KBR's Contract Win from Sasol

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Recently, KBR Inc. (KBR) was awarded a contract by petrochemical giant Sasol Technology (Pty) Ltd, the technology arm of the Sasol Group (Sasol), to provide engineering, procurement and construction management (EPCm) services for its gaseous oxygen compressor at the Oxygen East Plant in South Africa. The financial details of the contract have not yet been disclosed.

KBR would provide time control as well as cost and quality control and management services along with a full range of engineering services that will vary in scope depending on Sasol's needs for restoring the plant efficiency. The contract will be carried out as per the terms of the existing agreement between Sasol and KBR.

Earlier in 2009, KBR had received two contracts from Sasol with a combined value of about $2.7 million for projects in Sasolburg, South Africa. For these projects, KBR provided EPCm services for Sasol's high sulphur diesel project. In addition, the company offered the conceptual design to convert Sasol's existing polyvinyl chloride (:PVC) open reactor technology plant to closed reactor technology.

In 2010, the company was awarded another Framework Contract by Sasol to provide engineering services across various sectors including downstream, petrochemical, and upstream businesses in South Africa. With years of relevant experience and continued partnership with Sasol, management at KBR is confident of performing well on the current contract as well.

KBR is a leading global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power and industrial markets. During the last month, the company received 7 new contracts the most recent being $17.9 million Air force task order awarded to its joint venture with CH2M Hill. With a steady influx of contracts, KBR has a high positive earnings growth expectation of 12% for the next 5 years.

Other Stocks to Consider

KBR is a high beta stock (with beta of 1.3). This means greater volatility, which renders the stocks riskier. But under favourable conditions along with a strong volume support, the stocks also obtain the potential for high returns. With KBR, it has been a blessing and thus investors will derive gains, which will tend to be more heavily driven by capital gains from stock price hikes and less from direct dividend income.

KBR currently has a Zacks Rank #3 (Hold). Other stocks from the same sector that look promising include Michael Baker Corporation (BKR), with a Zacks Rank #1 (Strong Buy), while both Harris & Harris Group, Inc. (TINY) and Willdan Group, Inc. (WLDN) have a Zacks Rank #2 (Buy) each.

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