* Contract reported to be worth 312 million euros
* "La Ville Nouvelle de Hassi Messaoud" to house 80,000
* Analyst says news should be positive for SNC's stock
TORONTO, July 9 (Reuters) - Canada's biggest engineering
company, SNC-Lavalin Group Inc
The contract could be worth as much as 312 million euros ($440 million), according to an Algerian media report.
A company spokeswoman said SNC would not confirm the amount of the contract until it was signed, which should happen within a few weeks. She said the information in the Algerian media report seemed to be correct. (See http://tsa-algerie.com/SNC-Lavalin-remporte-un-contrat-de-312-millions-d-euros-en-A_7406.html)
"La Ville Nouvelle de Hassi Messaoud" is expected to be constructed over 96 months at a cost of $6 billion, according to the media report. It will comprise an area of 4,483 hectares and will be a hub for oil companies operating at nearby oil fields, the report said.
The existing town of Hassi Messaoud, which means "blessed well" in Arabic, is in east-central Algeria and adjacent to a major oil field of the same name.
Desjardins Securities analyst Pierre Lacroix said in a note to clients that the project would likely be one of the largest service contracts in SNC's history.
"The implication for SNC is significant as this contract is equivalent to about one-third of the current services backlog (C$1.5 billion [$1.3 billion] at the end of March 2009), and a typical gross margin for this type of contract is 25 percent to 30 percent," he said.
Lacroix said the market has likely not priced the contract into SNC's stock. "We therefore expect the stock to react positively to this news."
SNC's stock closed down 49 Canadian cents, or 1.2 percent, at C$41.00 on the Toronto Stock Exchange on Thursday.
(1 euro =$1.40)
($1=$1.16 Canadian) (Reporting by John McCrank; editing by Peter Galloway)