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It's a gas!: WorleyParsons (WOR) $22.55Font Size: Decrease Increase Print Page: Print CRITERION: Tim Boreham | June 05, 2009
Article from: The Australian
THE engineers and Bob the Builders who service the oil and gas sector are reaping the flow-on benefits from the big-ticket LNG projects in the, er, pipeline.

WorleyParsons (WOR, $22.55) announced yesterday that its Eos joint venture would provide project services for the $US16 billion ($20 billion) PNG LNG project.

The opaque Worley doesn't provide numbers, but the deal covers engineering, training and support services to the end of 2014 and continues Eos's involvement in front-end project development.

Also yesterday, Clough (CLO, 71.5c) announced its PNG joint venture had snared a contract for "early works associated with the project", including building bridges, roads and wharves. Again there's no dollar value, but as it involves a workforce of 900, it's no small beer.

Last week, Monadelphous Group (MND, $10.86) won a $170 million deal with Woodside for jobs on the $12 billion Pluto project in Western Australia.

The wins highlight the disparity in the sector: if you're on the West Australian iron ore or nickel you're in strife, but the oil and gas game has been a boon.

WorleyParson shares were trading at $40 a year ago, but the firm managed a 29 per cent interim profit boost to $197 million. Three-quarters of Worley's revenues come from the oil and gas sector.

While Worley took the Fifth Amendment yesterday, the PNG deal was big enough to be disclosed, but is not as weighty as other wins, such as work on a massive Canadian oil pipeline.

We rated Clough a hold at 61c early last month, after Western Australia's environment police reluctantly approved Chevron and co's $50 billion Gorgon LNG project. Clough does front-end work for the project and is in the running to build an LNG jetty at Dampier.

We'll retain Clough as a hold and will avoid WorleyParsons as it is still too expensive. We also pooh-poohed Monadelphous on valuation grounds in the past, but now rate the stock a long-term buy, underpinned by $500 million of new contract work.

Meanwhile, an air of mystery surrounds Neptune Marine Services (NMS, 59c), which on Tuesday requested a trading halt and sought a share suspension yesterday. A takeover? Hold.