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Honeywell to Supply Cryogenic Gas Processing Plant to EagleClaw

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Honeywell’s UOP to be used by EagleClaw

On November 20, 2017, Honeywell (HON) announced that it has entered an agreement with EagleClaw Midstream to supply a cryogenic gas processing plant. EagleClaw’s facility in the Permian Basin in Reeves County, Texas, will use UOP Russell to process 200 million standard cubic feet per day of natural gas. UOP Russell was fully acquired by HON.

Craig Ranta, business director of UOP Russell, said, “EagleClaw has chosen to go with UOP Russell for its last three plants — totaling 600 million cubic feet per day — due to excellent project execution and service offerings, and the advantages of integrating EagleClaw’s existing fleet of UOP Russell plants. We’re delivering a customized plant to match the rich feed gas composition in the basin, while the high NGL recovery makes EagleClaw more competitive capturing contracts from producers.”

UOP is part of HON’s Performance Materials and Technologies segment. In 3Q17, the UOP business rose 25% on a year-over-year and is looking strong with new contracts. The segment reported revenue of $2.3 billion for the quarter, representing a decline of 3% on a year-over-year basis.

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Update on HON’s stock performance

HON stock remained positive with a gain of 2.2% and closed at $149.66. HON is trading 3.7% above the 100-day moving average price of $144.30, indicating an upward trend in the stock. On a year-to-date basis, the stock has returned 28.8%. The consensus 12-month target price is $154.10, implying a return potential of 2.9% over the closing price as of November 24, 2017. However, investors need to be cautious, as its 14-day relative strength index is at 69, which indicates that the stock is inching towards “overbought” territory temporarily and could see some selling pressure in the near term.

Investors can indirectly hold HON by investing in the PowerShares Aerospace & Defense Portfolio (PPA), which invests 7.1% of its holdings in Honeywell. The other holdings of the fund include Boeing (BA), Lockheed Martin (LMT), and United Technologies (UTX), which have weights of 7.0%, 6.9%, and 6.8%, respectively, as of November 24, 2017.

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