Kentz shares surge to record high

SHARES IN Irish oil and gas engineering firm Kentz jumped to a record level in London trading yesterday after it announced details of a $2.3 billion exploration contract in Western Australia.

The company, which provides engineering services for the global oil, mining and pharmaceuticals industries, said it had been awarded the contract for a joint venture with US energy group CBI for the Chevron Corporation-led Gorgon liquefied natural gas project on Barrow Island in Western Australia.

Kentz, which had an order backlog of about $1.6 billion at the end of April, said last month it was bidding on further contracts at the Gorgon and Pluto gas projects in Australia.

Energy companies including Chevron and Shell are investing in Australian gas ventures to meet a projected increase in Asian demand for cleaner-burning alternatives to coal.

On the back on the announcement, Kentz shares rose 6.5 per cent to 494.5 pence on London’s alternative investment market (Aim), their highest since the company was first floated in 2007.

The stock is now up 53 per cent this year alone.

“This is an excellent project win for Kentz, lifting the backlog by almost 50 per cent and providing good earnings visibility through 2013-2014,” Keith Morris, a London-based analyst said.

“The contract commences immediately and is due to run until 2015 with peak activity in 2013 and 2014 and therefore the biggest impact on joint venture profit contribution,” he said.

Kentz, whose clients include Exxon Mobil and Shell, said in March that 2010 revenues increased by 50 per cent to $1.06 billion from $704 million the previous year.

The company said that, of its existing backlog, $932 million was due to be completed this year, with a further $600 million in 2012.