- Petrofac expects a 70% decline in revenues to $1.6 billion in engineering and construction divisions
- Still “unclear how long market conditions will continue to disrupt business activity,” says CEO
- Petrofac stock price has slipped 10% lower following the release of a trading update this morning
Shares of Petrofac Limited (LON: PFC) have slumped over 10% today after the company reported it expects a 70% decline in revenue for its two divisions. As a result, Petrofac share price has erased gains recorded in the past four days.
Fundamental analysis: Weak oil demand hurting the company
Petrofac said its two divisions – engineering and construction – are expected to suffer immensely from a plunge in demand for oil products. A major provider of oilfield services expects to see a 70% decline in revenues to $1.6 billion compared to last year, for its engineering and construction divisions.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
“Despite all of our efforts, the COVID-19 pandemic and sharp fall in oil prices have materially impacted financial performance and new orders in the first half of the year,” Ayman Asfari, Petrofac’s Group Chief Executive, said in a statement.
Petrofac said that new orders stand at $400 million, against last year’s $1.6 billion. Moreover, Petrofac’s order backlog sits at $6.4 billion as of May 31, while net debt is $139 million.
“Looking ahead, it is unclear how long market conditions will continue to disrupt business activity and delay awards,” Asfari added.
Still, the company believes that better times are coming for the oil industry. The order book is still in place, although operations in India and Iraq are halted,
“Notwithstanding this, we have a tendering pipeline of US$48 billion of opportunities scheduled for award by the end of 2021 and an order book that gives us good near-term revenue visibility,” Asfari concluded.
Invezz reported last month that Canada’s oil and gas industry is facing the worst-ever recession as the low oil prices and high supply continue to create havoc in the market.
Technical analysis: Stock price plunges
Petrofac stock price dipped 10% lower in London today following a trading update posted from the company. As a result, the sellers have managed to erase all gains recorded in the last four days.
The price action remains capped by the descending trend line at 220p, in addition to the 100-DMA that currently sits at 229.5p. On the downside, the buyers are relying on the horizontal support around 184p to protect it from the high selling pressure.
Petrofac share price has plunged around 10% today after the company reported it is facing a 70% decline in revenues for its engineering and construction divisions.