- Good operational performance across all our businesses
- Underlying net profit of US$421 million(1)
- Group (excluding IES) net profit US$463 million(1)
- IES net loss of US$42 million
- Reported net profit includes post-tax impairments and exceptionals of US$319 million
- New order intake of US$1.9 billion; backlog of US$14.3 billion gives excellent visibility for 2017
- Exited Ticleni PEC and Berantai RSC, releasing c.US$300 million in proceeds
- Net debt down 10% to US$617 million, reflecting strong cash generation and capex rephasing
- Full year dividend maintained at 65.80 cents per share
Year ended 31 December 2016
Year ended 31 December 2015
Exceptional items and certain re-measurements
Exceptional items and certain re-measurements
EBITDA before losses on Laggan-Tormore project
Net profit before losses on Laggan-Tormore project
Ayman Asfari, Petrofac’s Group Chief Executive, commented:
“Petrofac has delivered positive results for 2016, driven by record revenues, significant cost reduction and strong cash generation. In a busy year, the Group has also demonstrated its track record for operational delivery with more than 240 million man-hours worked across the portfolio.
“Whilst the market remains competitive, bidding activity has increased in recent months. We have right-sized our business, have a good pipeline of opportunities across our core markets and remain cost competitive, as evidenced by recent bidding success.
“Petrofac remains firmly focused on its core strengths, committed to reducing capital intensity and maintaining a strong balance sheet. Operational excellence and excellent revenue visibility position us well in 2017 and for a recovery in our core markets.”
Engineering & Construction (E&C)
Delivered record revenues and significantly reduced costs in challenging markets:
- New order intake of US$0.6 billion, comprising the award of Salalah LPG project in Oman
- Good progress across the portfolio, with more than 200 million man hours worked on 20 projects, including:
- Completed and handed over the Laggan-Tormore project in UK
- Delivered 145 modules (of 181 modules being fabricated in 18 yards worldwide) to the Upper Zakum site in Abu Dhabi
- Substantially completed the Sohar Refinery Improvement and Khazzan projects in Oman
- Good progress on Lower Fars heavy oil and KNPC Clean Fuels projects in Kuwait
- Underlying net margin of 7.0%, reflecting the impact of project phasing and mix, and commercial settlements in tighter market conditions, partially offset by operational efficiency and overhead savings
Engineering & Production Services (EPS)
Continued growth in our reimbursable business:
- US$1.3 billion of new contracts and extensions across EPS’ global operations, including:
- Duty Holder contract from BP to support late life management of Miller platform, in UK North Sea, in preparation for the next phase of its decommissioning programme
- 5-year Service Operator contract in North Sea for Anasuria Operating Company Limited and appointed Well Operator for Hurricane Energy to support its assets West of Shetland
- Two major projects with Repsol Sinopec for the provision of engineering support services
- US$75m contract from SOC for Crude Oil Export Expansion Project to provide maintenance management services and training services in support of IOCs in Iraq
- Net margin of 6.4%, reflecting business mix and performance, including the phasing of EPCm projects, as well as reductions in overhead costs
Integrated Energy Services (IES)
Solid operational performance, ahead of guidance:
- Lower production, down 13% to 20.9 mmboe (gross), and a change in production mix
- High uptime on Block PM304 in Malaysia, with production up 13%
- Chergui gas plant in Tunisia shut-in for majority of year as a result of civil unrest
- Exited Ticleni PEC in August 2016 and Berantai RSC in September 2016
- Lower average oil price of US$44/bbl (2015: US$52/bbl)
- Higher depreciation charge in Mexico, reflecting policy change (post-tax impact US$18 million)
- Reductions in operating costs, overheads and taxation
Made good progress with key business priorities:
- Successful start-up of production from Greater Stella Area development, with first hydrocarbons introduced in mid February 2017
- Continue to progress migration of PECs in Mexico to PSCs
Cost savings and headcount
• Right-sized business with headcount reduction of 29% to around 13,500 employees and delivered c.US$120 million of annualised savings
EXCEPTIONALS AND CERTAIN RE-MEASUREMENTS
Reported net profit was impacted by US$319 million of exceptional items and certain re-measurments (see note 5 to the attached financial statements), of which US$298 million are non-cash items:
- US$245 million of non-cash impairments of IES assets, principally reflecting a full provision against the carrying value of the Group’s investment in Seven Energy, as well as our exit from the Berantai RSC contract
- Other exceptional items of US$74 million
IES’s net book value was US$1.2 billion as at 31 December 2016 post impairments and asset disposals (2015: US$1.7 billion).
We are making good progress delivering our strategy of focusing on core strengths and reducing capital intensity. Our relentless focus on costs has delivered significant savings, whilst protecting our core capabilities. We will continue to focus on operational excellence to protect margins and reinforce our competitive position.
IES is expected to deliver EBITDA in 2017 in the range c.US$140 million to US$160 million(2) based on the current Brent oil price forward curve. We continue to progress discussions to migrate our PECs in Mexico to PSCs.
We remain focused on cash generation, reducing capital intensity and maintaining a strong balance sheet. Group capital expenditure is expected to be in the range US$300 million to US$350 million in 2017, including the costs to complete the commissioning of the Greater Stella Area development.
Our backlog provides excellent revenue visibility for 2017, bidding activity has increased and we have a good pipeline of bidding opportunities.
The Board is proposing a final year dividend of 43.80 cents per share for the year ended 31 December 2016 (2015: 43.80 cents). Together with the interim dividend of 22.00 cents per share (2015: 22.0 cents), this gives a total dividend for the year of 65.80 cents per share (2015: 65.80 cents), in line with the prior year. The total dividend for the year is well covered by free cash flow.
Our full year results presentation for analysts and investors will be held at 9.30am today, which will be webcast live via:
For further information contact:
+44 (0) 207 811 4900
Jonathan Low, Head of Investor Relations
Jonathan Edwards, Investor Relations Manager
Alison Flynn, Group Head of Communications
+44 (0) 207 811 4913
Tulchan Communications Group
+44 (0) 207 353 4200
NOTES TO EDITORS
Petrofac is a leading international service provider to the oil and gas production and processing industry, with a diverse client portfolio including many of the world’s leading integrated, independent and national oil and gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC).
Petrofac designs and builds oil and 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 and gas assets.
With around 13,500 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.
For additional information, please refer to the Petrofac website at www.petrofac.com.
LEI number: 2138004624W8CKCSJ177
Segmental performance and Financial review
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Group financial statements
Click on, or paste the following link into your web browser, to view the Group financial statements of Petrofac Limited for the year ended 31 December 2016 - Group financial statements.
The attached documents are extracts from the Group's Annual Report and Accounts for the year ended 31 December 2016. Page number references refer to the full Annual Report when available.