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Interim Management and AGM Statement
11 May, 2012
Petrofac, the international oil & gas facilities service provider, is publishing its Interim Management Statement for the period from 1 January 2012 to 11 May 2012, as required by the UK Listing Authority’s Disclosure and Transparency Rules, ahead of its Annual General Meeting today.
• Continuing operations performing in-line with expectations
• Expect to deliver net profit growth in 2012 of at least 15%
• Group backlog of US$9.6 billion at 30 April 2012 (31 December 2011: US$10.8 billion)
• Net cash balances of US$1.0 billion at 30 April 2012 (31 December 2011: US$1.5 billion)
Ayman Asfari, group chief executive, commented:
“We have started the year well and are making good operational progress across our portfolio of projects. We continue to bid actively in our core markets and believe that our differentiated and competitive offering positions us well to capitalise on the large number of opportunities we see.
“We remain confident that we will deliver net profit growth in 2012 of at least 15%, in line with our previous guidance, and remain on course to achieve our medium-term target of more than doubling our recurring 2010 Group earnings by 2015.”
Engineering, Construction, Operations & Maintenance (ECOM)
Onshore Engineering & Construction
We continue to make good progress across our portfolio of projects, including our major projects in Abu Dhabi, Algeria and Turkmenistan. We continue to see a strong pipeline of bidding opportunities for 2012 and beyond, and are making good progress on a number of opportunities in our core markets in the Middle East, North Africa and the Commonwealth of Independent States (CIS). In the year to date, we have been awarded the Badra project for Gazprom worth US$330 million in Iraq.
Offshore Projects & Operations
Offshore Projects & Operations activity remains at high levels for both long-term operations support contracts and offshore capital projects. We have secured a further capital project to undertake modification and upgrade works to the FPF5 mobile operating production unit (formerly the Ocean Legend) ahead of its deployment on the West Desaru fault block, the third phase of development on Block PM304, offshore Peninsular Malaysia. Following the approval of the Field Development Programme (FDP) for the Stella and Harrier fields in the North Sea, Offshore Projects & Operations will commence modification and upgrade works on the FPF1 floating production facility. We continue to bid actively on both operations support contracts and offshore capital projects in the UK/Europe, the Middle East and North Africa, the CIS and the Asia Pacific regions.
Engineering & Consulting Services
Engineering & Consulting Services continues to support front end engineering and design (FEED) work and early engineering on projects across the Group. As announced in February, we acquired KW Limited, a high-end subsea pipeline consulting and engineering services business which complements the existing skills in Engineering & Consulting Services and will enable us to develop our leading engineering proposition offshore.
Integrated Energy Services (IES)
We continue to make good progress with our IES strategy in the year to date, including the signing of a co-operation agreement with Schlumberger in January. The agreement will allow us to pursue larger projects and develop at a faster pace in the production enhancement market and we have shortlisted a number of opportunities to pursue jointly.
On Block PM304, we received FDP approval to develop the West Desaru fault block, on which first oil is expected in late 2012. On the Greater Stella Area development, the partners received FDP approval from the UK government in April for the development of the Stella and Harrier fields.
On the Berantai Risk Service Contract for PETRONAS in Malaysia, the drilling programme is progressing well. The modification and upgrade of the FPSO Berantai is due to be completed this quarter, and we expect to achieve first gas from the field in Q3 2012. On the Ticleni Production Enhancement Contract for Petrom in Romania, we are progressing key work items for the boosting of production including the continuation of the workover programme, a subsurface data gathering programme, a two rig drilling program, which is due to commence in 2H 2012, and the ongoing waterflood programme. Earlier this year, we successfully completed the transition and assumed operational responsibility for the Magallanes and Santuario blocks in Mexico. We have made a good start on the two 25-year Production Enhancement Contracts and have three drilling rigs currently commencing operations on the blocks. In Nigeria, we continue to make good progress in our strategic relationship with Seven Energy, and 100% of our warrants have now vested after reaching agreed operational milestones.
Supporting the development of local workforces remains a core part of our strategy as evidenced by our award in January of a five-year contract to run Saudi Petroleum Services Polytechnic’s Centre for Construction Skills and Drilling training. We received our first intake of students in April, which include local workers for Aramco along with staff from its contractor base.
The group’s backlog at the end of April 2012 stood at US$9.6 billion (31 December 2011: US$10.8 billion), comprising US$7.9 billion from ECOM (31 December 2011: US$9.2 billion) and US$1.7 billion from IES (31 December 2011: US$1.6 billion). Net cash balances were lower at the end of April 2012 at US$1.0 billion (31 December 2011: US$1.5 billion).