Petrofac News 1700X397
25 February 2020

Petrofac Limited results for the year ended 31 December 2019

  • Solid operational performance in all our businesses
  • Business performance net profit (1)(2) down 22% to US$276 million
  • Reported net profit (2) of US$73 million post impairments and exceptional items
  • New order intake (3) of US$3.2 billion; backlog (4) of US$7.4 billion at 31 December 2019
  • Net cash of US$15 million
  • Final dividend of 25.3 cents per share, maintaining total dividend at 38.0 cents per share


Year ended 31 December 2019

Year ended 31 December 2018


Business performance

Exceptional items and certain re-measurements


Business performance

Exceptional items and

certain re-measurements
















Net profit/(loss) (2)







Ayman Asfari, Petrofac’s Group Chief Executive, commented:

“Our results for 2019 reflect solid operational performance across the business and good progress delivering our strategy.

Best-in-class execution has delivered attractive margins in our core businesses, underpinned by an unrelenting drive to strengthen our cost competitiveness by investing in talent, local content and digital technology.  Our migration to a capital light business and tight working capital management has improved cash flow, with agreed non-core divestments set to further strengthen our balance sheet and enhance returns.

Looking forward, we expect 2020 to be a year of transition. We are encouraged by the improving market outlook, recent new awards and US$37 billion of bid opportunities scheduled for award by the end of 2020.  Consequently, we are investing in maintaining our bench strength to preserve our market-leading execution capability. This investment - together with project mix and the low new order intake of recent years - will impact financial performance in 2020, but best positions us for a return to growth as we rebuild our order book.”



Engineering & Construction (E&C)

Decline in profitability reflects project phasing and mix

  • New order intake of US$2.1 billion, including awards in Algeria, Oman and the Netherlands
    • Loss of awards in Saudi Arabia and Iraq in H1
    • Delays in bidding processes in other markets
  • Steady progress delivering our portfolio of E&C projects
  • Revenue of US$4.5 billion, down 5% due to project phasing
  • Net profit margin (1)(2) down 1.0 ppts to 6.2%, largely reflecting project mix and higher tax
  • Net profit (1)(2) down 18% to US$278 million

Engineering & Production Services (EPS)

Growth in revenue offset by a decline in contract margins

  • US$1.0 billion of new order intake (book-to-bill of 1.2x)
  • Revenue up 4% to US$0.9 billion
    • Strong growth in projects driven by new contract wins
    • Lower operations activity
  • Net profit margin (1)(2) down 1.4 ppts to 3.6% driven by lower contract margins and investment in business development and digital
  • Net profit (1)(2) down 26% to US$32 million
  • Completed bolt-on acquisition of W&W Energy Services ("W&W"), an entry-level position in the US onshore operations and maintenance market in the Permian basin

Integrated Energy Services (IES)

Underlying increase in profitability

  • Revenue down 31% to US$195 million (down 1% excluding asset sales)
    • Lower average realised price (5) of US$67/boe (2018: US$70/boe)
    • Increase in underlying equity production of 6% (net)
    • Lower PEC tariff income and cost recovery
  • EBITDA (1) down 38% to US$99 million (down 4% excluding asset sales)
    • Higher contribution from equity production excluding asset sales
    • Lower net cost recovery from Magallanes and Arenque PECs
    • Lower overhead costs
    • Increase in associate income
    • Net profit (1)(2) down 69% to US$12 million (up US$11 million excluding asset sales)

Exceptionals and certain re-measurements

Reported net profit of US$73 million (2018: US$64 million) was negatively impacted by exceptional items and certain re-measurements of US$203 million (2018: US$289 million), of which approximately US$172 million were non-cash items:

  • The agreement to sell Petrofac’s remaining 51% in its operations in Mexico triggered a non-cash impairment charge (post-tax) of US$49 million;
  • A non-cash impairment charge of US$86 million (post-tax) following a review of the carrying amount of the investment in Block PM304 in Malaysia;
  • A downward fair value adjustment of US$37 million (post-tax) due to uncertainty concerning the timing and outcome of migration of the Pánuco PEC to a PSC and consequently whether the contingent consideration pay out conditions will be achieved;
  • Other net exceptional items of US$31 million (post-tax), including Group reorganisation and redundancy costs, SFO related legal fees and JSD6000 disposal costs

The carrying amount of the IES portfolio (6) decreased to US$0.4 billion at 31 December 2019 (2018: US$0.5 billion) reflecting asset disposals and impairment charges. 


Net cash was US$15 million at 31 December 2019 (31 December 2018: US$90 million net cash), reflecting better than expected working capital inflows at the period end.  Free cash flow was US$138 million (31 December 2018: US$921 million), principally reflecting the impact of lower EBITDA, higher negative working capital movements and lower divestment proceeds.  The Group retained strong liquidity of US$1.6 billion at 31 December 2019 (31 December 2018: US$1.9 billion) following the repayment and retirement of US$0.3 billion of facilities during the period.


The Group’s dividend policy targets a dividend cover over the long term of between 2.0x and 3.0x business performance net profit. In line with this policy, the Board is proposing a final dividend of 25.3 cents per share (2018: 25.3 cents). The final dividend will be paid on 22 May 2020 to eligible shareholders on the register at 24 April 2020 (the ‘record date’). Shareholders who have not elected to receive dividends in US dollars will receive a sterling equivalent. Shareholders can elect by close of business on the record date to change their dividend currency election. Together with the interim dividend of 12.7 cents per share (2018: 12.7 cents), this gives a total dividend for the year of 38.0 cents per share (2018: 38.0 cents).

The Board takes a long-term view of its dividend and recognises the importance of dividends to shareholders.  It will take into account a range of factors when setting any future dividend, including the Company’s long-term dividend policy, historical performance, its long-term outlook, free cash flow and the position of its balance sheet.  Consequently, in a year of transition, it currently expects to maintain the dividend in 2020 in anticipation of a return to growth.


The market outlook is improving, and the Group has a busy tendering pipeline with US$37 billion of bid opportunities scheduled for award by the end of 2020.

We continue to expect a decrease in Group revenue in 2020 reflecting low new order intake in recent years.  Order backlog of US$7.4 billion at 31 December 2019 (2018: US$9.6 billion) provides good revenue visibility in the near term, with US$4.5 billion of secured revenue for 2020.


31 December 2019

31 December 2018 (7)


US$ billion

US$ billion

Engineering & Construction



Engineering & Production Services



Group backlog



The E&C division had US$3.8 billion of secured revenue for 2020 as at 31 December 2019.  As previously guided, net profit margins in E&C are expected to decline and be within the range of 5.0% to 5.75% in 2020, reflecting a higher contribution from contract awards in lower margin markets and a c.US$30 million investment in maintaining bench strength and technical capability. This investment ensures Petrofac can capitalise on the improving market outlook and best positions the Group for a recovery in new orders in 2020 and thereafter.

The EPS division has US$0.7 billion of secured revenue for 2020 and net profit margins are expected to be within the range of 3.5% to 4.5%.  Revenue growth is expected to be driven principally by a recovery in the brownfield projects market and growth in operations activity.

We continue to target best-in-class delivery for our clients, tightly controlling cost while investing in our people, local content and digital technologies. We are also committed to maintaining a strong balance sheet and capital discipline, consistent with our strategy to enhance returns. Capital expenditure is expected to increase to approximately US$150 million in 2020 (2019: US$92 million) as we invest in digital and developing new reserves in PM304.  The divestment of our upstream Mexico portfolio in on track to complete in mid-2020.


No charges have been brought against Petrofac, or any officers or current employees. Petrofac continues to engage with the SFO and will respond to any further developments as appropriate.  We are focused on bringing this matter to closure as quickly as possible and believe this is in the best interests of all stakeholders.


  1. Business performance before exceptional items & certain re-measurements. This measurement is shown by Petrofac as a means of measuring underlying business performance.
  2. Attributable to Petrofac Limited shareholders.
  3. New order intake is defined as new contract awards and extensions, net variation orders and the rolling increment attributable to EPS contracts which extend beyond five years.
  4. Backlog consists of: the estimated revenue attributable to the uncompleted portion of Engineering & Construction division projects; and, for the Engineering & Production Services division, the estimated revenue attributable to the lesser of the remaining term of the contract and five years.
  5. Average net realised price is net of royalties and hedging gains or losses. It is based on sales volumes, which may differ from production due to under/over-lifting in the period.
  6. Share of net assets attributable to Petrofac Limited Shareholders.
  7. On 1 January, the engineering, procurement and construction management (EPCm) business was reclassified from the EPS operating segment to the E&C operating segment. The EPCm business is presented within E&C in the prior year comparative figures.


Our full year results presentation will be held at 9.30am today and will be webcast live via:




Click on, or paste the following link into your web browser, to view our Segmental performance and Financial review for the year ended 31 December 2019 - https://www.petrofac.com/media/5057/petrofac-2019-segmental-performance-financial-review.pdf 


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 2019 - https://www.petrofac.com/media/5056/petrofac-2019-financial-statements.pdf

The linked documents are extracts from the Group’s Annual Report and Accounts for the year ended 31 December 2019. Page number references refer to the full Annual Report when available.




This announcement contains forward-looking statements relating to the business, financial performance and results of Petrofac and the industry in which Petrofac operates. These statements may be identified by words such as “expect”, “believe”, “estimate”, “plan”, “target”, or “forecast” and similar expressions, or by their context.  These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties.  Various factors could cause actual future results, performance or events to differ materially from those expressed in these statements and neither Petrofac nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.

This announcement contains inside information which is disclosed in accordance with the Market Abuse Regulation which came into effect on 3 July 2016.