News

07 March 2011

Final Results for the Year Ended 31 December 2010

Download our final results for 2010 in PDF format

Petrofac Limited (Petrofac, the group or the Company), a leading international provider of facilities solutions to the oil & gas production and processing industry, today announces its final results for the year ended 31 December 2010.

FINANCIAL HIGHLIGHTS

  • Net profit(1) up 58% to US$557.8 million (2009: US$353.6 million); net profit up 26% on a like-for-like basis(2)
  • Earnings per share (diluted) up 57% to 162.46 cents (2009: 103.19 cents)
  • Revenue up 19% to US$4.4 billion (2009: US$3.7 billion)
  • Year-end backlog(3) up 45% at US$11.7 billion (2009: US$8.1 billion)
  • Final dividend 30.00 cents (18.42 pence(4)); full year dividend up 22% to 43.80 cents (2009: 35.80 cents)
  • As part of the EnQuest demerger in April 2010, distribution of one EnQuest share for every Petrofac share with a fair value of 160.08 cents per share
  • Gross cash balances at 31 December 2010 of US$1.1 billion (2009: US$1.4 billion), augmented by receipt of US$0.7 billion of cash advances in January 2011
  • Medium-term Engineering & Construction net margin guidance raised 100 bps

Commenting on the outlook, Ayman Asfari, Petrofac’s group chief executive, said: “I am delighted to present another excellent set of results. 2010 has been an exceptional year for us, with a record intake of new orders, which gives us outstanding revenue visibility and brings exciting opportunities for us to develop our capability and to deliver it into new markets.

“With this strong financial underpinning, our differentiated and competitive offering and our proven excellence in project execution, we are confident that we will continue to deliver superior value for our customers and sector-leading returns for our shareholders, with like-for-like net profit growth in 2011 of at least 15%.”

2010 OPERATIONAL HIGHLIGHTS

Engineering & Construction

  • Excellent operational performance, including the substantial completion of 5 large EPC projects
  • Order intake of US$6.0 billion, including the US$3.4 billion EPC phase of the South Yoloten project in Turkmenistan and our first major project in Iraq

Offshore Engineering & Operations

  • Awarded our first predominantly lump-sum EPC project in the UKCS, the Laggan Tormore gas processing plant for Total on Shetland, worth in excess of £500 million
  • Expanded our international operations with the award of a 5 year duty holder contract for the Government of Sharjah in the United Arab Emirates

Engineering, Training Services and Production Solutions

  • Acquired TNEI, a specialist consultancy providing services in the areas of power transmission and distribution, planning and environmental consent and energy management
  • Established new training facilities in Syria and Algeria to help develop local workforces
  • Successfully transitioned to assume full operational responsibility for the Ticleni fields in Romania under a 15 year production enhancement contract
  • Acquired a 15% equity stake in Seven Energy, a Nigerian production and development company, and entered into a strategic alliance agreement to assist in developing its assets
  • Energy Developments
  • Completed EnQuest demerger with Don investment generating an IRR from inception to demerger of approximately 35%
  • Field Development Programme approved for the second phase of the Cendor field in Malaysia
  • Secured US$800 million Risk Services Contract (Petrofac share 50%) to develop the Berantai field, offshore Malaysia
  • Acquired CO2Deepstore, a developer of CO2 storage projects, and partnering with Shell on the Goldeneye CO2 storage prospect

PROSPECTS FOR 2011

The significant political changes across the Middle East and North Africa have, to date, had a minimal impact on our day to day operations. Of the countries substantially affected, Tunisia is the only one in which Petrofac has current operations and production at our Chergui facility has returned to normal after short periods of being shut-in. Managing country risk has always been an important part of operating in the region and we continue to monitor the evolving political situation closely to ensure that the interests of our employees, stakeholders and investors are safeguarded.

Engineering & Construction

We entered 2011 with a record backlog in Engineering & Construction of US$9.0 billion, which has been augmented by the award of the US$1.2 billion In Salah Gas project in Algeria in January, giving us outstanding revenue visibility for the coming year and beyond. As a result, our immediate focus is on ensuring that we continue our excellent operational performance across our portfolio of projects. Given the terms of our existing backlog, our confidence in our execution capability, and our competitive positioning in our core and developing markets, we are raising our medium-term net margin guidance from around 10% to around 11%.

Offshore Engineering & Operations

Our recent awards in Offshore Engineering & Operations should underpin strong revenue growth in 2011. We expect recent high levels of bidding activity, both in the UK and internationally, to continue, which should present us with further opportunities for growth. Notwithstanding the improvement in net margin achieved in 2010, we see opportunities to improve net margins further over the medium-term.

Engineering, Training Services and Production Solutions

As well as supporting the group’s wider activities, we expect Engineering Services to see more opportunities with external customers in 2011. Delegate numbers in Training Services improved as 2010 progressed and we expect this trend to continue throughout the course of this year. We continue to review strategic opportunities for establishing new training facilities and developing local workforces. Following the award of the Ticleni production enhancement contract in July 2010, and an improvement in general market conditions for our consultancy and technology businesses, we expect to deliver strong revenue growth in Production Solutions in 2011. Given the change in scope of our services on Dubai’s offshore oil & gas assets (now accounted for through Offshore Engineering & Operations), and given that we do not expect to recognise profit on the Ticleni contract until next year due to the long-term nature of the contract, we forecast a reduction in overall net profit for this reporting segment in 2011.

Energy Developments

With the award of the risk services contract for the development of the Berantai field and delivery of the FPSO, and commencement of the second phase of the Cendor field, we expect a significant increase in capital expenditure in 2011. Our current capital commitments are around US$500 million for 2011.

Analyst presentation:
A presentation for analysts will be held at 9.30am today, which will be webcast live via http://www.investorcalendar.com/IC/CEPage.asp?ID=163402. 

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