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KBR Secures EPCM Contract From Basra Oil Company in Iraq

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KBR Inc. (KBR - Free Report) recently clinched an engineering support, procurement and construction management services (EPCM) contract from Basra Oil Company. Per the deal, KBR will provide EPCM services for the development of the Majnoon Oil Field, based in Basra, Iraq. Estimated revenues related to the project will be booked into the Hydrocarbons Services business segment.

Under this two-plus-one-year extendable service deal, KBR will offer project management, multi-discipline engineering support as well as procurement and construction management services to Basra Oil Company.

Other Notable Contracts

Of late, the company inked notable deals that include a pre-FEED contract from INPEX Masela, license and engineering contract from ENAP Refinerías SA, and an ammonia plant contract for the Hindustan Urvarak and Rasayan Ltd (HURL) greenfield urea project in India.

Growth Drivers

KBR’s hydrocarbons Services business is poised to grow backed by opportunities in downstream petrochemical and ethylene projects, and a growing number of small-scale LNG projects in North America. Notably, the rise in LNG activity can be attributed to increased demand from China and India for environmental reasons. In Hydrocarbons segment, the company’s recurring revenue services business, including Industrial Services, is witnessing improvement driven by progress made on the Ichthys project. Additionally, KBR expects growth across all its key markets in the United States, the UK and Australia, courtesy of continued opportunities across the lifecycle of projects.

Meanwhile, an increasing portfolio of smaller and OpEx-facing projects, services, program management, and maintenance contracts offer the company a stronger foundation compared with previous years. According to KBR, healthy balance between hydrocarbons and government projects positions it well for future growth. Also, its Government Services is growing steadily owing to new award wins from the U.K. Ministry of Defence, the U.S. Air Force and the Naval Air Warfare Center Aircraft Division.

In a year’s time, this Zacks Rank #2 (Buy) company’s shares have gained 13.6% against the industry’s decline of 3.5%.

Further, KBR’s high backlog level indicates underlying strength. In addition, the company remains optimistic about backlog growth in 2018 owing to the pipeline of opportunities.

Other Stocks to Consider

Some other top-ranked stocks from the same space include Quanta Services, Inc. (PWR - Free Report) , Jacobs Engineering Group Inc. (JEC - Free Report) and Toll Brothers Inc. (TOL - Free Report) . While Quanta Services sports a Zacks Rank #1 (Strong Buy), Jacobs Engineering Group and Toll Brothers carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quanta Services surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 6.7%.

Jacobs Engineering Group outpaced estimates in the preceding four quarters, with an average earnings surprise of 12.3%.

Toll Brothers surpassed estimates thrice in the preceding four quarters, with an average positive earnings surprise of 15.2%.

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