Fluor Corporation (FLR) had two good news to cheer about recently as its Fluor ICA (a joint venture between Fluor and Empresas ICA, S.A.B. de C.V) and its unit Fluor Federal Petroleum Operations, LLC won two contracts. While Fluor ICA won a contract from Pemex, the unit got a contract from U.S. Department of Energy (:DOE).
Coming to the contract from Pemex, ICA Fluor won the $54-million contract to to build a gas compression system in Mexico. This contact will be booked in the third quarter of 2013. It primarily requires Fluor ICA to construct a gas compression system to service the Dos Bocas Marine Terminal located in Paraiso, Tabasco, on the Gulf of Mexico. The project is expected to be completed in the second quarter of 2015.
ICA Fluor is a leading industrial engineering-construction company in Mexico, committed to the engineering, procurement, construction and maintenance of industrial facilities in the oil and gas, chemical, petrochemical, automotive, power, mining, and telecommunication industries.
Fluor ICA will be responsible for the engineering, procurement, construction and start-up services for the electromechanical works. Fluor will also be responsible for building the new system to connect a 77-kilometer, 36- inch diameter pipeline to transport gas and crude oil from the Litoral offshore platform to the processing facilities in the marine terminal.
As for Fluor Federal Petroleum Operations, the U.S. Department of Energy (:DOE) awarded it a contract for the management and operation of the Strategic Petroleum Reserve (SPR) in Louisiana and Texas. This contract has a base term of five years, but the DOE has the option of extending the contract up to 10 years. The base contract is valued at about $697 million.
The SPR is the largest supply of emergency crude oil. The decision to withdraw crude oil from the SPR is made by the U.S. President. During an energy emergency, SPR oil is distributed by competitive sale. To date, the SPR has been used only three times, most recently in Jun 2011 when the President directed a sale of 30 million barrels of crude oil to offset disruptions in supply due to Middle East unrest.
Fluor Corporation has a strong presence and brand name in executing front-end engineering and design (FEEDQ) contracts and the Engineering, procurement and construction (:EPC) contracts in large petrochemical and petroleum companies.
Fluor currently carries a Zacks Rank #3 (Hold). Stocks in the same sector that are worth a look include LennoxInternational, Inc. (LII), Michael Baker Corp. (BKR) and Meritage Homes Corporation (MTH). While Lennox and Micheal Baker have a Zacks Rank #1 (Strong Buy), Meritage carries a Zacks Rank #2 (Buy).