Petrofac share price rebounds from two-year low

on Dec 6, 2013
Updated: Oct 21, 2019
Listen, Friday, December 6: Shares in oilfield services group Petrofac (LON:PFC) rebounded strongly today from yesterday’s drop, after the company reassured investors that reward will come from its efforts to expand into offshore activity.

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In today’s midday UTC trading, Petrofac’s share price has gained more than four percent, with an intraday high at 1,208p.
IG analyst Brenda Kelly observes: “Having hit a two-year low yesterday on rumours that management was reducing long-term earnings forecasts, Petrofac has been besieged by bargain-hunters this morning.”
At a strategy presentation in London yesterday, Petrofac sought to address investor concerns as to whether its plans to spend more than a year’s earnings on diversifying into offshore pipe-laying services will be worth the investment.

The FTSE 100-listed British provider is investing $700 million in a vessel for installing and decommissioning
oil and gas infrastructure, expenditure which it says is vital for its offshore growth. Some analysts and investors worry though that the offshore market is both crowded and risky, pointing to subsurface specialists such as Aker and Saipem being hit with project delays this year.

Petrofac chief executive Ayman Asfari told analysts at the company’s capital markets day: “If this capability was available to rent in the market, believe me we would do that … This investment represents the minimum to access this high-end market.”
The new vessel, the Petrofac 6,000, will allow the company to book orders from oil companies for bigger and more challenging engineering, procurement and construction projects in places like Mexico and West Africa. The ship is expected to be operational by early 2017 and is the biggest item in a $1 billion

investment in offshore capability over the next five years.
Petrofac, which specialises in onshore projects, particularly in the Middle East, has seen its share price drop nearly 30 percent this year due to investor concerns about its push into offshore and the company’s cautious outlook for the next two years (Petrofac’s share price drops on cautious guidance).

**Nigerian deal**
Separately, Petrofac said earlier this week that it had joined forces with independent African oil and gas company Taleveras Energy Resources in a cooperation deal with the Nigerian National Petroleum Company (NPDC) to develop oil assets in the African country.
In a statement Petrofac said: “As an initial result of this strategic collaboration, Petrofac has, together with Taleveras, agreed with NPDC to provide financial, technical, and capacity and capability building support for the further development of NPDC’s offshore block OML119.”
**Analysts on Petrofac**
Equity analysts at Societe Generale today reaffirmed their “buy” rating on Petrofac, Stock Ratings News has reported. They currently have a 1,560p price target on the stock.
**As of 14:11 UTC buy Petrofac shares at 1,199p**
**As of 14:11 UTC sell Petrofac shares at 1,197p**


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