TIDMPFC
RNS Number : 8939Q
Petrofac Limited
23 June 2015
Press Release
23 June 2015
PETROFAC LIMITED
TRADING UPDATE
Petrofac issues the following pre-close trading update ahead of
the announcement of its interim results for the six months ending
30 June 2015 on 25 August 2015.
-- Construction activities on the Laggan-Tormore project are
substantially complete; we are now busy with final completion and
pre-commissioning-related activitiesand our focus remains on
delivering first gas in Q3 2015; additional completion and
pre-commissioning works are expected to lead to incremental pre-tax
costs of approximately GBP30m; deferred tax asset recognised in
respect of tax losses on the project of approximately GBP20m
-- The rest of our portfolio continues to perform in line with
our operational and financial expectations(1)
-- Net profit(2) expected to be significantly weighted towards
2H 2015, reflecting phasing of project delivery, particularly in
OEC, where a number of projects are expected to reach their
percentage of completion threshold for initial profit recognition
in 2H 2015
-- ECOM order intake of US$4.7bn in the year to date, including
the US$900m Yibal Khuff award in June 2015; Group backlog stood at
record levels of US$20.5bn at 31 May 2015 (31 December 2014:
US$18.9bn), with ECOM backlog up 12%
-- Net debt of US$1.2bn at 31 May 2015 (31 December 2014:
US$0.7bn), primarily reflecting ongoing investment in IES's Greater
Stella Area project and our offshore installation vessel, payment
of the 2014 final dividend and incremental costs on
Laggan-Tormore
Ayman Asfari, Petrofac's Group Chief Executive,commented:
"We have had a good start to the year in ECOM, securing more
than US$4.7 billion of order intake and, putting the challenges we
have faced on Laggan-Tormore to one side, the rest of our portfolio
continues to perform well. The Group's backlog stands at record
levels, giving us excellent revenue visibility for the rest of this
year and beyond. Our pipeline of bidding opportunities remains
attractive, and ongoing investment by our clients in large
strategic projects in our core markets, together with our strong
competitive position, should see us secure a number of further
awards over the second half of the year.
"In Integrated Energy Services, our focus remains on generating
value from the existing project portfolio and reducing the capital
intensity of this business."
Engineering, Construction, Operations & Maintenance
(ECOM)
Onshore Engineering & Construction (OEC)
Construction activities on the Laggan-Tormore gas plant project
are substantially complete, with planned welding activities more
than 99% complete and more than 99% of electrical, instrumentation
and telecommunications (EIT) cabling laid. However, direct
construction manhours are higher than previously expected due to
additional completion and pre-commissioning-related activities. The
costs of the additional direct construction manhours, along with
the associated indirect, subcontractor and material costs, are
expected to result in incremental costs to complete of
approximately GBP30 million.
Together with the incremental costs announced in April 2015 of
around GBP130 million, and the recognition of a deferred tax asset
in respect of tax losses on the project of approximately GBP20
million, this brings the loss in the year to date to around GBP140
million (around US$220 million). These additional costs reflect our
continuing firm intention to devote the necessary resources to the
project. We have a good working relationship with our client and
look forward to finalising the outstanding commercial, technical
and contractual issues with the client on or around completion in
Q3 2015.
Our remaining operational focus is on the final completion and
pre-commissioning-related activities such as piping system testing,
EIT terminations and the close-out of punch-list items to enable
the delivery of first gas from theplant in Q3 2015.
We continue to make good progress across the rest of our
portfolio of engineering, procurement and construction (EPC)
projects. We have started the year positively by securing new
business, with around US$3 billion of order intake in the year to
date, including the Lower Fars heavy oil project in Kuwait. Our
backlog stands at record levels, which gives us excellent revenue
visibility for 2015 and beyond. Our pipeline of bidding
opportunities remains attractive, and we see continued ongoing
investment by our clients in our core markets. Given our strong
competitive position, we are confident of securing further Onshore
Engineering & Construction awards during the remainder of the
year.
Offshore Projects & Operations (OPO)
In early June, we announced that we had secured a Duty Holder
Support Services contract to support Oranje-Nassau Energie (ONE),
as the company has become operator of the Sean gas field in the
Southern North Sea. The contract is worth US$45 million over three
years, with the option of two one-year extensions.
We also recently announced that we have secured a number of
contract extensions in the year to date totalling approximately
US$400 million. The largest of these awards is for the provision of
operations and maintenance teams for CNR International across its
North Sea assets - the three platforms in the Ninian complex;
Murchison; and Tiffany - for the next five years. In addition, in
the East Irish Sea, we secured a two-year contract renewal from
Eni, covering operations and maintenance services for the Douglas
fixed platforms, Offshore Storage Installation and Point of Ayr
terminal; and Duty Holder responsibility for the Irish Sea Pioneer
operations support vessel.
In light of the current low oil price environment, we continue
to work with our clients to address the cost pressures being
experienced in the UK North Sea and generate value for them while
protecting our margins.
Engineering & Consulting Services (ECS)
In June, Engineering & Consulting Services was awarded a
four and a half year engineering, procurement and construction
management contract (EPCm) for Petroleum Development Oman (PDO) to
provide services for its Yibal Khuff project in Oman. The total
contract value is expected to be around US$900 million with around
one quarter of the revenues relating to professional services
(engineering, construction and commissioning management).
Integrated Energy Services (IES)
Equity Upstream Investments
We are making continued progress on the Greater Stella Area
development in the UK North Sea, with first production still
expected mid-2016. Through Offshore Projects & Operations, work
is ongoing on the FPF1 floating production facility, with sailaway
of the FPF1 scheduled for the first quarter of 2016. On Block PM304
in Malaysia, production levels continue to ramp up as we drill and
tie back further wells on the field. Year to date production from
the Chergui gas concession in Tunisia is below expectations due to
periods of civil unrest during March and April, but production in
May has returned to full capacity.
Production Enhancement Contracts
As part of the ongoing energy reforms in Mexico, we have the
opportunity to migrate our portfolio of Mexican Production
Enhancement Contracts (PECs) to a new form of contract. We expect
to be in a position to provide a further update later in the year.
As noted at our full year results, we are in the process of exiting
our position on the Ticleni field in Romania.
Risk Service Contracts
The Berantai risk service contract continues to operate in line
with expectations.
Financial position
Group backlog stood at US$20.5 billion at 31 May 2015 (31
December 2014: US$18.9 billion):
31 May 31 December
2015 2014
US$ billion US$ billion
Onshore Engineering & Construction 12.5 10.8
Offshore Projects & Operations 3.5 3.4
Engineering & Consulting Services 1.4 1.4
ECOM 17.4 15.6
Integrated Energy Services 3.1 3.3
Group 20.5 18.9
Net debt was US$1.2 billion at 31 May 2015 (31 December 2014:
US$0.7 billion), primarily reflecting ongoing investment in IES's
Greater Stella Area project and our offshore installation vessel,
the Petrofac JSD 6000, payment of the 2014 final dividend and
incremental costs on Laggan-Tormore.
Notes
(1) On 25 February 2015, we noted that based on an average oil
price of around US$60 per barrel in 2015 (which is likely to be
around the actual average oil price based on actual prices in the
year to date, the forward curve and our hedged positions for the
remainder of 2015), our net earnings were expected to be around
US$460 million. After the loss in the year to date on the
Laggan-Tormore project of around US$220 million, the Group's net
profit before exceptional items and certain re-measurements for
2015 is expected to be around US$240 million.
(2) Before recognition of the year to date loss on
Laggan-Tormore.
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 Officer
Alison Flynn, Head of Media Relations +44 (0) 207 811 4913
Tulchan Communications Group Ltd +44 (0) 207 353 4200
Stephen Malthouse
Martin Robinson
petrofac@tulchangroup.com
Notes to Editors
Petrofac
Petrofac is a leading international service provider to the oil
& gas production and processing industry, with a diverse
customer 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 customers' needs across the
full life cycle of oil & gas assets.
With more than 20,000 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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