Consistent with its deal-winning spree, Jacobs Engineering Group Inc. (JEC) recently announced that it has secured two strategic contracts from Methanex Corporation, the world’s largest methanol supplier to major international markets, and Shell Global Solutions International B.V. ("Shell"), respectively.
Per the Methanex contract, Jacobs will provide engineering, procurement and construction services for the corporation’s methanol production facility in Louisiana. The plant is expected to be operational by the second half of 2014. This U.S. Gulf Coast facility, expected to grow in the coming years, is estimated to hold a construction value of $550 million.
On the other hand, the contract from Shell entails to provide engineering and project management services (:EPMS) to the company’s European downstream assets. The contract carries options of renewal for an additional five years and can be extended to other Shell businesses beyond Europe to the Middle East and Africa.
With this contract, Jacobs' expect to strengthen its long-standing partnership with Shell; thereby providing services such as feasibility studies, small plant modifications as well as discrete services for Shell's major refining and chemical sites in Pernis, The Netherlands, and Rhineland, Germany.
The company’s continued diversification and international exposure through various contract wins are noteworthy. Besides, continued investments by the company’s pharma clients in emerging PharmaBio markets of Brazil, China and India leave room for Jacobs to diversify further, both categorically and geographically.
The company provides stiff competition to other industry players like Fluor Corporation (FLR) and Foster Wheeler AG (FWLT). We currently maintain a Neutral recommendation on Jacobs. The stock also carries a Zacks #3 Rank, which implies a short-term (1-3 months) Hold rating.
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