13 December 2011
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 2011, expected to be on 5 March 2012.
- Operations continue to perform in line with expectations
- Expect to deliver like-for-like(1) net profit growth in 2011 of at least 20%
- On the basis of awards announced in the year to date, backlog expected to be approximately US$10.6 billion at 31 December 2011 (31 December 2010: US$11.7 billion)
- Gross cash balances expected to be approximately US$1.3 billion at 31 December 2011 (31 December 2010: US$1.1 billion)
Ayman Asfari, Group Chief Executive, commented:
“We have delivered good operational performance across our portfolio of projects in the year to date. We expect to deliver like-for-like net profit growth for the full year of at least 20% and, given our excellent earnings visibility, we expect to deliver strong growth in 2012.
“We have a strong pipeline of new opportunities for Engineering, Construction, Operations & Maintenance (ECOM) and Integrated Energy Services (IES), which, combined with our existing projects, gives us confidence that we can achieve our target of more than doubling our recurring 2010 group earnings by 2015.”
Following good progress in implementing our group reorganisation, we now intend to report our 2011 full year results under the revised group structure. We will report the results of our two divisions (ECOM and IES) under four reporting segments: Onshore Engineering & Construction; Offshore Projects & Operations; Engineering & Consulting Services; and Integrated Energy Services. Restated 2010 results will be made available in advance of the 2011 full year results.
Engineering, Construction, Operations & Maintenance (ECOM)
Onshore Engineering & Construction
We continue to make good progress across our portfolio of projects, including the South Yoloten project in Turkmenistan, where, as expected, we will reach the progress threshold for recognising profit by the end of the year. As we move into 2012, we see a strong pipeline of bidding opportunities in our core markets in the Middle East, North Africa and the Commonwealth of Independent States.
Offshore Projects & Operations
Offshore Projects & Operations has had a record year with high activity levels on both long-term operations support contracts and offshore capital projects, including the SEPAT development, offshore Peninsular Malaysia, which is substantially complete, and the FPSO Berantai. We recently secured a further capital project (subject to Field Development Programme approval) to undertake modification and upgrade works to the FPF1 floating production facility ahead of its deployment on the Greater Stella Area development in the Central North Sea and we will provide Duty Holder services to the FPF1 on a life-of-field contract. We continue to pursue new operations support contracts and offshore capital projects, including support of Integrated Energy Services’ projects, as we progress our strategy of taking our EPC (engineering, procurement and construction) capability offshore.
Engineering & Consulting Services
Engineering & Consulting Services provides support to ECOM and IES, but also engineering and consulting services to external customers. We opened our third Indian engineering office, in Delhi, earlier in the year, taking our total headcount for our Indian engineering offices to around 1,750. We recently entered a strategic joint venture with China Petroleum Engineering & Construction Corporation (CPECC) to provide project management and engineering services on projects for Chinese oil & gas companies in China and internationally.
Integrated Energy Services (IES)
We have made good progress with our IES strategy in the year to date, including the award of two Production Enhancement Contracts in Mexico (where we anticipate taking responsibility for field operations during February 2012) and have reached an agreement to upgrade and deploy the FPF1 floating production facility on the Greater Stella Area and to take a 20% interest in the Stella and Harrier, Hurricane and Helios fields.
On the Berantai project for PETRONAS in Malaysia, the jacket and topsides have been installed for the first wellhead platform and the drilling programme has commenced on schedule. The FPSO Berantai is expected to sailaway to location around the end of the first quarter of 2012. In Block PM304, offshore Peninsular Malaysia, the gas lift facilities on the Cendor field are expected to commence operation around the end of this year and we expect the Field Development Programme for the West Desaru fault block to be approved in early 2012. Year to date production at the Chergui gas plant in Tunisia is ahead of target following strong production levels during the second half of 2011.
On the Ticleni Production Enhancement Contract in Romania, we are drilling the second water injection well as part of the water flood pilot and overall production is in line with expectations. In Nigeria, we continue to make good progress in our strategic relationship with Seven Energy.
Our Training business has seen an increase in delegate numbers in the year to date and has recently entered into a strategic partnership with Raytheon Technical Services Company to deliver water survival training to the global oil & gas industry at NASA's Johnson Space Centre underwater facility in Houston.
Group backlog is anticipated to be approximately US$10.6 billion at the end of the year (31 December 2010: US$11.7 billion). The group expects its gross cash balances at 31 December 2011 to be around US$1.3 billion (2010: US$1.1 billion).
(1) Like-for-like net profit growth excludes the gain of US$124.9 million on the EnQuest demerger and the trading net profit from Energy Developments’ demerged assets of US$2.1 million for the year ended 31 December 2010.
A telephone conference call for analysts and investors will be held at 9am today (please contact Tulchan Communications for details).