TIDMPFC
RNS Number : 4899X
Petrofac Limited
22 February 2017
PETROFAC LIMITED
FINAL RESULTS FOR THE YEARED 31 DECEMBER 2016
-- Good operational performance across all our businesses
-- Underlying net profit of US$421 million(1)
o Group (excluding IES) net profit US$463 million(1)
o IES net loss of US$42 million
-- Reported net profit includes post-tax impairments and exceptionals of US$319 million
-- New order intake of US$1.9 billion; backlog of US$14.3
billion gives excellent visibility for 2017
-- Exited Ticleni PEC and Berantai RSC, releasing c.US$300 million in proceeds
-- Net debt down 10% to US$617 million, reflecting strong cash generation and capex rephasing
-- Full year dividend maintained at 65.80 cents per share
Year ended 31 December Year ended 31 December
2016 2015
--------------------------- ---------------------------------------- ----------------------------------------
US$ millions Exceptional Exceptional
items items
Business and certain Business and certain
performance re-measurements Total performance re-measurements Total
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
Revenue 7,873 - 7,873 6,844 - 6,844
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
EBITDA before losses
on Laggan-Tormore
project 805 n/a n/a 792 n/a n/a
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
EBITDA 704 n/a n/a 312 n/a n/a
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
Net profit before
losses on Laggan-Tormore
project 421 n/a n/a 440 n/a n/a
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
Net profit/(loss) 320 (319) 1 9 (358) (349)
--------------------------- ------------- ----------------- ------ ------------- ----------------- ------
Ayman Asfari, Petrofac's Group Chief Executive, commented:
"Petrofac has delivered positive results for 2016, driven by
record revenues, significant cost reduction and strong cash
generation. In a busy year, the Group has also demonstrated its
track record for operational delivery with more than 240 million
man-hours worked across the portfolio.
"Whilst the market remains competitive, bidding activity has
increased in recent months. We have right-sized our business, have
a good pipeline of opportunities across our core markets and remain
cost competitive, as evidenced by recent bidding success.
"Petrofac remains firmly focused on its core strengths,
committed to reducing capital intensity and maintaining a strong
balance sheet. Operational excellence and excellent revenue
visibility position us well in 2017 and for a recovery in our core
markets."
DIVISIONAL HIGHLIGHTS
Engineering & Construction (E&C)
Delivered record revenues and significantly reduced costs in
challenging markets:
-- New order intake of US$0.6 billion, comprising the award of Salalah LPG project in Oman
-- Good progress across the portfolio, with more than 200
million man hours worked on 20 projects, including:
o Completed and handed over the Laggan-Tormore project in UK
o Delivered 145 modules (of 181 modules being fabricated in 18
yards worldwide) to the Upper Zakum site in Abu Dhabi
o Substantially completed the Sohar Refinery Improvement and
Khazzan projects in Oman
o Good progress on Lower Fars heavy oil and KNPC Clean Fuels
projects in Kuwait
-- Underlying net margin of 7.0%, reflecting the impact of
project phasing and mix, and commercial settlements in tighter
market conditions, partially offset by operational efficiency and
overhead savings
Engineering & Production Services (EPS)
Continued growth in our reimbursable business:
-- US$1.3 billion of new contracts and extensions across EPS' global operations, including:
o Duty Holder contract from BP to support late life management
of Miller platform, in UK North Sea, in preparation for the next
phase of its decommissioning programme
o 5-year Service Operator contract in North Sea for Anasuria
Operating Company Limited and appointed Well Operator for Hurricane
Energy to support its assets West of Shetland
o Two major projects with Repsol Sinopec for the provision of
engineering support services
o US$75m contract from SOC for Crude Oil Export Expansion
Project to provide maintenance management services and training
services in support of IOCs in Iraq
-- Net margin of 6.4%, reflecting business mix and performance,
including the phasing of EPCm projects, as well as reductions in
overhead costs
Integrated Energy Services (IES)
Solid operational performance, ahead of guidance:
-- Lower production, down 13% to 20.9 mmboe (gross), and a change in production mix
o High uptime on Block PM304 in Malaysia, with production up
13%
o Chergui gas plant in Tunisia shut-in for majority of year as a
result of civil unrest
o Exited Ticleni PEC in August 2016 and Berantai RSC in
September 2016
-- Lower average oil price of US$44/bbl (2015: US$52/bbl)
-- Higher depreciation charge in Mexico, reflecting policy
change (post-tax impact US$18 million)
-- Reductions in operating costs, overheads and taxation
Made good progress with key business priorities:
-- Successful start-up of production from Greater Stella Area
development, with first hydrocarbons introduced in mid February
2017
-- Continue to progress migration of PECs in Mexico to PSCs
Cost savings and headcount
-- Right-sized business with headcount reduction of 29% to
around 13,500 employees and delivered c.US$120 million of
annualised savings
Exceptionals and certain re-measurements
Reported net profit was impacted by US$319 million of
exceptional items and certain re-measurments (see note 5 to the
attached financial statements), of which US$298 million are
non-cash items:
-- US$245 million of non-cash impairments of IES assets,
principally reflecting a full provision against the carrying value
of the Group's investment in Seven Energy, as well as our exit from
the Berantai RSC contract
-- Other exceptional items of US$74 million
IES's net book value was US$1.2 billion as at 31 December 2016
post impairments and asset disposals (2015: US$1.7 billion).
OUTLOOK
We are making good progress delivering our strategy of focusing
on core strengths and reducing capital intensity. Our relentless
focus on costs has delivered significant savings, whilst protecting
our core capabilities. We will continue to focus on operational
excellence to protect margins and reinforce our competitive
position.
IES is expected to deliver EBITDA in 2017 in the range c.US$140
million to US$160 million(2) based on the current Brent oil price
forward curve. We continue to progress discussions to migrate our
PECs in Mexico to PSCs.
We remain focused on cash generation, reducing capital intensity
and maintaining a strong balance sheet. Group capital expenditure
is expected to be in the range US$300 million to US$350 million in
2017, including the costs to complete the commissioning of the
Greater Stella Area development.
Our backlog provides excellent revenue visibility for 2017,
bidding activity has increased and we have a good pipeline of
bidding opportunities.
DIVID
The Board is proposing a final year dividend of 43.80 cents per
share for the year ended 31 December 2016 (2015: 43.80 cents).
Together with the interim dividend of 22.00 cents per share (2015:
22.0 cents), this gives a total dividend for the year of 65.80
cents per share (2015: 65.80 cents), in line with the prior year.
The total dividend for the year is well covered by free cash
flow.
NOTES
(1) Underlying Business Performance before recognition of the
final charge on the Laggan-Tormore project.
(2) A US$1 increase/decrease in the price of oil will
increase/decrease IES' EBITDA by approximately US$4 million.
ANALYST PRESENTATION
Our full year results presentation for analysts and investors
will be held at 9.30am today, which will be webcast live via:
http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16532/69004/Lobby/default.htm
Ends
Disclaimer:
This announcement contains forward-looking statements relating
to the business, financial performance and results of Petrofac and
the industry in which Petrofac operates. These statements may be
identified by words such as "expect", "believe", "estimate",
"plan", "target", or "forecast" and similar expressions, or by
their context. These statements are made on the basis of current
knowledge and assumptions and involve risks and uncertainties.
Various factors could cause actual future results, performance or
events to differ materially from those described in these
statements and neither Petrofac nor any other person accepts any
responsibility for the accuracy of the opinions expressed in this
presentation or the underlying assumptions. No obligation is
assumed to update any forward-looking statements.
For further information contact:
Petrofac Limited
+44 (0) 207 811 4900
Jonathan Low, Head of Investor Relations
jonathan.low@petrofac.com
Jonathan Edwards, Investor Relations Manager
jonathan.edwards@petrofac.com
Alison Flynn, Group Head of Communications
alison.flynn@petrofac.com
+44 (0) 207 811 4913
Tulchan Communications Group
+44 (0) 207 353 4200
petrofac@tulchangroup.com
Martin Robinson
Stephen Malthouse
NOTES TO EDITORS
Petrofac
Petrofac is a leading international service provider to the oil
and gas production and processing industry, with a diverse client
portfolio including many of the world's leading integrated,
independent and national oil and gas companies. Petrofac is quoted
on the London Stock Exchange (symbol: PFC).
Petrofac designs and builds oil and gas facilities; operates,
maintains and manages facilities and trains personnel; enhances
production; and, where it can leverage its service capability,
develops and co-invests in upstream and infrastructure projects.
Petrofac's range of services meets its clients' needs across the
full life cycle of oil and gas assets.
With around 13,500 employees, Petrofac operates out of seven
strategically located operational centres, in Aberdeen, Sharjah,
Abu Dhabi, Woking, Chennai, Mumbai and Kuala Lumpur and has a
further 24 offices worldwide.
For additional information, please refer to the Petrofac website
at www.petrofac.com.
LEI number: 2138004624W8CKCSJ177
Segmental performance and Financial review
Click on, or paste the following link into your web browser, to
view our Segmental performance and Financial review for the year
ended 31 December 2016 -
http://www.rns-pdf.londonstockexchange.com/rns/4899X_2-2017-2-21.pdf.
Group financial statements
Click on, or paste the following link into your web browser, to
view the Group financial statements of Petrofac Limited for the
year ended 31 December 2016 -
http://www.rns-pdf.londonstockexchange.com/rns/4899X_1-2017-2-21.pdf.
The attached documents are extracts from the Group's Annual
Report and Accounts for the year ended 31 December 2016. Page
number references refer to the full Annual Report when
available.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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