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Non-U.S. Markets Beckon, E&C Public Firms Tell Investors

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Amid the ongoing growth opportunities of the U.S.-Canada energy boom, engineers and contractors are seeing new—or renewed—growth potential in non-U.S. markets, say CEOs of publicly held E&C firms.


Fluor Corp. CEO David Seaton told investors at a Credit Suisse-sponsored event in New York City that, of the 20 large oil-and-gas project awards the firm is tracking over the next two years, 17 are overseas.

"It's a big world out there," added Patrick Mullen, president of the engineering, construction and maintenance group at CB&I. He sees growth in LNG and gas-fired power projects beyond the U.S. Offshore projects now account for $500 million of backlog, he said at the June 5 event. Total backlog is at $30

Deanna Goodwin, president of Technip North America, said her company recently won a $3.5-billion joint-venture award for oil production and EPC work in offshore Angola, its largest-ever subsea contract. Power-transmission specialist Quanta Services sees strong prospects offshore over a longer term, said CEO James O'Neil. He also noted a growing market in needed oil-and-gas infrastructure in Australia and possibly Mexico, when risks are lessened.

Past aggressive bidding by Korean contractors—particularly in the Middle East, which led to big losses—has changed, said Mullen. "Different dynamics are developing," he said. Fluor's diversity allows it to be more selective on projects, said Seaton. O'Neil said 46% of the firm's business is fixed-price contracts. Companies did not foresee project cancellations, but CEOs did expect that some would linger longer in front-end design.

CB&I's Mullen said understanding project scope via involvement in early-stage work would lessen risk in submitting a fixed-price bid.

Companies are optimistic that the workforce crunch is being addressed or won't happen immediately. Labor is adequate for now on both onshore and offshore projects, said Technip's Goodwin. She and other execs expect to use more modularization as a workforce strategy. Bob Gomes, CEO of Stantec, said oil-and-gas firms are recruiting engineers from Canada's Atlantic provinces to fill gaps in the booming west.

URS Corp. Executive Vice President Thomas Hicks said the firm would disclose "soon" results of future options being explored by its "value creation" committee announced earlier this year.

He gave no specifics, including the timing of selecting a successor to CEO Martin Koffel, who is set to retire this year. He said it "would be folly to break up" the firm due to the close integration of its units.

U.S. transportation was "still a target-rich market," said URS infrastructure executive Martin Tanzer, who predicted that "the U.S. will be the world's largest P3 market in three years."

Stantec also is sticking with U.S. and Canada markets. Gomes said the firm would focus on the broad, midsize design-project market he terms the firm's "sweet spot," noting a pickup in transportation funding by counties. He said the firm's transportation business grew 8% last year.

The firm anticipated an acquisition in Texas to boost its position in oil & gas.

Hill International President David Richter said the firm this year is expected to finish collecting as much as $60 million owed it by Libya from pre-revolution activities, although the firm is again working there. But he sees growth through acquisition in the U.S.


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