Petrofac News 1700X397
17 December 2010

Trading Update

Petrofac, the international oil & gas facilities service provider, issues the following pre-close trading update ahead of the announcement of its audited results for the year ending 31 December 2010, expected to be on 7 March 2011.

  • Net profit for the year expected to be in line with expectations for like-for-like year-on-year growth of at least 20%(1)
  • Excluding the potential award of the South Yoloten project in Turkmenistan, order intake for the year is anticipated to be around US$4.4 billion, resulting in a year-end backlog position of around US$8.4 billion(2) (31 December 2009: US$8.1bn)
  • Gross cash balances at 31 December 2010 expected to be around US$1.0 billion (31 December 2009: US$1.4bn)

Ayman Asfari, group chief executive, commented: "We are pleased with our excellent operational performance during the year to date and we are confident of delivering record results for 2010 in line with expectations for strong growth.

"Although the conversion process has taken longer than originally expected, we remain confident of moving into the EPC phase of the South Yoloten project in Turkmenistan. Should conversion not occur until 2011, we still expect to close 2010 with record levels of year-end backlog. Our good current prospects and excellent revenue visibility underpin our confidence that we will deliver continued strong growth in the coming year and beyond."

Engineering & Construction

In Engineering & Construction, we have continued our excellent performance, with good progress on our portfolio of projects, including handover of the Ebla gas plant in Syria and two (of three) of the In Salah Gas compression stations in Algeria, and substantial completion of the Jihar gas plant in Syria, the Harweel enhanced oil recovery plant in Oman, the Mina Al-Ahmadi refinery pipelines in Kuwait and the third In Salah Gas compression station. As a result, we expect to deliver a net profit margin in 2010 ahead of our medium-term guidance of around 10%. We have good current prospects in our core markets, as well as opportunities in emerging markets such as Turkmenistan and Iraq.

Offshore Engineering & Operations

Our Offshore Engineering & Operations business has been successful in securing a number of contract extensions and awards during the year, most notably the US$800 million EPC contract for the development of the Laggan Tormore gas processing facility for Total at Sullom Voe, on Shetland, in the UK. Offshore Engineering & Operations backlog is expected to end the year at record levels and we continue to see a good pipeline of bidding opportunities in the UK and internationally.

Engineering, Training Services & Production Solutions

In Engineering Services, we have had a subdued year in terms of work for external customers, but we expect to see a recovery as we move into 2011. In Training Services, we have seen a steady improvement in overall delegate numbers, including a strong rise in international markets. In Production Solutions, we have successfully completed the transition to assume full operational responsibility for the Ticleni fields in Romania under a 15 year production enhancement contract. Following the recent agreement to invest in and enter into a strategic alliance with Seven Energy International Limited (‘Seven Energy’), a leading Nigerian production and development company, we have mobilised a team to Nigeria to assist with the development of their production, processing and transportation assets.

Energy Developments

Through Energy Developments we recently acquired a 20% stake in Gateway Storage Company Limited, to progress and develop the Gateway gas storage project in the East Irish Sea. This follows our other recent investments in Seven Energy and the Goldeneye gas field in the North Sea and the divestment of our UK Continental Shelf assets earlier in the year. In Malaysia, we have received approval for the Field Development Programme for the second phase of the Cendor project and we are finalising our contracting strategy. We are currently reviewing a number of opportunities in upstream oil & gas assets and energy infrastructure, including equity investments and risk service contracts, and we are continuing to build our co-investment capability. Our operational assets are performing in line with expectations.

Backlog and gross cash balances

Excluding the potential award of the South Yoloten project in Turkmenistan, group backlog is anticipated to be approximately US$8.4 billion at the end of the year (31 December 2009: US$8.1 billion) comprising approximately US$5.7 billion from Engineering & Construction (31 December 2009: US$6.2 billion) and approximately US$2.7 billion across the other business units (31 December 2009: US$1.9 billion).


31 December 2010

30 June 2010

31 December 2009

Engineering & Construction




Offshore Engineering & Operations




Engineering, Training Services and Production Solutions








The group expects its gross cash balances at 31 December 2010 to be around US$1.0 billion (2009: US$1.4 billion).

1.    Like-for-like net profit growth excludes the trading net profit from Energy Developments’ demerged assets of US$12.7 million for the year ended 31 December 2009 and US$2.1 million for the year ending 31 December 2010 and the capital gain on the EnQuest demerger of US$125.6 million for the year ending 31 December 2010. Reported net profit attributable to Petrofac Limited shareholders was US$353.6 million for the year ended 31 December 2009. Current market expectations for Petrofac’s net profit for the year ending 31 December 2010 are based on forecasts provided to Petrofac by 20 equity analysts since publication of the group’s Interim Results in August 2010. The average of those forecasts is US$416.3 million.
2.    Backlog consists of the estimated revenue attributable to the uncompleted portion of lump-sum engineering, procurement and construction contracts and variation orders plus, with regard to engineering services and facilities management contracts, the estimated revenue attributable to the lesser of the remaining term of the contract and, in the case of life-of-field facilities management contracts, five years. The group uses this key performance indicator as a measure of the visibility of future earnings. Order intake comprises new contracts awarded, growth in scope of existing contracts and the rolling increment attributable to contracts which extend beyond five years. Backlog and order intake are not audited measures.

Conference call

A telephone conference call for analysts and investors will be held at 9am today (please contact Tulchan Communications for details).

For further information contact:
Petrofac Limited             +44 (0) 20 7811 4900      
Jonathan Low, Head of Investor Relations
Tulchan Communications Group Ltd             +44 (0) 20 7353 4200      
James Bradley
David Allchurch

Notes to Editors


Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry, with a diverse customer portfolio including many of the world’s leading integrated, independent and national oil & gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC) and is a constituent of the FTSE 100 Index.

The group delivers services through seven business units: Engineering & Construction, Engineering & Construction Ventures, Engineering Services, Offshore Engineering & Operations, Training Services, Production Solutions and Energy Developments.

Through these businesses Petrofac designs and builds oil & gas facilities; operates, maintains and manages facilities and trains personnel; enhances production; and, where it can leverage its service capability, develops and co-invests in upstream and infrastructure projects. Petrofac’s range of services meets its customers’ needs across the full life cycle of oil & gas assets.

With more than 13,000 employees, Petrofac operates out of six strategically located operational centres, in Aberdeen, Sharjah, Woking, Chennai, Mumbai and Abu Dhabi and a further 19 offices worldwide. The predominant focus of Petrofac’s business is on the UK Continental Shelf (UKCS), the Middle East and Africa, the Commonwealth of Independent States (CIS) and the Asia Pacific region.