Client News > Release

11-06-2010

Kentz Corporation Limited - AGM Statement

Kentz Corporation Limited (LSE: KENZ), the holding company of the Kentz engineering and construction group, hosted its Annual General Meeting, relating to the year ending 31 December 2009, at 9.30am today at the Andaz Hotel, 40 Liverpool Street, London EC2M 7QN.

At the meeting, Hugh O’Donnell, the CEO of Kentz made the following statement:

"I am pleased to report that following a solid performance in 2009 a number of new opportunities have arisen for Kentz this year. To date our 2010 trading is in line with market forecasts. Currently, we expect to see a similar weighting in revenues between H1 and H2 2010 as was achieved in 2009.

The backlog as at the end of April 2010 was US$1,585.6m (Dec 2009: US$1,497.4m). The order intake between January and April 2010 of US$370.5m has generated backlog growth in all three business units. In excess of US$100m of this order intake has come from natural growth in existing contracts.

The Group remains closely aligned to its core clients and, in line with recent positive forecast capex spend data from the International Energy Agency (IEA) in the oil and gas sector, has a very strong pipeline of additional prospects, including several in new and challenging areas. We expect to convert a number of these prospects into backlog during the second half of 2010.

Safety grows ever more important in our industry and remains at the heart of everything we deliver at Kentz. I am pleased to report that we recently achieved a significant safety milestone on the E&I Utilities contract on the Pearl GTL plant in Qatar, where we executed 10 million man-hours of work without a lost time incident. Kentz’s total recordable incident rate for the year is 0.20.

As areas such as Iraq begin to open up to investment from international oil companies, having a track record of project execution in remote locations is proving extremely beneficial. Below I have outlined some of our prospects, together with project activity from our three Global Business Units.

The Group’s cash position remains strong and, with relatively little debt on the balance sheet, we have a solid financial base to support our operations through 2010 and beyond".

Specialist Engineering, Procurement and Construction (EPC)

The order book for the Specialist EPC business unit continues to grow and at the end of April stood at US$851.2m (Dec 2009: US$837.3m). This growth has been underpinned through continued expansion in Australasia, where a number of new very significant LNG projects are under development. Kentz is currently involved in delivering EPC solutions on two large scale LNG projects in this region.
 
In Qatar we are delivering the EPC scope on the Ras Laffan Refinery Port, an US$85m contract for Qatargas. Kentz has also recently been awarded an EPC contract to replace two existing glycol regeneration trains at Qatar Petroleum's Fahahil Stripping Plant in Dukhan, Qatar. 

EPC activities are continuing on the Sidra project on the US$208m contract for the design, supply and delivery of the main electrical systems on the Qatar Foundation and Qatar Petroleum supported Sidra Medical and Research Centre.
 
Our focus in the Abu Dhabi market on niche EPC projects has generated several new contracts. Our projects currently underway include a US$30m EPC contract for the Storex Control Systems upgrade for ADGAS on Das Island and a WIP replacement on wellhead platform 15 for ZADCO.   

Kentz is continuing to provide engineering, consultancy, procurement and onsite construction support services on the development of infrastructure with the Royal Commission for Jubail and Yanbu in Saudi Arabia.

This includes the development of approximately 2,000 hectares of land to the west of Jubail 2. Future scopes of work under discussion with the Royal Commission include security systems for the complete industrial area, and the development of a railway system from the new industrial area to the port.

The pipeline for the Specialist EPC business unit looks very encouraging with significant opportunities in Australasia and Iraq.

Construction services

The Construction business unit backlog has also grown and at the end of April was US$564.2m (Dec 2009: US$529.4m). This was boosted in February 2010 with the award to Kentz E&C of the Site Wide Specialist Instrumentation Contract for the Pluto LNG Project, bringing the combined value of work secured to date on the project to in excess of AUD$120m.
 
In Qatar, construction is well advanced on Qatar Gas’s new LNG Berth 6 loading facility where Kentz is providing instrumentation, electrical and telecommunications services.

In Mozambique, construction work is progressing on the Moatize Coal Project worth approximately US$69m to Kentz.  The project is being developed by Vale. A number of additional coal projects are being planned in the region and Kentz’s experience in Mozambique positions us well to secure future contacts.

Elsewhere in Sub-Saharan Africa, Kentz is supporting the maintenance and operation phase for the Kenmare Resources Moma Mineral Sands project in Mozambique. Kentz is also currently working on the Medupi power station contract worth in excess of US$250m.
 
In the Caribbean, Kentz-OJ’s was recently awarded the complete Electrical and Instrumentation Installation Contract on the Trinidad Generation Unlimited (TGU) 720MW Combined Cycle Power Plant Project. TGU is developing a 720MW gas-fired combined-cycle plant located in La Brea, Trinidad, Republic of Trinidad and Tobago.

The pipeline of prospects for construction remains strong with a number of significant opportunities in Australasia.

Technical Support Services

The Technical Support Services business unit backlog has grown significantly at the end of April to US$170.2m (Dec 2009: US$130.8m). This growth has been supported by a number of recent awards for support service contracts with core clients to provide management, completions and commissioning services on oil and gas infrastructure and production systems in the Australasian region.
 
Throughout the Middle East Kentz is involved in a number of technical support service contracts. In Qatar, Kentz continues to be involved in the Shell Pearl GTL project delivering commissioning support services for plant-wide systems.

Kentz has also been awarded a five year contract to provide engineering support services for Qatar Petroleum's offshore operations for plant change requests and engineering studies. In Kuwait, Kentz has a five year PMC support services contract for engineering and consultancy services on national oil and gas projects.

In Far East Russia on Sakhalin I, Kentz, together with its Russian partner companies Kentz DEM and Kentz SMNM, is working on ExxonNeftegas’s developments on Odoptu, Arkutun-Dagi and the Chayvo expansion programme. Kentz is also carrying out a US$25m shutdown services and operations support contract with ExxonNeftegas Ltd. On the Sakhalin II facilities we are providing technical support and construction services to Sakhalin Energy (SEIC).

In South Africa, we continue to provide construction and maintenance, shutdown and turnaround services to the Sasol and Engen facilities. Across Asia in Indonesia, we are providing commissioning and start-up support personnel for a 20,000 bpd early production facility.
 
The pipeline for the Technical Support Services business unit looks very promising. The growth in the pipeline has come from an increased focus on longer term maintenance service contract opportunities and the general growth in demand for technical services to support the boom in the development of remote onshore oil and gas facilities".