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KBR to Work With Chevron Lummus Global for India Project

Zacks Equity Research

KBR, Inc.’s KBR market-leading technology — ROSE solvent de-asphalting (“SDA”) process — is all set to be integrated with Chevron Lummus Global’s (“CLG”) LC-MAX technology to support Hindustan Petroleum Corporation Limited’s (“HPCL”) modernization project at the Visakh refinery in India.

Contract Synergies

Per the contract, KBR will provide technology licensing as well as basic engineering design and proprietary equipment services for the ROSE SDA portion of the LC-MAX unit. Notably, ROSE is a cost-effective solution that upgrades larger proportion of low-value residue streams into high-value products. Also, the solution enables clients to develop the underlying market in fuel, lube and petrochemical applications. It also helps them reduce environmental footprint of their products.

The collaboration with the LC-MAX technology — an advanced, patented, ebullated-bed residue upgrading process — will be a significant economic solution. This will enhance KBR’s Technology Solutions’ profitability. The company has already been awarded more than 60 ROSE licenses with a combined licensed capacity of nearly 1.6 million BPSD that includes many repeat licensees.

Technology Solutions Bodes Well

Refining and petrochemicals projects in India as well as higher technologies demand continue to drive the Technology Solutions segment. Notably, the segment’s revenues increased 18.5% year over year in the third quarter of 2019.

During the third quarter, the company received a Purifier license and basic engineering design contract for the largest grassroots ammonia plant designed by KBR. The plant featured energy efficiency, flexibility and lower capital costs.
The Technology Solutions segment recorded 48%, 29% and 19% organic growth in the first, the second and the third quarter of 2019, respectively. The results were primarily backed by strong execution across its chemical, petrochemical, refining and ammonia projects as well as increased proprietary equipment sales. The company expects global technology opportunities led by ammonia, refining and olefins projects to continue.

Courtesy of robust contribution from the company’s businesses, shares of KBR have surged 98.9% so far this year compared with the industry’s 27.1% rally.

Zacks Rank & Key Picks
Currently, KBR currently 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 same industry are Gates Industrial Corporation plc GTES, Quanta Services, Inc PWR, and AECOM ACM. Gates and Quanta Services sport a Zack Rank #1(Strong Buy), while AECOM carries a Zacks Rank #2 (Buy).

Gates Industrial’s earnings surpassed estimates in two of the trailing four quarters, the average being 12.1%.

Quanta Services’ current-year earnings are expected to rise approximately 15%.

AECOM has three-five year expected earnings per share growth rate of 9.3%.

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