Final Results for the Year Ended 31 December 2012

Download Petrofac's 2012 final results in PDF format

•    Revenue up 9% to US$6.3 billion (2011: US$5.8 billion)
•    Net profit(1) up 17% to US$632 million (2011: US$540 million)
•    Earnings per share (diluted) up 17% to 183.88 cents (2011: 157.13 cents)
•    Final dividend of 43.00 cents (28.40 pence(2)) per share (2011: 37.20 cents); full year dividend up 17% to 64.00 cents per share (2011: 54.60 cents)
•    Backlog(3) up 9% to US$11.8 billion at 31 December 2012 (2011: US$10.8 billion)
 
Ayman Asfari, Petrofac’s Group Chief Executive commented on the final results:

“We have delivered another year of strong financial results and good operational performance. Our portfolio of existing projects is in excellent shape, which we expect will help us to maintain our sector-leading onshore margins, and we see many new and attractive opportunities across our business.

“Petrofac has a clear strategy for long-term sustainable growth based on three key drivers: expanding our existing business into new geographies; developing our leading EPC offering offshore; and delivering on our plans for Integrated Energy Services. To achieve this we have continued to build our capability and strengthen the team across the Group.  We are expanding in new markets, such as Mexico, where we now have four long-term contracts; we have laid out a clear plan to progress our offshore strategy; and we have achieved significant milestones on our portfolio of Integrated Energy Services projects, which are building long-term sustainable earnings for the Group.

“I am excited and confident about our prospects for the coming year and beyond. We expect to deliver good growth in net profit in 2013 and our strategy underpins long-term earnings growth, including the achievement of our 2015 earnings target(4).”
 
OPERATIONAL HIGHLIGHTS

ENGINEERING, CONSTRUCTION, OPERATIONS & MAINTENANCE (ECOM)

Onshore Engineering & Construction

•    Completed the Kauther project in Oman, introduced hydrocarbons on the Asab oil field development in Abu Dhabi and substantially completed the Karan project in Saudi Arabia
•    The gas processing facility at El Merk in Algeria is ready for commencement of initial production
•    Made good progress across the rest of our portfolio, including on the GASCO 4th NGL train in Abu Dhabi and the South Yoloten gas field development in Turkmenistan, which remain on schedule for completion in 2013
•    Achieved order intake in 2012 of US$3.0 billion, securing major new awards in Iraq, Kuwait and Saudi Arabia

Offshore Projects & Operations

•    Delivered record activity levels during 2012, from both long-term operations support contracts and offshore capital projects
•    Achieved order intake of US$2.2 billion, including: operations and maintenance projects in Iraq for BP and South Oil Company; engineering and construction services to all of Apache’s UK North Sea assets; and a platform refurbishment contract for PETRONAS in Malaysia
•    Mapped out a clear plan to build a differentiated offshore EPIC business that will give access to top tier projects, including deepwater and SURF, supported by building our own installation capability, with a capital outlay of around US$1 billion over the next five years
Engineering & Consulting Services
•    Awarded a number of conceptual and front end engineering and design (FEED) studies in Africa and the CIS
•    Acquired KW Limited, a high-end subsea pipeline consulting and engineering services business which will enable us to strengthen our leading engineering proposition offshore
 
INTEGRATED ENERGY SERVICES (IES)

•    Achieved gas export on the Berantai Risk Service Contract in Malaysia, following full field development, including FPSO topsides upgrade and modification, in less than 21 months
•    Made a good start on the Magallanes and Santuario Production Enhancement Contracts (PECs) in Mexico and were awarded a further two PECs for the Pánuco (in conjunction with Schlumberger) and Arenque contracts areas
•    Completed the upgrade of the MOPU for the West Desaru field in Malaysia and made  significant progress on the second phase of Cendor; both are expected to commence production in 2013
•    Entered into a strategic alliance agreement with Bowleven to develop the Etinde Permit in Cameroon, subject to an agreed Field Development Plan and other conditions
 
OUTLOOK

In ECOM, given our competitive positioning and a strong pipeline of bidding opportunities for onshore engineering and construction projects, particularly in the Middle East, Africa and the Commonwealth of Independent States, we anticipate growth in our Onshore Engineering & Construction backlog during 2013. We enter 2013 with a record backlog in Offshore Projects & Operations, and we continue to see high levels of bidding activity in both operations support contracts and offshore capital projects. We expect to maintain our sector-leading net margins in Onshore Engineering & Construction and grow our margins in Offshore Projects & Operations over the medium-term as we undertake more offshore capital projects.

In Integrated Energy Services, we remain focused on building our execution track record, with important delivery milestones throughout 2013 on our existing projects. We are making good progress on our transition activities on the Pánuco and Arenque contract areas in Mexico and we expect to commence field operations during the first half of 2013. On Block PM304 in Malaysia, we expect to commence production from the West Desaru fault block and the second phase of Cendor during the year, which should substantially increase production. We continue to see strong industry demand for commercially innovative integrated oilfield services, and we are looking at a number of additional opportunities with hydrocarbon resource holders (both National Oil Companies and niche explorers).

Overall, we are confident in our prospects for the coming year and beyond. We expect to deliver good growth in net profit in 2013 and remain on target to more than double our recurring 2010 Group earnings by 2015.
 
Notes

(1) Net profit for the year attributable to Petrofac Limited shareholders.

(2) 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 2012 final dividend from US dollars into sterling is based upon an exchange rate of US$1.5142:£1, being the Bank of England sterling spot rate as at midday on 26 February 2013.

(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) Our Group earnings target is net profit after tax of more than US$862 million by 2015, a doubling of 2010 recurring earnings.