Petrofac Limited (Petrofac, the group or the Company), today announces its interim results for the six months ended 30 June 2013.
Download the 2013 interim results in PDF format
- Good operational performance; portfolio remains in excellent shape
- On course to deliver a strong second half resulting in modest growth in net profit for the full year 2013; remain on track to achieve our 2015 earnings target(1)
- As previously guided, our revenue and net profit for 2013 is expected to be significantly weighted towards the second half of the year, reflecting the phasing of project delivery
o Revenue of US$2.8 billion (2012: US$3.2 billion)
o Net profit(2) of US$243 million (2012: US$326 million)
o Earnings per share (diluted) of 70.72 cents (2012: 94.82 cents)
- Backlog(3) at 30 June 2013 up 21% to US$14.3 billion (31 December 2012: US$11.8 billion), reflecting strong ECOM order intake in H1 2013 of US$4.9 billion (2012: US$1.4 billion) and an increase in our economic interest in Petrofac Emirates(4)
- Interim dividend up 5% to 22.00 cents (14.10 pence(5)) per share (2012: 21.00 cents)
Ayman Asfari, Petrofac’s Group Chief Executive commented on the interim results:
“Operationally, we have made a good start to the year on our portfolio of projects and we have built good momentum in securing new awards. As previously signalled in our trading update, net profit for 2013 is expected to be significantly weighted towards the second half of the year, reflecting the phasing of Onshore Engineering & Construction and Integrated Energy Services project delivery.
“We look ahead with confidence in our ability to deliver a strong second half performance and achieve our guidance of modest growth in net profit for 2013. Our high quality portfolio of existing projects reflects our disciplined approach to bidding and managing risk, which, together with a strong pipeline of bidding opportunities and our competitive positioning, means that we remain on track to achieve our 2015 earnings target.”
ENGINEERING, CONSTRUCTION, OPERATIONS & MAINTENANCE (ECOM)
Onshore Engineering & Construction
- Good progress on our portfolio of projects during the first half of the year
- Commissioning in progress on major projects in Abu Dhabi (Asab oil field development), Algeria (El Merk gas processing facility) and Turkmenistan (South Yoloten development)
- We have made progress at the In Salah southern fields development site and are finalising arrangements with our client for further mobilisation of resources in the near future
- Increased our economic interest in Petrofac Emirates to 75%
- Three projects secured in Abu Dhabi in the year to date totalling US$3.6 billion
Offshore Projects & Operations
- Awarded our largest EPIC project to date: a US$500 million package for the Satah Al Razboot (SARB) offshore project in Abu Dhabi
- Awarded our largest operations and maintenance contract to date in Oman (US$50 million over three years) for Oman Oil Company Exploration and Production LLC
- Building our position in new markets such as offshore wind and decommissioning with recent awards for Siemens Energy and Sasol
- Finalised the design and finalising commercial terms for our offshore installation vessel
Engineering & Consulting Services
- Awarded a project management contract by PEMEX to develop the Lakach project, their first deepwater development
- Awarded a three-year engineering services contract in Algeria, by the In Salah Gas and In Amenas joint ventures
- Following on from an earlier collaboration agreement, RNZ is now fully integrated within Petrofac; RNZ is licensed to undertake major offshore engineering projects for Petronas and has approximately 700 employees, taking our total headcount in Asia Pacific to 1,400
INTEGRATED ENERGY SERVICES (IES)
- Achieved first production from West Desaru, Block PM304, in Malaysia, in early August
- Taken over operations on the Pánuco and offshore Arenque blocks in Mexico following the completion of transition activities; making good progress on Magallanes and Santuario blocks
- Established a service company in Mexico with a local partner to deliver more value from our existing Production Enhancement Contracts
- Completed the first development phase of the Berantai Risk Service Contract, having brought all 13 wells from the first phase of the development online
- Bowleven has completed the appraisal of the IM5 well on the Etinde Permit in Cameroon, with encouraging results
- Development drilling operations have commenced on the Stella field in the UK North Sea, where we will acquire a 20% interest upon first production
- Progressing training partnership with Petronas towards the management of high-specification training facilities and pursuing high-value opportunities with a number of NOCs
- Signed an MOU to explore opportunities to improve the efficiency of oil production and increase production from the mature Emba fields in Kazakhstan
ECOM has made a good start to the year with strong order intake in the first half of US$4.9 billion, taking ECOM backlog to US$11.0 billion and greatly improving revenue visibility for next year and beyond. Our pipeline of bidding opportunities for the remainder of the year and into 2014 remains strong. We expect to grow Onshore Engineering & Construction backlog over the course of 2013, before taking into account the increase in our economic interest in Petrofac Emirates, which added a further US$1.8 billion to backlog at 30 June 2013. Net margins for Onshore Engineering & Construction are expected to be around 11% for 2013 and, given the quality of our portfolio and the strength of our bidding pipeline, we remain confident of maintaining sector-leading net margins going forward. We expect net margins in Offshore Projects & Operations to increase over time as we undertake more offshore capital projects.
IES has made a good start to the year with net profit, excluding the gain on the FPF1 in 1H 2012, up more than 50% compared with the corresponding period in 2012. We are now in the operations phase on five Production Enhancement Contracts, following the recent completion of transition activities on Pánuco and Arenque in Mexico. On the Magallanes, Santuario and Ticleni fields, where we have been in the operations phase for some time, we have made good progress in increasing production levels and we expect production to continue to improve over the second half of 2013 and beyond. In Malaysia, we have successfully completed the first development phase of the Berantai Risk Service Contract and we recently achieved a significant milestone with the commencement of production from West Desaru on Block PM304. Overall, the existing IES portfolio is positioned to deliver a strong second half of the year and to build long-term sustainable earnings for the Group(6). We continue to see strong demand for the provision of integrated services under innovative commercial models and we are currently progressing a number of new opportunities.
Overall, we expect to deliver modest growth in net profit this year and remain on track to achieve our 2015 earnings target(1).
(1) Our Group earnings target is net profit after tax of more than US$862 million in 2015, a doubling of 2010 recurring earnings.
(2) Net profit for the period attributable to Petrofac Limited shareholders.
(3) Backlog consists of the estimated revenue attributable to the uncompleted portion of lump-sum engineering, procurement and construction contracts and variation orders plus, with regard to engineering, operations, maintenance and Integrated Energy Services contracts, the estimated revenue attributable to the lesser of the remaining term of the contract and five years. Backlog will not be booked on Integrated Energy Services contracts where the Group has entitlement to reserves. The Group uses this key performance indicator as a measure of the visibility of future revenue. Backlog is not an audited measure.
(4) We increased our economic interest in Petrofac Emirates to 75% with effect from January 2013. As a result, we will report 100% of the revenue and backlog on all current and future Petrofac Emirates’ projects (with Nama’s 25% economic interest reported as ‘profit for the year attributable to non-controlling interests’). This had the impact of increasing backlog at 30 June 2013 by US$1.8 billion.
(5) The Group reports its financial results in US dollars and, accordingly, will declare any dividends in US dollars together with a sterling equivalent. Unless shareholders have made valid elections to the contrary, they will receive any dividends payable in sterling. Conversion of the 2013 interim dividend from US dollars into sterling is based upon an exchange rate of US$1.5603:£1, being the Bank of England Sterling spot rate as at midday on 23 August 2013. The Group aims to distribute 35% of full year post tax profits, which will be paid approximately one-third as an interim dividend and two-thirds as a final dividend.
(6) See the IES data pack from June 2013