KBR (NYSE:KBR) used a recent analyst meeting to outline the benefits the company would receive from the build out of the infrastructure needed to support increased energy development over the next decade. (For related reading, check out Do-It-Yourself Analyst Predictions.)
IN PICTURES: Eight Ways To Survive A Market Downturn
KBR provides engineering, construction and other services to large companies and governments all over the world. The company had revenues of $12.1 billion in 2009, and a contract backlog of $13.3 billion as of the end of the first quarter of 2010.
Hydrocarbons Business Group
KBR's Hydrocarbons Business Group consists of construction and engineering services for upstream and downstream oil and gas projects.
The company sees a particularly large opportunity in the increase in Liquefied Natural Gas (LNG) facilities as many countries seek to monetize natural gas assets. KBR estimates that the value of LNG projects over the next five years will be $ 165 billion.
KBR won a contract in September 2009 to work on the Gorgon LNG project located in Australia. Gorgon is a large project being built by Chevron (NYSE:CVX), along with partners Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.A, RDS.B). The downstream portion of the project involves the construction of three LNG trains with annual capacity of 15 million tons.
Other opportunities in the Hydrocarbons Business Group include Gas To Liquids (GTL) facilities, offshore oil and gas development, refineries and petrochemicals. Business here is obviously driven by the price of oil and natural gas and this business should have a decent growth rate as long as commodity prices stay high. (Learn more about the industry in the Oil And Gas Industry Primer.)
Infrastructure, Government, and Power Business Group
Another important segment for KBR is the Infrastructure, Government, and Power Business Group, which provide engineering, construction and other services mostly for the U.S. government and other sovereign nations. This business is levered to government spending, in particular that of the U.S. and United Kingdom.
The company provides services to the U.S. military in Iraq under the Logistics Civil Augmentation Program (LOGCAP), but is seeing this business reduced as U.S. forces withdraw from the country. KBR also gets business from the building of infrastructure and power generation projects.
KBR has reported some recent contract wins on various projects. The company announced two contracts with DuPont (NYSE:DD) to provide construction management services on projects that the company is building. One project is for a production facility in Ohio, and the other is for the expansion of DuPont's office complex in Delaware.
Petrobras (NYSE:PBR) chose KBR for engineering and construction services at a new ammonia plant that the company is building in Brazil.
KBR will be a beneficiary of the increased demand for energy and the accompanying infrastructure needed to support that development. The company is also a critical contractor to the U.S. and other governments. (For more stock analysis, take a look at 3 Utilities With A Decade's Double-Digit EPS Growth)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
SavingsSocial entrepreneurs recruit "skeptics" to team green, by providing economically efficient products and services that minimize consumers' carbon footprint.
InvestingMany global Investment banks are highly involved in the energy industry, but there are also some smaller banks and boutiques that are strong players.
Stock AnalysisThese three stocks are resilient, fundamentally sound and also pay generous dividends.
Investing NewsAre stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
Investing NewsHere are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
Investing NewsHere are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
Stock AnalysisIf you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
Stock AnalysisLearn about the top energy companies in Russia, a country that holds some of the largest reserves of oil, natural gas and coal in the world.
Mutual Funds & ETFsExplore detailed analyses of the top buy-and-hold exchange traded funds, and learn about their characteristics, statistics and suitability.
Stock AnalysisExamine the current state of Netflix Inc., and learn about three of the major fundamental risks that the company is currently facing.
The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>