Petrofac News 1700X397
17 October 2014

Interim Management Statement

  • On track to deliver net profit in the range US$580 million to US$600 million for the full year 2014, in line with previous guidance
  • Most successful year for new awards, with ECOM order intake of US$9.4 billion in the year to date
  • Group backlog(1) increased to US$21.2 billion at 30 September 2014 (30 June 2014: US$20.3 billion), giving very good revenue visibility for the remainder of the year and beyond
  • Net debt stood at US$1.1 billion at 30 September 2014 (30 June 2014: US$1.3 billion)

Ayman Asfari, Petrofac’s Group Chief Executive, commented:
“This is already our most successful year for new awards in ECOM, with ECOM order intake of US$9.4 billion in the year to date, which has been secured at bid margins, on a country-by-country basis, in line with the last few years.

“In IES, our focus remains on the delivery of key operational milestones on the existing project portfolio. During the period we achieved first oil on Cendor phase 2 on Block PM304 in Malaysia, a significant operational landmark on the project, with ramp up of production expected in the near-term.

“With activity levels stepping up over the second half of the year, in line with our expectations, we remain on track to deliver net profit in the range US$580 million to US$600 million for the full year 2014.”

Engineering, Construction, Operations & Maintenance (ECOM)

Operations in Iraq
Our operations in Iraq are south and east of Baghdad and represent less than 5% of the Group’s expected revenues for 2014. While we continue to monitor events closely, there has been no significant impact on our current operations to date.

Onshore Engineering & Construction
Activity levels on our portfolio of engineering and construction projects have increased substantially during the second half of the year, in line with our expectations, as we move into the execution phase on a number of projects secured over recent months. On later stage projects, we have fully commissioned the first train on the Badra oilfield development for Gazprom in Iraq, we are making good progress on the In Salah southern fields development in Algeria after returning to site in the first half of the year and we continue to progress the Laggan-Tormore gas plant on Shetland, with substantial mechanical completion targeted for the end of the year.

Following on from our strong first half order intake of US$4.5 billion, we have continued to secure new business in our core markets, with recent awards including: a contract for a US$0.7 billion gathering centre for Kuwait Oil Company; and, a US$0.5 billion refinery package on the RAPID project for a subsidiary of PETRONAS in Malaysia. Our pipeline of bidding opportunities remains attractive, reflecting ongoing high levels of investment by our customers in our core geographic markets, and, given our strong competitive position, we are confident of securing further Onshore Engineering & Construction awards during the remainder of the year.

Offshore Projects & Operations
We continue to perform well on our portfolio of operations support contracts and offshore capital projects. We were recently awarded two major reimbursable contracts in the UKCS and Iraq. In the Central North Sea, Petrofac has been selected to provide engineering and construction support worth up to US$120 million for Chevron’s three operated assets – the Captain, Alba and Erskine platforms. The contract is for up to three years, plus two one-year options. In Iraq, we have been awarded a major contract to provide general construction management services to BP Iraq NV (BP) on the Rumaila field near Basra in the south of the country. We will manage brownfield modifications to assist BP and its partners to rapidly and safely increase production from what is one of the world’s largest fields. The contract, which runs for three years, with an option for further extension of two years, has a value of up to US$500 million.

Engineering & Consulting Services
We continue to see good activity levels on projects such as the Rabab Harweel Integrated Project in Oman, our largest ever engineering, procurement and construction management contract, and in support of the rest of the Group’s activities.

Integrated Energy Services (IES)
Equity Upstream Investments
On the FPF1 modification works, we continue to advance construction activities on the main deck of the vessel, with all the main oil and gas processing plant packages in place and installation of the associated pipework and cabling in progress. First production on the Greater Stella Area development in the UK North Sea is planned for mid-2015.

First oil was achieved from Cendor phase 2 in early September, marking a major milestone in the development of Block PM304. We have disconnected the original Cendor phase 1 mobile offshore production unit (MOPU) and installed a bridge linking the Cendor phase 1 wells to the Cendor phase 2 wellhead platforms. The West Desaru tie-in to the Cendor phase 2 FPSO has been safely and successfully completed. Production from Block PM304 is expected to ramp up in the near-term as the facilities are fully commissioned and new wells are brought on line.

In Tunisia, debottlenecking activities are scheduled as part of a short planned shutdown of the central processing facility on the Chergui gas concession later this month, which will increase capacity.

Production Enhancement Contracts
We continue to make good progress on our production enhancement contracts in Mexico, with steady levels of production over the year to date and new production from the north east of the Santuario block, following recent near-field appraisal success, expected to come on stream around the end of the year.

We continue to work towards a revised Field Development Plan on the Ticleni field in Romania before the end of the year.

Risk Service Contracts
The Berantai risk service contract continues to perform in line with expectations and we continue to progress early activities on OML119 in Nigeria.

Financial position

30 September 2014

30 June 2014

US$ billion

US$ billion

Onshore Engineering & Construction



Offshore Projects & Operations



Engineering & Consulting Services



Integrated Energy Services






Net debt was lower at US$1.1 billion at 30 September 2014 (30 June 2014: US$1.3 billion), reflecting a reduction of US$0.4 billion on completion of the PetroFirst transaction in August 2014 and a reduction in work in progress of US$0.2 billion, including receipt of the first tranche of cash in relation to suspension costs on the In Salah southern fields development in Algeria. This was partially offset by a reduction in accrued contract expenses of US$0.2 billion and a reduction in billings in excess of cost and estimated earnings of US$0.2 billion. The management of working capital and the resolution of commercial settlements remains a high priority for us. We continue to make positive progress in respect of a number of the most significant working capital positions and further improvement is expected over the remainder of the year.