Petrofac, the international oil & gas facilities service provider, issues the following pre-close trading update ahead of the announcement of its interim results for the six months ending 30 June 2010, expected to be on 23 August 2010.
- Operations performing in-line with expectations
- Good progress on first phase of Turkmenistan project
- Group backlog expected to finish the year higher than it began (30 June 2010 forecast: US$6.9 billion; 31 December 2009: US$8.1 billion)
- Gross cash balances expected to be around US$1.0 billion at 30 June 2010 (31 December 2009: US$1.4 billion)
Ayman Asfari, Group Chief Executive, commented: “We have had a successful start to 2010 and we remain confident that this will be another year of strong growth in line with our expectations.
“Our bidding pipeline, which is focused on major hydrocarbon regions where significant expenditures are expected, remains strong and we expect our backlog to finish the year higher than it began, extending our outstanding backlog visibility well into next year and beyond.”
Engineering & Construction
In Engineering & Construction, the group continues to make good progress on its portfolio of contracts, including the initial phase of the South Yoloten project in Turkmenistan. We expect the decision on whether to convert into the much larger lump-sum EPC phase of this contract to be made in the near future. Our bidding pipeline remains strong in our core markets of the Middle East and Africa and the Commonwealth of Independent States, and we are beginning to establish a presence in Iraq in anticipation of near-term opportunities and to position us for what we expect will be significant levels of capital expenditure over the medium to long-term.
Offshore Engineering & Operations
Activity levels in Offshore Engineering & Operations have improved due to the commencement of work on major contracts awarded in the second half of 2009 and a general improvement in market conditions. We secured significant contract extensions with key customers in the first half of the year and tendering activity, both in the UK and internationally, remains at high levels. We have successfully completed four small acquisitions in the year to date, which broaden our capability and, in the case of the acquisitions of TNEI and CO2DeepStore, will enable us to take the first steps to position us in the renewable energy and low carbon sectors.
Engineering, Training Services & Production Solutions
Although we continue to see a steady flow of enquiries, our Engineering Services business continues to experience subdued activity levels. In Training Services, we have recently seen an increase in overall delegate numbers and we remain focused on strategic business development opportunities, both in the UK and internationally. In Production Solutions, we are making good progress towards securing our first production enhancement contract, where we would aim to improve the performance of marginal or mature fields by bringing together our operations, training, engineering and consultancy skills.
We were pleased to complete the sale of Energy Developments’ Don assets during the first half of the year, generating a capital gain of approximately US$125 million and demonstrating the value of our “build and harvest” strategy. Our operational assets are performing in line with expectations, including the Cendor development, offshore Malaysia, where we expect to issue a Field Development Programme for the second phase of the development in the next few weeks.
Backlog and cash position
Based on orders secured to date, total backlog is expected to be approximately US$6.9 billion at 30 June 2010 (31 December 2009: US$8.1 billion), comprising US$5.5 billion from Engineering & Construction (31 December 2009: US$6.2 billion) and US$1.4 billion across the other reporting segments (31 December 2009: US$1.9 billion). Gross cash balances are expected to be around US$1.0 billion at the end of June 2010 (31 December 2009: US$1.4 billion).