24 June 2014
Petrofac issues the following pre-close trading update ahead of the announcement of its interim results for the six months ending 30 June 2014 on 26 August 2014.
- Good operational performance from ECOM with good progress being made across the EPC portfolio; focused on delivering improved operational performance on certain IES projects
- ECOM order intake of US$6.8 billion in the year to date; Group backlog stands at record levels of US$20.1 billion at 31 May 2014 (31 December 2013: US$15.0 billion)
- In line with previous guidance, net profit for the full year 2014 expected to be in the range US$580 million to US$600 million; net profit expected to be significantly weighted toward H2 2014, reflecting phasing of OEC and OPO project delivery over the course of the year
- Net debt of US$1.3 billion at 31 May 2014 (31 December 2013: US$0.7 billion), reflecting ongoing investment in IES and our offshore installation vessel, payment of the 2013 final dividend and a continued high level of working capital
Ayman Asfari, Petrofac’s Group Chief Executive, commented:
“We have had a good start to the year in ECOM, delivering good operational performance, and securing more than US$6 billion of order intake. The Group’s backlog stands at record levels, giving us good revenue visibility for the rest of this year and beyond. Our pipeline of bidding opportunities remains attractive, which, together with our strong competitive position, should see us secure a number of further awards over the second half of the year.
“In Integrated Energy Services, we remain focused on delivering improved operational performance on certain projects in the portfolio. Looking further ahead, whilst we continue to see strong demand for the provision of integrated services, we are prioritising those opportunities which make the best use of our existing core areas of strength, offer clear synergies with ECOM, and deliver attractive returns on capital employed.”
Engineering, Construction, Operations & Maintenance (ECOM)
Our operations in Iraq are south and east of Baghdad and represent less than 5% of the Group's expected revenues for 2014. While we continue to monitor events closely, there has been no significant impact on our current operations to date.
Onshore Engineering & Construction (OEC)
We continue to make good progress across our portfolio of engineering, procurement and construction (EPC) projects. Activity levels, revenue and net income are expected to increase substantially in the second half of the year as we move into the execution phase on a number of major projects. We have had an excellent few months in terms of securing new business, with US$4.5 billion of order intake in the year to date, including in Oman, Kuwait and Algeria. Together with our opening backlog position, this gives us good revenue visibility for 2014 and beyond. Our pipeline of bidding opportunities remains attractive and, given our strong competitive position, we are confident of securing further Onshore Engineering & Construction awards during the remainder of the year.
Offshore Projects & Operations (OPO)
We have secured a number of contract extensions and new wins in Offshore Projects & Operations in the year to date. We were recently awarded a ten-year operations and maintenance contract with EnQuest, which supersedes an initial five year contract awarded to Petrofac in 2013, which will see Petrofac continue to provide operations and maintenance services on the Thistle, Heather and Northern Producer assets, and the EnQuest Producer floating production, storage and offloading vessel (FPSO). Through Offshore Capital Projects, we recently secured our largest offshore engineering, procurement, construction and installation (EPCI) project to date (in consortium with Siemens) with the award of a major contract from TenneT, the German-Dutch transmission grid operator, for the BorWin3 offshore wind farm grid connection in the North Sea.
Engineering & Consulting Services (ECS)
In March, Engineering & Consulting Services was awarded its largest ever award for an engineering, procurement and construction management contract (EPCm) for Petroleum Development Oman (PDO) to provide services for its Rabab Harweel Integrated Project (RHIP) in Oman. The total contract value is expected to be more than US$1 billion with around one quarter of the revenues relating to professional services (engineering and construction and commissioning management).
Integrated Energy Services (IES)
Equity Upstream Investments
Commissioning of the FPSO for the second phase of Cendor on Block PM304 is proceeding on schedule and first production through the Phase 2 FPSO is expected early in the second half of the year. Through Offshore Projects & Operations, we remain focused on the ongoing work on the topsides processing plant on the FPF1 floating production facility. We plan to sailaway the FPF1 in spring 2015 with first production on the Greater Stella Area development expected in mid-2015. Year to date production from the Chergui gas concession in Tunisia is in line with expectations.
Production Enhancement Contracts
We continue to make good progress on our production enhancement contracts in Mexico. As noted in our recent Interim Management Statement, we are in the process of agreeing a revised Field Development Plan on the Ticleni field in Romania.
Risk Service Contracts
The Berantai risk service contract continues to perform in line with expectations and we continue to work towards a second phase. We have commenced early activities on OML119 in Nigeria but do not expect material investment until the Field Development Plan has been finalised and agreed.
Group backlog stood at US$20.1 billion at 31 May 2014 (31 December 2013: US$15.0 billion):
31 May 2014
31 December 2013
Onshore Engineering & Construction
Offshore Projects & Operations
Engineering & Consulting Services
Integrated Energy Services
Net debt was US$1.3 billion at 31 May 2014 (31 December 2013: US$0.7 billion), reflecting ongoing investment in IES and our offshore installation vessel, the Petrofac JSD 6000, payment of the 2013 final dividend and a continued high level of working capital balances on certain contracts which built up during 2013 and which have not yet unwound.
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 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.