(FLR) Fluor Corporation Provides Australian EPCM Contract

Fluor Corporation (FLR) is all set to provide its engineering, procurement and construction management (EPCM) services for Woodside Energy Limited’s operating gas assets in Australia. In the final agreement, the initial contract term for Fluor is three years and has an option to be extended three times by one year. The value of the contact was not disclosed but included in the second quarter 2011 bookings of the company.

As per the agreement, Fluor will be responsible for capital projects supporting Woodside’s Production Projects Group. All EPCM services required in the entire project life cycle will be performed by Fluor. The engineering services will be performed by the company in its office in Perth, Australia and implementation and construction work will be done at the respective Woodside asset.

Fluor will benefit from the rapidly growing liquefied natural gas industry through provision of its engineering and support services in the coming years. The company is in relationship with Woodside from past two years. Presently, Fluor’s front-end engineering and design (FEED) services is being provided for the Browse LNG Development, situated  approximately 425 kilometers north of Broome off the northwest coast of Australia.

The company is witnessing signs of recovery in oil and gas markets and Global Services business. Recently, Fluor received a number of new awards driven by substantial mining, which have a lower margin profile.

The company’s Mining business is expected to make substantial progress ahead. Fluor has bids outstanding in Government, which could add to their backlog in 2011. Further, Global Services business is seeing signs of recovery and Fluor Corporation is confident of strengthening its market position and growth potential going forward.

Acting through its subsidiaries, Fluor Corporation is one of the largest professional services firms, providing engineering, procurement, construction and maintenance as well as project management services on a global basis.

It serves a diverse set of industries worldwide including oil and gas, chemical and petrochemicals, transportation, mining and metals, power, life sciences and manufacturing. It is also a primary service provider to the U.S. federal government.  The company’s prime competitor is Jacob’s Engineering Group (JEC).

We continue to maintain a Neutral rating on Fluor Corporation with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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