UK: Kentz Expects 2012 Earnings to Meet Expectations

Kentz Corporation Limited, the holding company of the Kentz engineering and construction group, released the following interim management statement for the period 1 July to 11 November 2012.

Overview

• Growth underpinned through new project awards together with natural growth on existing contracts

• Backlog at the end of September 2012 was US$2.53bn (July 2012: US$2.54bn) (October 2011: US$2.38bn)

• Prospect pipeline increased to US$13.1bn

• Expect to deliver 2012 earnings in line with current market expectations

• US$50 million shutdown services and operations support contract with Exxon Neftegas

• Construction business unit recently won a further contract with Kenmare Resources on the Moma Sands mining project

• Nearing completion on the EPC contract for the Gorgon construction village

• Delivered 33.9 million man-hours with a total recordable incident rate of 0.22

• Appointment of Tush Doshi as Chief Operating Officer of the EPC business unit

• Interim dividend of 5.5 US cents paid in October, an increase of 10% on 2011

Christian Brown, Chief Executive of Kentz, said: “We continue to perform well across our global operations and expect to deliver 2012 earnings in line with current market expectations. We are confident that our backlog and current prospects will continue to support double digit earnings growth in 2013.

“Kentz’s clients include a number of the world’s leading natural resource companies, on some of the world’s largest natural resource projects, and we have an excellent foundation on which to further globalise our Construction and TSS business units and increase both our capability and addressable market for our EPC business.”

Operational Update

The company’s operations throughout 29 countries performed well in the second half of the year to date.

In Western Australia, the company is nearing completion of the EPC contract for the Gorgon construction village. The companywill follow this in mid-2013 with the completion of the EPC project for the Gorgon telecoms package on Barrow Island. Although activity on the Gorgon MEI contract has been below expectations, the company does not expect any impact on its 2012 results and along with its client the company continues to focus on first LNG at the end of 2014.

Elsewhere in Australia, the company continues to work on the QGC LNG and Ichthys LNG projects following awards earlier this year for its Technical Support Services (TSS) and EPC business
units. Kentz remains focused on opportunities in the region for projects that it has received final investment decision (FID).

The company’s operations in North and South America have produced solid results to date in 2012 where its Construction and TSS business units have been executing projects on the Kearl Oil Sands projects for Imperial Oil, the Aurora Mine Relocation (AMR) project for Syncrude, Barrick Mine in the Dominican Republic and on a number of other smaller projects. The company continues to evaluate further opportunities in the Americas, in particular in Canada where considerable investments are expanding the development of the country’s oil sands resources.

Kentz has a number of established operations across Africa, where its Construction and TSS business units remain strong. The company maintains a strong relationship with Sasol in South Africa which the company has developed over the past 30 years. Kentz continues to execute projects under the five year shutdown management and execution services contract, signed in 2011, at Natref’s flagship inland crude refinery in Sasolburg along with the provision of structural, mechanical, electrical, instrumentation and piping (“MEIP) construction services for Sasol’s GHHER expansion project.

The company’s EPC business unit has recently been awarded a US$45 million contract with Scatec Solar, for the 75MWp Kalkbult Solar Photovoltaic (PV) Project in the Northern Cape area of South Africa. This is a good award for the company’s EPC business unit and a key project for South African energy that positions Kentz well for further work in the renewable space.

In Mozambique, the company’s Construction business unit recently won a further contract with Kenmare Resources on the Moma Sands mining project. Kentz has been working on this project since 2008 and is pleased to have won further work as part of the on-going expansion project. The company also continues to provide construction services to Vale on the Moatize Coal Plant following the successful completion of Phase 1 of this project earlier this year.

The rapid growth of the company’s businesses around the world has overshadowed the continued progress in the Middle East which is still a core and important market for Kentz and the company continues to provide many services to important clients throughout the region. The company’s core markets of Saudi Arabia, UAE and Kuwait continue to produce many opportunities for Kentz, in addition to providing centres of engineering excellence, and the company sees further bidding activity in newer locations such as Iraq.

The company’s  recent award of shutdown services and operations support contract with Exxon Neftegas Ltd in Far East Russia reaffirms its ability to deliver projects successfully for the company’s clients in Arctic conditions. Kentz has opened an office in Moscow to enable the company to focus on developments in western and northern Russia where the process of monetising the vast hydrocarbon resources in the Kara and Black Seas present new opportunities for Kentz.

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LNG World News Staff, November 12, 2012