We own Worley in our direct equity portfolios. The stock is, to our mind, cheap…

With reasonably modest hurdles for sales and earnings growth…

…generating bottom of the cycle returns.

And gives us a partial oil exposure (as part of a portfolio approach, we also have a sizeable position in WPL, ORG, AZJ and MND).

In turn, that’s been part of the overhang on the stock, with WOR lumped in with all the other oil and gas exposures, suffering from a mix of ESG aversion and the expectation that demand for WOR’s core competencies (hydrocarbon based engineering) will eventual decline to zero.

We see things a little differently. A sizeable chunk of the factored sales pipeline is in renewables, or low emissions, based.

And the announcement today seemed to help (re)-cement the idea that WOR is part of the transition solution. There’s enough legacy fossil fuel based work to see WOR through, which underpins the thesis and combines favourably with the very cheap valuation.

However, the reason for yesterday’s pop seems better attributable (although the announcement timeline doesn’t align!) to RIO’s capex plans, outlined aftermarket.


The gradual ramp up of capex, and the acknowledged underinvestment, general speaking, across much of the resources space, whether it’s iron ore, or otherwise, is good for WOR.

It’s also good for Mono’s (MND, Monadelphous) too.

Signs of life for long suffering contractors.

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