The GR Engineering Services Ltd (ASX: GNG) share price is trading higher this afternoon, up by 7.56% to $0.92 at the time of writing. The share price gain comes on the back of GNR's announcement that its wholly owned subsidiary Upstream Production Solutions has entered into an agreement with an Australian government department.
What does GR Engineering do?
GR Engineering provides process and detailed engineering design, procurement and construction services to the mining and mineral processing industry. It also delivers operations, maintenance, projects and advisory services to the oil and gas sector. GNG has three divisions: design and construction services, consulting services, and asset management services.
GNG Engineering has a current market capitalisation of $132 million, a very high price-to-earnings (P/E) ratio of 199 and currently pays a high dividend yield of 6.1% (unfranked).
In its most recent full-year earnings results, GR Engineering reported FY19 sales revenue of $182.3 million, underlying earnings before interest, tax, depreciation and amortisation of $11.2 million and profit before tax of $8.8 million.
What did GR Engineering announce?
GR Engineering has reported that its wholly owned subsidiary Upstream Production Solutions (Upstream PS) has entered into an agreement with the Australian Government's Department of Industry, Science, Energy and Resources to provide operations and maintenance services to the Northern Endeavour floating production, storage and offtake facility.
On 14 February 2020, the department announced that urgent steps were underway to secure the continued safety and security of the Northern Endeavour FPSO after the liquidation of the Northern Oil and Gas Australia group of companies (NOGA). It also announced the establishment of the Northern Endeavour Temporary Operations Program to provide funding to support the operation and maintenance of the Northern Endeavour.
As part of the program, the department has now engaged Upstream PS to provide operations and maintenance services that will reinstate minimum manning and restore safety critical services to the Northern Endeavour. Upstream PS has safely remobilised personnel to the FPSO and is proceeding under an initial short-term contract to provide services to the department on commercial terms, in a non-production environment.
Upstream PS has been involved in operating and maintaining the Northern Endeavour for over three and a half years.
Commenting on the agreement, GR Engineering's managing director Geoff Jones said:
We are pleased that Upstream PS has been identified as the party best placed to support the Department's immediate safety and security objectives under the Northern Endeavour Temporary Operations Program. Upstream PS' involvement in operating and maintaining the Northern Endeavour for over three and a half years and at all times prior to NOGA's entry into liquidation has facilitated Upstream PS' quick response and safe re-mobilisation to the Facility.
