A SUBSIDIARY of AusGroup has just secured an initial AU$34.5 million contract with CB& I and Kentz Joint Venture (CKJV) on the Chevron-operated Gorgon Project.

This brings the total contract wins announced by AusGroup since May to AU$58.6 million, which will boost its rather weak order book, as at mid-May 2013, of AU$215 million.

To put things in perspective, the AU$215 million of outstanding work was:

1. Equivalent to less than 2 quarters of revenue based on AU$138.3 million of revenue reported for the quarter ended 31 March 2013.  

2. Significantly lower than the order book reported with previous quarterly results: AU$308 m (Feb 2013), AU$303 m (Nov 2012), AU$324 m (Aug 2012) and AU$438 m (May 2012). 

 

Laurie Barlow, CEO of AusGroup. NextInsight file photoIn the latest contract win, AusGroup's 100%-owned subsidiary, scaffolding specialist MAS Australasia, has been commissioned to erect multi-purpose scaffolding which will be used to provide access for insulation, painting, installation and other works.

The Gorgon Project is located on Barrow Island off the coast of Western Australia. 

Expected to initially create at least 80 local jobs, the work scope also includes the provision of key MAS management personnel and the use of a specialised in-house Scaffold Management System.

MAS will also assist with the planning, design, engineering and coordination of scaffolding on the Project.
 

Laurie Barlow, CEO and Managing Director of AusGroup, said: “We hope that our strong performance with this scope of work will further strengthen our relationship with CKJV as we continue providing a range of services on the Chevron-operated Gorgon Project.”
 

The Gorgon Project is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history.

It is operated by an Australian subsidiary of Chevron and is a joint venture of the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

AusGroup trades at 8.9X PE. Chart: BloombergSince May, AusGroup has announced these other developments:

1. Contract award for insulation project of AU$10.5 million

2. Contract award for insulation work worth AU$13.6 million

3. A key step in AusGroup’s ASX listing -- AusGroup enters conditional Sale and Purchase Agreement.

4. A client, Karara Mining Limited, has withheld progress payments amounting to AU$21.7 million.  AusGroup said it is actively liaising with KML management to attempt to resolve the situation.