Out Fox The $treet

According to a Chicago Bridge & Iron (NYSE: CBI ) presentation, the LNG project capital expenditures over the next two years will reach over $70 billion. The spending will reach a plateau in 2015 at over $45 billion and max out around $50 billion in 2017. Not bad for a market that topped out around $30 billion in 2012 and plunged this year. Probably not surprising, but a main beneficiary will be more » Disclosure: No positions mentioned. Please review the disclaimer page for more info. 

Small-Cap Insight As the global economy struggles along especially in emerging markets, the domestic engineering firms have seen revenues and profits stagnate this year. Ironically, an unlikely source is now contributing to huge growth expectations over the next couple of years. The shale gas revolution in North America is pushing LNG export projects, and ammonia and ethylene plants back to the US where chemical construction projects had dried up for decades. In the case of KBR, Inc ( KBR ) , analysts expect dramatic earnings increases in out years while the stock still trades at a below market multiple. The company is off to a good start with FEED work on a couple of LNG export projects in British Columbia and the recent announcement of a $600M ammonia project in Louisiana. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Earnings results for Flour (FLR) and Foster Wheeler (FWLT) were less than stellar last week after horrible numbers for McDermott (MDR) the previous week. Looking into the details for at least FLR and FWLT the numbers weren't as bad as first glance. Revenues have been increasing since the lows in 2010 and order expectations remain strong for 2012. Not to mention FLR reported a record backlog. For this sector, it really comes down to global growth expectations and confidence. Everybody knows that demand will exist in the future has power demands continue to grow. The question is when companies will move forward with large multi billion dollar projects. Projects that will utilize any existing over capacity in the industry there by pushing up margins. Even though margins are not overly robust both FLR and FWLT have great balance sheets that allow for strong share repurchase programs. FWLT has reduced the float by 8M and FLR by 5M in the last 12 months so shareholders are getting ...

On Saturday, Dow (DOW) and Saudi Aramco signed the Joint Venture agreement to create Sadara Chemical company. Sadara will be a $20B project comprised of 26 manufacturing untis, several of which constitute "mega projects". The complex will be one of the largest integrated chemical facilities and the largest ever built in one single phase.  The plan is for the facility to take advantage of the cheap feedstock from Aramco and combine that with DOWs chemical expertise. Also, it will take advantage of cheap labor in Saudia Arabia.  This project was originally discussed in 2007, but eventually delayed due to the financial crisis.  It should be a boon for Engineering & Construction companies such as Flour (FLR) and possibly other like Jacob's Engineering (JEC) and Foster Wheeler (FWLT). FLR already has $1.9B contract for connecting all the utilities for the complex, but all companies in the sector will benefit as the project soaks up industry capacity.  ...

This is the third in a series of articles on the performance of stock sectors since the financial crisis. The first article focused on  steel producers  while the second article was on  women's apparel . As with the first two articles, the goal is review a sector where stock prices remain drastically depressed from highs seen prior to the financial crisis back in 2006-2008. In some cases, this might be a sign that the sector was just overvalued back then and hence the current price is deserved. In other cases, this might signal that the sector has plenty of room for recovery especially if the global economy gets over the current soft patch. Read the full article at Seeking Alpha .  Disclosure: Long FWLT in client and personal accounts. Please review the disclaimer page for more details. This information is provided for informational purposes and should not be relied upon as investment advice. 

Considering that oil has traded in the $80s range for months now, it shouldn't be that surprising that OPEC would revive projects shut down in 2008-2009. Apparently ever project is now moving forward though that wasn't conveyed by Foster Wheeler (FWLT) and other energy engineering firms in their Q4 reports. Maybe its a sign that we'll see some awards in the next 6 months. Today OPEC announced that some 150 projects are now moving forward to increase annual production by 12M barrels by 2030. Of those projects, some 35 were canceled/delayed and have now been restarted (other reports suggested that 135 projects were delayed). Either way the E&C firms should see higher order rates in the near future if true. Another big issue during the crisis was financing and I'd expect with oil maintaining at these levels that will soon disappear as an issue as well. Members of Opec, the oil exporters’ group, have revived the oil projects they put on hold when oil prices collapsed t...