16 May 2008
Interim Management and AGM Statement
Petrofac, the international oil & gas facilities service provider, is publishing its first Interim Management Statement for the period from 1 January 2008 to 16 May 2008, as required by the UK Listing Authority’s Disclosure and Transparency Rules ahead of its Annual General Meeting today. At the meeting, Chairman, Rodney Chase, will make the following statement:
“I am pleased to report that the current year has started well and we are confident that 2008 will be another year of strong growth.
Our Engineering & Construction division has continued its record of excellent operational performance and has already achieved contract awards of approximately US$1 billion in the year to date. Subsequent to the announcement of our 2007 results, we have secured two lump-sum engineering, procurement and construction (EPC) awards in Syria: the first, for US$454 million, is for the Jihar gas treatment plant with the Hayan Petroleum Company, scheduled to be delivered in the first quarter of 2011; the second, for US$477 million, is for the Ebla gas treatment plant with Petro-Canada and is expected to be delivered before the end of 2010. We also secured follow-on work with AGIP KCO on the Kashagan development in Kazakhstan. Our current backlog gives us good visibility of revenues for 2008 and this, combined with a healthy bidding pipeline in our core markets, should underpin continued strong growth into the medium term.
In Operations Services, we have recently completed our first full year of operation of Dubai’s offshore oil & gas facilities where performance continues to progress well. In addition, our Facilities Management business has secured a two-year extension of our duty holder contract with Venture Production, effective from November 2008, and we are finalising contractual arrangements with Sea Production Limited to provide turnkey operations services on the Northern Producer, the floating production facility to be used on the Don fields, by Petrofac Energy Developments and its co-venturers. Our Brownfield engineering business has secured new awards, including follow-on work with Venture Production, and continues to achieve good growth, particularly internationally. Our Training business has opened new training centres on Sakhalin Island and in Houston and is due to open a further centre in Dubai later this year, in joint venture with Dubai Petroleum.
Our Energy Developments division continues to make good progress with the development of the Don Southwest and West Don fields, where first oil is targeted for the first half of 2009. Modifications to the Northern Producer floating production facility are proceeding in accordance with plan and the John Shaw semi-submersible drilling rig is scheduled to commence the drilling programme early in the second half of 2008. In Tunisia, we expect to introduce gas into the Chergui plant shortly and to begin gas exports in July. Our operational assets continue to perform well, with production from the Cendor field, offshore Peninsular Malaysia, broadly maintained at 2007 levels. Conceptual planning for the next phase of the Cendor development is underway with further appraisal drilling through the course of this year. We announced in April that we have agreed, in principle, to take a 10% interest in the Ebla production sharing contract alongside Petro-Canada and we are currently working towards finalising the terms of the agreement.
As a result of new contract awards and extensions in the year to date, the group’s backlog at the end of April has increased to approximately US$4.9 billion (31 December 2007: US$4.4 billion), comprising approximately US$2.9 billion from the Engineering & Construction division (31 December 2007: US$2.5 billion) and approximately US$2.0 billion from the Operations Services division (31 December 2007: US$1.9 billion). The group’s financial position has not changed significantly from the end of 2007, with our balance sheet, including cash balances, remaining strong.
Overall, we have had a good start to the year, giving us confidence in meeting our strong growth expectations for the current year and beyond and, in the absence of unforeseen circumstances, we expect our net profit for 2008 to be towards the top end of the range of current market expectations.”
The current market expectations for Petrofac’s net profit for the year ending 31 December 2008, referred to earlier in this announcement, are based on forecasts provided to Petrofac by 13 equity analysts since publication of the Group’s 2007 results in March 2008. The range of those forecasts is from US$211.2 million to US$243.6 million.