Lasse Petterson, CB&I chief operating officer, told Wall Street analysts on July 24 that "global market trends are positive in all our seven primary end markets."

Petterson noted, "The [liquefied natural gas] trade is projected to continue growing at a rate twice as fast as natural-gas production, but the LNG portion of gas supply is forecasted to increase approximately 20% over the next two decades."

The growth will provide new opportunities for engineer-procure-construction opportunities, Petterson added, "and we have positioned CB&I well for [these] by winning and executing six LNG liquefaction [front-end engineering and design] studies in the last year."

Russia's LNG Megaproject
CB&I completed last quarter the FEED contract for the estimated $30-billion Sabetta liquefied-natural-gas production, storage and transportation complex located on the Yamal Peninsula in Siberia for Yamal LNG, an entity that is 80% owned by Russian independent gas producer Novatek and 20% by French gas company Total.

The region is one of the world’s largest natural-gas-producing areas. The Arctic complex is envisioned as a new approach for LNG exports to China and other Asian countries.

"It was recently reported in the Russian business press that the Russian government would invest in a private-public partnership for the dredging and marine facilities at Sabetta, which is key to the Yamal LNG project," Petterson said. The firm says its FEED work will provide a base for detailed engineering, procurement and construction (EPC) as well as cost estimates and a project schedule to allow Yamal LNG to secure further investment.

The work was done with CB&I global partners Chiyoda Corp., the Japanese engineering and construction firm, Italian oil-and-gas contractor Saipem S.p.A. and a Russian design institute.

"Given the government’s significant involvement, we are optimistic the project [will] take off, given that financing had been a key issue," says analyst Cook of Credit Suisse. She added that CB&I remains bullish on LNG prospects in the U.S., Australia, western Canada and East Africa.

Petterson also forecast growth in shale-gas-driven petrochemical facility construction in the U.S. and Russia and in offshore oil-and-gas projects in Brazil, Malaysia and the North Sea.

Pipe Fabrication Market Could Surge
Bernhard told analysts on July 10 that, over the next year or two, opportunities for Shaw in pipe fabrication "are going to be very, very active, probably likely at an all-time high," particularly in petrochemical and nuclear work. He added, "The overseas market is really booming [for] our new shops in the U.A.E. and Brazil."

With delays and execution issues at its nuclear-plant sites, Shaw has struggled with profitability in recent quarters. But Bernhard said margins were likely to improve, particularly in its fabrication business. CB&I is involved in containment-vessel fabrication at the Vogtle and V.C. Summer nuclear-plant sites.

One analyst says Shaw's sale of its energy and chemicals business to Technip earlier this year—the deal is set to close by next March—made the link with CB&I "easier to consummate." Shaw also is selling its nuclear-sector investment in Westinghouse.

"I think the biggest risk to CB&I is the end-market expansion into the power sector," says Fisher. "Any time you have end-market expansion combined with fixed-price contracts, you have risk. I wouldn't be terribly surprised if CBI sold off some of the services assets—perhaps environmental and infrastructure—that were acquired in this deal."

Adds analyst Cook, "CB&I was viewed as a higher-quality, lower-risk E&C company with above-average growth prospects and inherently higher margins. We believe investor concern will remain centered on the risk associated with acquiring Shaw." She says Credit Suisse will reduce its CB&I rating to "neutral" from "outperform," "as CB&I becomes a show-me story."