Willbros Group Inc (WG), Orion Marine Group, Inc. (ORN), Great Lakes Dredge & Dock Corporation (GLDD): Low Valuations Insufficient to Compensate for Risks

Founded in 1908 and listed in 1996, Willbros Group Inc (NYSE:WG) is an independent, full service engineering and construction (E&C) contractor serving the oil, gas, power, refining, and petrochemical industries. It provides engineering, procurement and construction (EPC), turnaround, maintenance, life-cycle extension services, and facilities development and operations services to industry and government entities worldwide.

Moats that matter

Willbros has developed a brand as a preferred contractor, with a reputation for quality, cost efficiency, and safety over its 100-year history. However, every company claims to have a good brand, but the true test of any brand is its customer base. Willbros has long-standing customer relationships with integrated majors, large independents, utilities and energy companies, natural gas transportation companies, and Canadian oil sands operators, with some of its relationships spanning more than 50 years.

In addition to the diversity of the customer base and the duration of customer relationships, the quality of customers is also critical. Willbros Group Inc (NYSE:WG) is five years into a 10-year alliance agreement with Oncor, initiated in August 2008, making Willbros the ‘go-to-guy’ for most of Oncor’s transmission and distribution maintenance, and construction services. Oncor is a regulated electric distribution and transmission business that operates the largest distribution and transmission system in Texas, and accounted for 15% of Willbros’ revenue in fiscal 2012.