Cimic Group Ltd share price up 2% on $150 million contract extension win

The Cimic Group Ltd (ASX: CIM) share price has risen by 2% on news that Cimic’s UGL has been awarded a $150 million Australian Terminal Operations Management (ATOM) Services contract extension.

UGL will continue to provide asset management and project-related services at BP fuel terminals across Australia.

Under the contract extension, UGL will provide project, engineering and maintenance services to ATOM. It will be a 50:50 joint venture between BP Australia and UGL.

The revenue generated over several years will amount to $150 million.

Cimic Group CEO, Michael Wright, said “We are proud to extend our long-standing relationship with BP and to continue to provide leading asset services to the downstream oil and gas industry.”

Cimic’s subsidiary UGL’s Managing Director, Jason Spears, said “Securing this contract extension reflects UGL’s commitment to delivering innovative and cost-effective operations and maintenance services that optimise asset utilisation and the reliability of our client’s critical assets.”

ATOM CEO Chris Gatt said “We are excited to continue our strategic partnership with UGL, a company which has successfully grown our business. Our relationship with UGL continues to be integral to delivering safe, reliable and cost-effective services to BP.”

Foolish takeaway

This is yet another piece of good news for Cimic. Its share price has risen by 21.8% over the past year, soundly beating the market. I’m not sure if it will go on to beat the market again over the next year, but contracts like this will definitely help.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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