The companies didn't say how much KBR's contract was worth, but D.A. Davidson said in a research note that the estimated cost of the project is $20 billion, and KBR's management portion could be worth several hundred million dollars.
"Additionally, KBR could also benefit from additional scope as the project develops," Davidson said in its note. The firm raised its price target for KBR from $38 to $42 per share.
That news came a few days after KBR said it received a $2.8 billion contract for construction of an Algerian liquefied natural gas, or LNG, project.
Lehman Brothers analyst Andy Kaplowitz said the LNG project is likely worth a little more than 20 cents a share to KBR from 2008 to 2010, but more importantly signals KBR "can and will likely continue to win big" LNG contracts.
Unlike oil, natural gas for decades has had the advantage of being a local energy source. But as North American supplies dwindle and demand grows, the energy industry is investing billions of dollars to ship the fuel across oceans as LNG.
The Algerian job "is essentially a game-changing win for the company, in our view," Kaplowitz said in a research note.
Goldman Sachs analyst Albert Kabili noted the contract eases concern about KBR's lack of recent major wins for LNG projects.
On the military side of the business, the U.S. Navy on Wednesday awarded KBR an $8.5 million contract boost for additional services for personnel at two Iraqi oil platforms. The company will perform the work in waters off the coast of Iraq through November 2007.
Already last month, KBR was one of three companies awarded respective $5 billion contracts from the Army to provide food and shelter to U.S. troops in Iraq, Afghanistan and Kuwait.
KBR had been the prime contractor on the deal since December 2001 -- a source of controversy for it and for former parent Halliburton, which was once headed by Vice President Dick Cheney.
Some members of Congress have repeatedly alleged KBR has abused terms of its service contract and defrauded the government. The allegations against KBR include billing the government for undelivered meals, overstating labor costs and using government funds to buy unneeded vehicles. KBR has said it routinely provides information requested by the federal government.
KBR made $6.5 billion in revenue from defense-related operations in 2006, according to a filing last month with the U.S. Securities and Exchange Commission.
Chairman and Chief Executive Bill Utt has said he's optimistic about KBR's prospects following the split with its parent of 44 years.
Both companies welcomed the separation. Utt has said KBR now can devote its full attention to engineering, construction and services work for industrial, government and military customers, while Halliburton concentrates on its profitable oilfield services operations.
KBR is scheduled to report second-quarter earnings Aug. 2.