Worley Parsons (WOR)

By Jason Fittler

Worley Parsons (WOR) is a global provider of professional services to oil & gas, power, resources, infrastructure and environment industries.

Services include; feasibility studies, design, project services, upgrade and maintenance services. This diversification has allowed WOR to consistently grow revenue, despite operating indirect exposure to resource and energy prices.

WOR has a primary focus on LNG and unconventional oil and gas. This should allow them to benefit from the growth of unconventional oil and gas developments; oils and sands in Canada, and Coal seam gas in Australia.

A downturn in the resources sector and or oil and gas prices would reduce revenues; diversification and adaptability should limit this risk.

Debt levels are relatively low, with a net debt/equity ratio of 24.72%.

Many clients are sticky because of long contracts and WOR employees becoming embedded in client processes.

While the engineering sector is very competitive, the size of WOR means few firms can compete with the scope of different activities performed by WOR. Involvement in pre-project feasibility studies also increases chances of project execution contracts.

Consensus Earnings Per Share (EPS) are expected to rise 14.4% to 1.59/share, higher than historical EPS growth of 7%p.a.

Dividends yield is also forecast to rise to approximately 4.20%p.a.

Worley Parsons appears a well-run company positioned to take advantage of future growth in the unconventional oil and gas sector - BUY under $23.50

For more information on Worley Parsons (WOR) please contact us on 07 4771 4577.