The GR Engineering Services Ltd (ASX: GNG) share price has surged higher in morning trade, up 3.51% at $1.18.
This follows the company's announcement of a new Australian government contract for its wholly owned subsidiary, Upstream Production Solutions Pty Ltd (Upstream PS).
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What's driving the GR Engineering share price today?
In today's ASX release, GR Engineering reported that Upstream PS has secured a 1-year contract with the Department of Industry, Science, Energy and Resources (DISER).
In the contract, the company will provide operations, maintenance and project services to the Northern Endeavor floating production storage and offloading (FPSO) facility and its associated infrastructure.
Upstream PS has provided maintenance and operations services to the FPSO since February this year. That contract is due to expire on 31 December, in the leadup to the FPSO's disconnection and removal..
The company expects approximately $130 million in revenue from the new contract, based on the budget for core operation and maintenance services and the planned pre-disconnection project works involved.
Commenting on the new contract, GR Engineering managing director Geoff Jones said:
We are pleased to continue working with DISER and the relevant regulatory bodies to safely manage and maintain the FPSO and execute the required pre-disconnect preparation activities to support a safe removal of the FPSO in the future.
Company snapshot
GR Engineering provides process engineering design and construction services to the mining and mineral processing industry.
With projects at Dalgaranga Gold, Mt Morgan, and Nova Nickel, it has divisions in mining processing, and oil and gas. The majority of its revenue is generated from the mining processing segment.
GR Engineering shares first began trading on the ASX in April 2011. The company has a current market cap of $177 million and pays a dividend yield of 5.3%, unfranked.
About the GR Engineering share price
The company was off to a strong start in 2020, with the share price gaining 25% by 24 January. From there, shares got dragged down by the wider COVID-driven selloff, falling 34% by 23 March. Since the March low, the GR Engineering share price has surged 76%, putting its shares up 45% year-to-date.
By comparison, the broader All Ordinaries Index (ASX: XAO) is up 1.5% for the year.
