Petrofac Share Price Drops on Lacklustre Profit Forecast
Petrofac Limited (LON:PFC) expects modest growth in the current year and remains on track to meet our 2015 earnings target, the UK oil services company has said.
The company has also provided an update on its In Salah project in Algeria which was delayed earlier this year. Petrofac’s share price shed more than three percent in morning trading on the London Stock Exchange today, June 25.
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**Petrofac Eyes Modest Profit Growth**
In a trading update released today, the FTSE 100 company said that it expected net profit for 2013 to be “significantly weighted” toward the second half of the year, reflecting project delivery dates.
Petrofac warned in an interim management statement last month, that it expected only “modest growth” due to the delay to the In Salah project in Algeria. The company had previously said it expected “good growth”.
“We have made good progress in the year to date, achieving a number of key milestones,” Petrofac’s Chief Executive Ayman Asfari commented in today’s statement. “We have secured $2.6 billion of order intake and our portfolio of active projects is in excellent shape.”
The group’s backlog stood at $11.9 billion (£7.7 billion) at 31 May 2013, slightly up from 31 December 2012. Petrofac’s net debt was $0.3 billion (£0.2 billion) as of May 31, 2013, compared with net cash of $0.3 billion as of December 31, 2012, with the cash outflow being predominantly due to investment in Integrated
Energy Services (IES) projects. The company expects to remain in net debt throughout the remainder of the year on account of ongoing deployment of cash on IES projects and initial investment in its offshore strategy.
**In Salah Gas Project Update**
Reuters quoted Petrofac’s CFO Tim Weller as saying today that the company was going to restart the In Salah gas project in Algeria in a few weeks and resume full site operations during the second half of 2013. The project has been idled due to an attack in January on another Algerian gas facility which prompted Petrofac to temporarily remove its staff from the In Salah southern fields development.
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“We’ll be starting activity back on the site pretty much as soon as we get into the second half of the year,” Weller noted, as quoted by Reuters. “The expectation is we’ll be up to full pace in terms of construction activity by September or early October.”
Weller also said that Petrofac would not be bidding for projects in the Chicontepec basin in Mexico where the company had been carrying out a number of studies. “The sub-surface infrastructure there is remarkably complex,” Weller noted. “We’re not looking to expose ourselves to that much risk.”
**Petrofac’s share price was 3.16 percent lower at 1,195.00p in London as of 10:16 BST on 25 June 2013.**
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