Petrofac issues the following pre-close trading update ahead of the announcement of its full year results for year ending 31 December 2018 on 28 February 2019.
- Trading in line with expectations
- New order intake(1) of US$5.0 billion in the year to date
- Net debt is expected to be around US$250 million at 31 December 2018
Ayman Asfari, Petrofac’s Group Chief Executive, commented:
“We are on course to report good results, which reflect solid operational performance in all our businesses and excellent progress delivering our strategy.
“Healthy new order intake in both our core and growth markets reflects our competitiveness in a market that has seen some delays in contract awards. We have also made excellent progress transitioning back to a capital light business with US$0.8 billion(2) of divestments of non-core assets, realising US$0.5 billion of net divestment proceeds to date.
“Looking forward, we remain focused on securing new orders, delivering operational excellence and maintaining a strong balance sheet. We are well-positioned with a differentiated offering, good backlog and revenue visibility, and high levels of tendering for award in 2019.”
Engineering & Construction (E&C)
We have made solid progress delivering our portfolio of projects. In Kuwait, the Lower Fars Heavy Oil, Manifold Group Trunkline and KNPC Clean Fuels projects are in pre-commissioning or phased hand-over stages. In Abu Dhabi, we recently achieved a major milestone on the Upper Zakum Field Development with the oil facility ready for start up. Elsewhere, the Jazan North and South tank farms, Fadhili sulphur recovery plant and RAPID projects are nearing completion. The topside platform has also been successfully installed on the Borwin 3 offshore wind project in the North Sea.
We have been awarded new orders worth US$3.8 billion in E&C year to date. Of these, US$2.2 billion were awarded in growth markets, including the Thai Oil refinery project in Thailand, three projects in India and an offshore wind project in The Netherlands. We are currently bidding on more than US$15 billion of tenders scheduled for award in the first half of 2019.
Engineering & Production Services (EPS)
The continued resilience of our operations business, short-term extensions of historical contracts in EPS East and good progress on our EPCm (3) projects are off-setting a challenging market environment for brownfield projects in the North Sea.
We have secured US$1.2 billion of awards and extensions in EPS year to date, predominantly in the UK, Oman, Turkey and Iraq.
Integrated Energy Services (IES)
Net production is forecast to be approximately 6.1 mmboe in 2018, in line with guidance (4). The average realised oil price (net of royalties) for the year is expected to be approximately US$61 per barrel of oil equivalent (2017: US$51/boe) reflecting higher oil prices, production mix and hedging activity.
Group backlog stood at US$10.2 billion at 30 November 2018:
30 November 2018
31 December 2017
Engineering & Construction
Engineering & Production Services
Net debt is expected to be around US$250 million at 31 December 2018 (2017: US$0.6 billion), benefitting from lower capital expenditure, a working capital inflow in the second half of 2018 and approximately US$0.5 billion of net divestment proceeds. We continue to review options for our remaining non-core assets, consistent with our strategy to reduce capital intensity.
Alastair Cochran, Chief Financial Officer, will host a conference call for analysts and investors at 8am today.
(1) 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. Order intake is not an audited measure.
(2) Gross consideration, including firm, deferred and contingent consideration.
(3) Engineering, Procurement and Construction Management.
(4) 2018 full year net production guidance is 6-7 million barrels of oil equivalent (mmboe).