TIDMPFC
RNS Number : 2222J
Petrofac Limited
27 June 2017
27 June 2017
PETROFAC LIMITED
TRADING UPDATE
Petrofac issues the following pre-close trading update ahead of
the announcement of its half year results for the six months ending
30 June 2017 on 30 August 2017.
-- Underlying net profit(1) for the first half of 2017 is
expected to be US$135 million to US$145 million; full year net
profit is expected to be weighted to the second half of the
year
-- New order intake of US$1.7 billion in the year to date
-- Backlog of US$13.0 billion at 31 May 2017
-- Net debt is forecast to be around US$1.1 billion at 30 June 2017 in line with expectations
Ayman Asfari, Petrofac's Group Chief Executive, commented:
"We have made a positive start to the year, driven by good
project execution and financial discipline.
"Our core business continues to trade in line with expectations
and we remain competitive, securing new contract awards in both our
E&C and EPS divisions throughout the last six months. The high
level of tendering activity is evidence of greater confidence in
our core markets and we continue to have a very good pipeline of
bidding opportunities. In IES, performance in the first half of
2017 has been impacted by lower realised oil prices, lower capital
investment in Mexico and our delayed entry onto the Greater Stella
Area development licence.
"Our clear strategy - focused on best in class execution,
maintaining our cost-competitiveness to secure new awards and
reducing capital intensity - positions us well for the remainder of
the year."
Rijnhard van Tets, Petrofac's Chairman, commented:
"Everyone within Petrofac is completely focused on delivering
operational excellence for our clients and winning new contracts.
In addition, we are committed to maintaining our strong balance
sheet and reducing net debt. The Board has great confidence in
Petrofac's ability to continue to deliver, and is fully supportive
of the work being done to serve our clients and deliver our
strategy.
"An independent committee of the Board will continue to engage
with the SFO and its investigation."
Engineering & Construction
We have delivered good progress on our portfolio of lump-sum
engineering and construction projects during the first half of the
year, including substantially completing the Sohar Refinery
Improvement Project and Khazzan central processing facility in
Oman. Petrofac has secured new project awards since bidding
activity picked up in late 2016, including the GC-32 project in
Kuwait for US$1.3 billion in March. We continue to see a high level
of tendering activity in our core markets.
Engineering & Production Services
Our reimbursable business continues to perform in line with
expectations. We have secured awards and extensions with new and
existing clients worth approximately US$0.3 billion year to date
predominantly in the UK, Iraq and Kuwait. In addition, we recently
secured a 10-year framework agreement with Petroleum Development
Oman for the provision of Engineering, Procurement and Construction
Management (EPCm) support services for major oil and gas projects,
which will further increase backlog as projects are sanctioned.
Integrated Energy Services (IES)
The Greater Stella Area (GSA) development commenced production
in February, although the ramp-up in production and our formal
entry onto the licence has been slower than expected. The Chergui
gas plant in Tunisia has recently recommenced production after an
extensive shut-in due to civil unrest. Lower investment in our
Mexican Production Enhancement Contracts (PECs) has also impacted
underlying performance. Production in Malaysia (PM304) has been in
line with expectations.
Looking forward, IES' full year EBITDA is now expected to be in
the range c.US$80 million to US$100 million, principally reflecting
lower current forward curve oil prices(2) , a lower contribution
from GSA and lower investment in Mexico. Migration of the first of
our Mexican PECs to a production sharing contract is expected in
the second half of the year.
Financial position
Group backlog stood at US$13.0 billion at 31 May 2017:
31 May 2017 31 December
2016
US$ billion US$ billion
Engineering & Construction 7.6 8.2
Engineering & Production Services 2.9 3.5
Integrated Energy Services 2.5 2.6
Group 13.0 14.3
Net debt is expected to be around US$1.1 billion at 30 June
2017, reflecting working capital movements and payment of the 2016
final dividend. Net debt is expected to reduce during the second
half of the year.
Notes
(1) Underlying business performance profit for the year
attributable to Petrofac Limited shareholders before exceptional
items and certain re-measurements.
(2) IES full year EBITDA guidance of US$140 million to US$160
million on 22 February 2017 was based on the then prevailing
forward curve, which averaged US$56, with a US$1 increase/decrease
in the price of oil decreasing/increasing IES' EBITDA by
approximately US$4 million.
Conference call
Alastair Cochran, Chief Financial Officer, will host a
conference call for analysts and investors at 8am today.
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 Edwards, Investor Relations Manager
Alison Flynn, Group Head of Communications +44 (0) 207 811 4913
Tulchan Communications Group LLP +44 (0) 207 353 4200
Martin Robinson
petrofac@tulchangroup.com
LEI 2138004624W8CKCSJ177
Notes to Editors
Petrofac
Petrofac is a leading international service provider to the oil
& gas production and processing industry, with a diverse client
portfolio including many of the world's leading integrated,
independent and national oil & gas companies. Petrofac is
quoted on the London Stock Exchange (symbol: PFC).
Petrofac designs and builds oil & 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 & 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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