Chicago Bridge & Iron Company N.V. (CBI) through its business unit, Lummus Technology signed an agreement with BP plc (BP), a London-based oil and gas company, for an exclusive right to sell, market and license BP’s paraxylene recovery and isomerization technology worldwide.
Lummus Technology is one of the leading players engaged in licensing proprietary process technologies to the hydrocarbon industry and licenses more than 70 processes supported by over 1,500 patents and patent applications. Lummus accounted for over 5.0% of Chicago Bridge’s total revenue in the second quarter of 2010.
We believe that Lummus is all set to enhance its technology portfolio as the aforementioned agreement with BP improves its portfolio in aromatics and also provides exposure into the polyester value chain. Besides, reviving petrochemical activity in developing countries supports improving conditions for the business in late 2010 or early in 2011.
Chicago Bridge & Iron Company is among the world’s leading engineering, procurement and construction companies. Its diverse area of operation includes upstream oil & gas, downstream oil & gas, LNG, power, water & wastewater and metals & mining.
Ending second quarter 2010, the company’s backlog was approximately $6.8 billion and new projects in the quarter totaled $915.8 million, up from $428.9 million in the comparable quarter of 2009.
In the quarters ahead, investments in steel plate structures and energy processes projects are expected to remain strong, while LNG investments are also likely to be favorable for the company. For fiscal 2010, Chicago Bridge expects new orders between $4.0 and $4.5 billion, revenues between $3.9 and $4.2 billion and earnings per share of $1.75 to $1.90.
The company has operations in more than 70 countries and employs approximately 16,000 people. Major competitors of the company include Matrix Service Co. (MTRX) and privately held Bechtel Group Inc. and Mitsubishi Heavy Industries Ltd. We currently maintain a Neutral recommendation on the stock.
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