Petrofac News 1700X397
29 August 2018

Results for the six months ended 30 June 2018

  • Strong operational performance in all our businesses
  • Business performance net profit (1)(2) up 20% to US$190 million
  • Reported net loss (2) of US$17 million post impairments and exceptional items of US$207 million
  • New order intake (3) of US$3.3 billion year to date; backlog (4) of US$9.7 billion at 30 June 2018
  • Net debt of US$0.9 billion in line with expectations
  • Signed US$0.8 billion of divestments year to date
  • Interim dividend of 12.7 cents per share in line with dividend policy


Six months ended 30 June 2018

Six months ended 30 June 2017


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:

“We have reported a good set of first half results that reflect strong execution and excellent progress delivering our strategy.

“We remain focused on our core and delivering organic growth as the market recovers. The Group has secured US$3.3 billion of new orders in both established and adjacent markets year to date, and is well placed on several bids due for award before the end of the year. Our focus on operational excellence is reflected in improved margins and continued good progress across our project portfolio in the first half.  Furthermore, we are well positioned for the second half with good revenue visibility, a strong competitive position and healthy liquidity.

“The Group is also making significant progress reducing capital intensity, signing agreements to sell the JSD6000 installation vessel, our interests in the Chergui gas concession and Greater Stella Area development, as well as a 49% interest in our Mexican operations. These transactions will increase our focus on our core and strengthen our balance sheet.”


Engineering & Construction (E&C)

Good results reflecting best-in-class delivery

  • High level of activity with 107 million manhours worked, up 2%
  • US$2.4 billion of new order intake year to date, including awards in the GCC, India, the Netherlands, Iraq and Algeria
  • Good progress across our portfolio of lump-sum projects
  • Alrar and Reggane projects in Algeria commissioned
  • KNPC Clean Fuels, Lower Fars Heavy Oil, Jazan Tank Farms and Upper Zakum Field Development scheduled to be substantially complete around the end of 2018
  • Revenue of US$1.9 billion, down 19% largely reflecting project phasing
  • Net margin up 1.0 ppts to 7.7%, reflecting an improvement in project mix, lower tax and lower overhead recovery
  • Net profit down 7% to US$149 million
  • Sale of the JSD6000 installation vessel announced in April 2018

Engineering & Production Services (EPS)

Good operational performance in challenging market conditions

  • US$0.9 billion of awards year to date, predominantly in Oman, UK, Turkey and Iraq
  • Revenue of US$0.7 billion, up 9% largely driven by new awards and project phasing in EPCm
  • Net margin broadly stable at 7.6% reflecting lower overheads offset by business mix, higher tax and higher minority interests
  • Net profit up 6% to US$54 million

Integrated Energy Services (IES)

Return to profit driven by production mix and higher realised prices

  • Revenue of US$136 million, up 40% (up 62% excluding asset sales)
  • Equity production doubled to 1.8 mmboe (net)
  • Total production down 8% to 3.1 mmboe (net) due to portfolio mix and asset sales
  • Higher average realised price (5) of US$56/boe (1H 2017: US$52/boe)
  • Lower tariff income and cost recovery in Mexico reflecting Santuario’s migration to a PSC
  • EBITDA up 97% to US$72 million (up 115% excluding asset sales)
  • Equity interests’ EBITDA per boe flat reflecting increase in unit operating costs
  • Higher PEC contribution largely driven by lower opex
  • Net profit up 183% to US$16 million (up 162% excluding asset sales)
  • Announced sales, which are expected to complete by Q1 2019, of Chergui (100%), Mexican operations (49%) and Greater Stella Area development (100%)


Exceptionals and certain re-measurements

The reported net loss of US$17 million was impacted by exceptional items and certain re-measurements of US$207 million, of which approximately US$188 million were non-cash items:

  • Agreed asset sales during 2018 triggered US$173 million of non-cash impairments (post-tax) in relation to the JSD6000 installation vessel, Mexico operations and the Greater Stella Area development; and,
  • Other exceptional net items of US$34 million (post-tax).

The carrying amount of the IES portfolio (6) at 30 June 2018 was US$0.8 billion (31 December 2017: US$1.0 billion). Agreed divestments is expected to reduce the net book value by approximately US$0.4 billion on completion.



Net debt was US$0.9 billion at 30 June 2018 (31 December 2017: US$0.6 billion), in line with expectations. The increase in net debt largely reflects the unwind of temporary favourable working capital movements at the end of 2017, the phasing of tax and dividend payments, the purchase of treasury shares and US$93 million of net divestment proceeds. Net debt is expected to decrease during the second half of the year.

The Group retained healthy liquidity of US$1.3 billion at 30 June 2018 (31 December 2017: US$1.6 billion). In addition, the Group secured US$300 million of additional banking facilities in August 2018, further strengthening its liquidity position. This financing is in line with the Company’s strategy to pre-fund expected liquidity requirements for at least the next 12 months, including maturity of Petrofac’s US$677 million 3.40% bond in October 2018.



In August 2017, the Board approved a sustainable dividend policy that targets a dividend cover of between 2.0x and 3.0x business performance net profit as the Group transitions back towards a low capital intensity business model. This new policy also targets paying an interim dividend each year of approximately 33% of the prior year total dividend.

In line with this policy, the Board has declared an interim dividend of 12.7 cents per share (2017: 12.7 cents). The interim dividend will be paid on 19 October 2018 to eligible shareholders on the register at 21 September 2018 (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.



The Group is trading in line with expectations in its core E&C and EPS businesses, with IES expected to continue to benefit from the recovery in oil prices.  We are well positioned for the second half with a healthy order backlog of US$9.7 billion at 30 June 2018 (31 December 2017: US$10.2 billion) and US$3.0 billion of secured revenue for the second half of 2018.


30 June 2018

31 December 2017


US$ billion

US$ billion

Engineering & Construction



Engineering & Production Services






The Group has secured US$3.3 billion of new orders in the year to date, with awards in both established and adjacent markets. We are well placed on several bids due for award before the end of the year, have a healthy bidding pipeline and a strong competitive position.

We continue to take measures to deliver a sustainable reduction in net debt and strengthen our balance sheet.  Group capital expenditure is expected to decrease to around US$150 million in 2018 (2017: US$170 million) in line with prior guidance. Furthermore, we remain committed to delivering operational excellence and divesting non-core assets. In the year to date, we have agreed the sale of assets for cash consideration of up to US$0.8 billion.


Effective 1 August 2018, George Salibi was appointed Chief Operating Officer, E&C, and John Pearson was appointed Chief Operating Officer, EPS. George and John have overall accountability for delivery of their respective business plans and report to Ayman Asfari, Group Chief Executive.


  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 comprises new contract awards and extensions, net variation orders and the rolling increment attributable to EPS contracts which extend beyond five years. US$3.3 billion of new order intake year to date includes US$0.6 billion for the Tinhert project announced this morning.
  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. Includes balances within oil & gas assets, intangible assets, interests in associates, other financial assets and assets held for sale (excludes working capital, tax and decommissioning liabilities).

View the Group's financial statements for the six months ended 30 June 2018.


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





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 based on current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described 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.