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Monadelphous share price could climb on new contracts update

The Monadelphous Group Limited (ASX: MND) share price is on watch this morning after a pre-market update announcing the engineering company has secured $150 million of new construction and maintenance work.

What did Monadelphous announce this morning?

Monadelphous announced it has secured new construction and maintenance work in the resources and energy sectors with a combined value of approximately $150 million.

According to this morning’s release, Monadelphous has been awarded a contract with Origin Energy Ltd (ASX: ORG) for the construction of the Talinga Orana Gas Gathering Station, located near Chinchilla, Queensland.

The contract – which includes fabrication, pre-assembly and site construction of two gas compression trains and supporting utilities and infrastructure – is expected to be completed by March 2020.

Monadelphous said it has also secured an order under an existing panel contract with the BHP Mitsubishi Alliance to perform major shutdown works at the Hay Point Coal Terminal in Mackay, Queensland, following successful completion of a similar shutdown earlier in the year.

In Western Australia, Monadelphous said it has been awarded a new 3-year contract for the supply of shutdown and mechanical services at South32‘s Worsley Alumina Refinery in Collie.

According to the pre-market update, Monadelphous has also secured two new contracts with Rio Tinto Ltd (ASX: RIO) including a 3-year contract to provide rope access and tank inspection services at its Yarwun alumina refinery near Gladstone, Queensland and a contract for the refurbishment of the high-grade iron ore screenhouse at the Tom Price mine, Western Australia.

Monadelphous Managing Director Rob Velletri said: “We are pleased to have been awarded new contracts with a number of our existing customers, highlighting the strength of our relationships and our leading reputation for quality delivery.”

How has the Monadelphous share price performed this year?

The Monadelphous share price has quietly surged higher in 2019, climbing 34% since the start of January.

While the $1.74 billion engineering company has been a strong performer on the ASX, fellow engineering groups Seven Holdings Ltd (ASX: SVW) and Emeco Holdings Ltd (ASX: EHL) have also surged higher as the construction sector has boomed.

With today’s announcement of more contracts, particularly with the likes of Rio Tinto and Origin, I’d expect to see the Monadelphous share price climb higher in early trade with hopes of further revenue and operational expansion.

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Motley Fool contributor Kenneth Hall 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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