TIDMPFC
RNS Number : 3011Z
Petrofac Limited
14 December 2017
14 December 2017
PETROFAC LIMITED
TRADING UPDATE
Petrofac issues the following pre-close trading update ahead of
the announcement of its full year results for the year ending 31
December 2017 on 1 March 2018.
-- Trading in line with expectations
-- US$5.2 billion in new order intake year to date
-- Net debt is forecast to be around US$850 million at 31
December 2017 in line with expectations
Ayman Asfari, Petrofac's Group Chief Executive, commented:
"Overall trading remains in line with expectations, underpinned
by high levels of project activity, good project execution and
strong financial discipline.
"We have seen a recovery in new order intake in 2017, securing
US$5.2 billion in new awards in the year to date in both existing
and new markets. Tendering activity remains high, we continue to
maintain our bidding discipline in competitive markets and we have
a healthy order backlog.
"Our portfolio is in good shape, and we remain focused on
project delivery and maintaining our cost competitiveness through
operational excellence. This - together with measures we are taking
to strengthen our balance sheet - positions us well."
Engineering & Construction
We have delivered good progress across our portfolio of lump-sum
engineering and construction projects. On our upstream projects, we
have handed over the Khazzan central processing facility in Oman.
We have also commissioned the In Salah southern fields development,
introduced gas into the Reggane North Development plant and are
ready for the introduction of gas into the Alrar gas plant, all in
Algeria. Several other projects are now in the pre-commissioning or
commissioning phase. On our downstream projects, the Sohar refinery
in Oman is in commercial operation, the Petro Rabigh and Jazan
south tank farm projects in Saudi Arabia are in the commissioning
phase, and pre-commissioning activities have started on the KNPC
Clean Fuels Project in Kuwait.
We have secured US$4.1 billion of new order intake in the year
to date and continue to see a high level of tendering activity in
our core markets.
Engineering & Production Services
Continued good performance in our international O&M
contracts and EPCm projects has largely offset lower activity,
utilisation and order intake in the UK North Sea. We have secured
awards and extensions worth approximately US$1.1 billion in the
year to date, predominantly in the UK, Iraq and Kuwait, as well as
our first project in Turkey. We have also signed a long-term
framework agreement with PDO Oman, which will add to backlog as
projects are sanctioned.
We have maintained our focus on improving operational efficiency
and utilisation, while positioning ourselves for a recovery in
market conditions and growth in new markets.
Integrated Energy Services (IES)
EBITDA for the full year is expected to be at the bottom end of
our US$80 million to US$100 million guidance range, reflecting
licence entry in September and lower production from the Greater
Stella Area development. Production on Block PM304 in Malaysia and
the Chergui gas plant in Tunisia is in line with expectations.
Investment in Mexico remains low pending migration of our
Production Enhancement Contracts. The sale of our interest in the
Pánuco Production Enhancement Contract to Schlumberger completed in
August 2017.
Financial position
Backlog(1) , excluding IES, stood at US$10.3 billion at 30
November 2017, reflecting a recovery in new order intake offset by
progress on our existing portfolio of projects:
30 November 31 December
2017 2016
US$ billion US$ billion
Engineering & Construction 7.5 8.2
Engineering & Production
Services 2.8 3.5
Total 10.3 11.7
Recent UK tax law changes(2) will result in a non-recurring
deferred tax charge being included within 2017 full year business
performance results. As previously disclosed, the tax charge for
the period would have been US$22 million higher if the new loss
relief rules had applied at 30 June 2017.
Net debt is expected to be around US$850 million at 31 December
2017, reflecting strong working capital management and financial
discipline. Group capital expenditure is expected to be lower than
previous guidance at around US$175 million.
We continue to pursue a range of measures to deliver a
sustainable reduction in net debt and strengthen our balance sheet.
These include a relentless focus on operational excellence,
reducing capital investment, rebasing our dividend and continuing
to divest non-core assets.
Notes
(1) The Group is no longer recognising backlog in respect of the
IES division (previously, backlog was recognised in relation to IES
service contracts i.e. projects where we did not have entitlement
to reserves). Backlog at 30 November 2017 includes US$1.0 billion
for Petrofac's share of the Duqm refinery project in Oman. The
project will commence upon receipt of the full notice to proceed
from the client.
(2) Changes to UK carry forward tax loss relief rules were
substantively enacted in October 2017, which will result in a
non-recurring deferred tax charge being included within 2017 full
year business performance results. As previously disclosed in the
2016 Annual Report (p144) and 30 June 2017 Half Year Report (p24),
the recognised deferred tax asset at that date would have been
US$22 million lower and the tax charge for the period would have
been US$22 million higher if the new loss relief rules had applied
at 31 December 2016 (or 30 June 2017).
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.low@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
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 13,000 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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