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Chicago Bridge & Iron Company N.V. (CBI), Fluor Corporation (NEW) (FLR): Stocks Set to Benefit From LNG Exports

The Energy Department has issued a second permit to export liquefied natural gas (LNG) from the United States. The license, awarded to Freeport LNG Expansion and FLNG Liquefaction, will result in overseas shipping of 1.4 billion cubic feet of gas every day from a terminal on the Texas Gulf Coast. This is only the second such permit to export U.S. LNG. While exports by Freeport are not likely to start before 2017, the market has already started contemplating more such licences being issued by the department going forward.

Chicago Bridge & Iron Company N.V. (NYSE:CBI)

Chicago Bridge’s prospects improved

For once, the move is likely to help engineering and construction firms such as Chicago Bridge & Iron Company N.V. (NYSE:CBI). The company is an integrated engineering, procurement, and construction (EPC) services provider with a focus on the energy, petrochemical, and natural resource industries. The company recorded revenue of $2.3 billion during the first quarter of 2013, representing an 87% jump. While nearly 60% of this came from an acquisition, the remaining amount was primarily due to increased construction activities related to LNG mechanical erection and gas processing projects.

The company has been winning new projects internationally in this area, including engineering services for an offshore LNG platform in the Norwegian Sea worth approximately $180 million, and scope increases on its refinery project in Colombia worth nearly $175 million. Chicago Bridge & Iron Company N.V. (NYSE:CBI)’s prospects are improved by the fact that it has already worked on the front-end engineering and design for the Texas Gulf Coast plant. In fact, it would be a surprise if the company fails to win additional contract work at the plant. Its shares have advanced 23% over the last month but are still available at a forward price to earnings ratio of 12.4.

Fluor Corporation (NEW) (NYSE:FLR) is another industrial construction and engineering player which is strong in the hydrocarbon, chemical, and petrochemical industries. Although based in Texas, Fluor Corporation (NEW) (NYSE:FLR) is an international player involved in offshore production facilities. It continues to see significant opportunities in the Canadian oil sands market apart from unconventional gas projects in various geographical locations.

Oil and gas is the biggest segment for this company with revenue of $9.5 billion, amounting to 34.5% of global revenue in 2012. Fluor Corporation (NEW) (NYSE:FLR) is currently trading at a price to earnings ratio of only 14.2 times projected earnings for 2014, and has a debt equity ratio of 0.15.