KBR Emerges As Chosen Bidder For Freeport's LNG Train 4

KBR, Inc. (NYSE:KBR) has been selected as the preferred bidder by Freeport LNG Development, L.P. for the engineering, procurement, construction, and commissioning (“EPC”) contract for the fourth liquefaction train at the latter's liquefied natural gas (“LNG”) export terminal in Texas.

Under the anticipated EPC contract, KBR will provide engineering, procurement, construction, commissioning and startup of a nominal 5-million ton per annum (“MTPA”) LNG train and associated gas pre-treatment plant.

Notably, after a nine-month front-end engineering and design (“FEED”) verification, execution planning and EPC proposal process, KBR has been selected for the contract. Meanwhile, KBR stated that the fixed price EPC contract should be concluded this quarter. The company expects a limited notice to proceed period that will include early engineering and commitment of critical long-lead equipment orders. KBR anticipates a full notice to proceed for the Train 4 project during the second half of 2019.

Freeport LNG intends to add this fourth liquefaction train adjacent to the first three trains at its facility on Quintana Island in Brazoria County, TX. The 4th Train will boost the facility’s total LNG export capacity to 20 MTPA. McDermott International Inc. (NYSE:MDR) is the prime contractor for the first three units at Freeport.

Being active in the LNG industry for more than four decades, KBR remains committed to boost global LNG production for environmental reasons. Its Energy Solutions unit, accounting for 20.3% of revenues, is expected to benefit from the growing number of LNG projects and solid backlog level ($13.6 billion as of Mar 31, 2019).

Share Price Performance

KBR’s shares have gained 45.4% year to date, outperforming its industry and the S&P 500 composite’s growth of 22.6% and 14.3%, respectively. The contract winning spree underscores KBR's strong ability to safely and efficiently deliver projects in operating facilities.

Zacks Rank & Key Picks

Currently, KBR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Construction sector are EMCOR Group, Inc. (NYSE:EME) and MasTec, Inc. (NYSE:MTZ) , each sporting a Zacks Rank #1.

EMCOR’s earnings per share are expected to increase 11% in 2019.

MasTec’s 2019 earnings per share are expected to increase 19.9%.

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