Energy Business

Fluor Adds Wind To Its Pocket (FLR, SI, RDS.A)

Fluor Corporation (NYSE:FLR) won a contract from Scottish & Southern Energy to construct a 500 MW wind farm, the world’s largest, off the coast of Suffolk in the UK. Fluor will book the $1.8 billion contract in the second quarter of 2008. On Monday, Fluor reported a 63% jump in earnings and revenue growth of 32%, boosting the stock price by nearly $25.00 yesterday. This single project is equal to nearly a third of the company’s reported new business in the first quarter of 2008. Fluor’s stock is off $1.46 in pre-open trading.  On any other day besides after a huge earnings move, this contract would have likely moved the stock differently.

The Greater Gabbard Offshore Wind Farm will generate enough electricity to power more than 415,000 homes, approximately the entire demand from Suffolk. Each of the 140 turbines will generate 3.6 MW. A division of Siemens (NYSE:SI) will supply the turbines. Construction is scheduled to begin in 2009, and the project is expected to be completed in 2011.

Earlier this month, Shell (NYSE:RDS.A) withdrew from an 1 GW wind farm project located in the Thames estuary that would have generated enough power to supply one-quarter of the homes in London. Shell’s move was interpreted as a significant blow to the British government’s eventual goal of 33 GW of offshore wind capacity, which would provide electricity to every home in the country. Today’s announcement by Fluor takes some of the sting out of that ill-wind.

Paul Ausick
May 14, 2008