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KBR Wins a FEED Contract From Equinor Canada, Fortifies STS

KBR, Inc.’s KBR Canadian entity — KBR Industrial Canada Co. — won a front-end engineering design (FEED) contract from Equinor Canada.

Per the deal, KBR will help Equinor develop the topside facilities of the new Bay Du Nord floating production, storage and offloading facility (FPSO). KBR also has an option for the continuation of detailed design and procurement management services through the completion of the FPSO. Last year, KBR carried out the pre-FEED engineering work for the FPSO.

Located off the coast of Newfoundland, Canada, the new facilities will be one of the lowest carbon-emitting FPSOs in the world. While using an onboard combined cycle power system and the latest technology to minimize the number of crew onboard and maximize digital solutions, the FPSO will ensure safe and reliable energy production.

Jay Ibrahim, president of KBR's Sustainable Technology Solutions business, or STS, said, "This win is indicative of KBR's strategic commitment to work with clients not only to secure energy supply for the world but to do it in a safe, responsible and sustainable way. KBR adds maximum value to clients such as Equinor by drawing on our extensive global engineering expertise and applying the latest technology and processes to deliver extraordinary outcomes."

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Zacks Investment Research

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Shares of the company grew 1.18% on Apr 3 and 8.3% in the past three months compared with the industry’s 12.7% growth. Earnings estimates for 2023 increased by a cent in the past 30 days, reflecting a 5.5% year-over-year increase. The trend is likely to continue, given the solid backlog level (including award options).

KBR’s solid backlog and option level of $19.8 billion (as of Dec 31, 2022) accentuate its strength. In 2022, KBR received $8.2 billion of bookings and options in highly strategic areas with a 1.2x trailing 12-month book-to-bill. In the future, KBR expects broad-based growth across both segments.

Solid Technology Business Prospect

KBR has been a leader in process technology development, commercialization and plant design for more than 50 years. The determination to lower emissions, achieve product diversification and energy efficiency and develop more sustainable technologies and solutions has been driving KBR’s performance.

In February, KBR launched Sustainable Aviation Fuel (SAF) technology in alliance with Swedish Biofuels AB. The technology processes ethanol and converts carbon dioxide and synthesis gas to SAF, helping KBR's clients utilize captured carbon toward a cleaner, greener future.

The demand for the company’s technologies across ammonia for food production, olefins for non-single-use plastics, refining for product diversification and more green solutions to meet tighter environmental standards has been going strong. A strategic shift to IP-enabled maintenance is also gaining traction and KBR’s advisory portfolio continues to see increasing activity, particularly in the energy transition.

Of the total backlog, Sustainable Technology Solutions segment accounted for $4.01 billion of the total backlog.

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:

Altair Engineering Inc. ALTR, sporting a Zacks Rank #1 at present, provides software and cloud solutions in simulation, high-performance computing, data analytics and artificial intelligence worldwide.

ALTR’s expected earnings growth rate for 2023 is 11.2%.

Willdan Group, Inc. WLDN, sporting a Zacks Rank #1 at present, is a nationwide provider of professional, technical and consulting services to utilities, government agencies and private industry.

WLDN’s expected earnings growth rate for 2023 is 30.7%.

AECOM ACM, carrying a Zacks Rank #2 (Buy) at present, is a leading solutions provider for supporting professional, technical and management solutions for diverse industries across end markets like transportation, facilities and government as well as those in environmental, energy and water businesses.

ACM’s expected earnings growth rate for fiscal 2023 is 5.8%.


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