Petrofac On Track for Growth Thanks to High Levels of Bidding Activity

International oilfield services firm Petrofac reported Friday it remains on track to deliver net profit growth this year of at least 15 percent thanks to a good operational performance.

UK-headquartered Petrofac – which works on engineering, construction, operations and maintenance (ECOM) projects and offers integrated energy services (IES) – said that it is currently experiencing high levels of bidding activity, particularly in the Middle East, North Africa and the Commonwealth of Independent States.

The firm reported that its Onshore Engineering & Construction business has made good progress across its portfolio of projects, including on major projects in Abu Dhabi, Turkmenistan and Algeria. This business' order intake during the year to date has been $1.3 billion – after it secured major awards in Iraq, Saudi Arabia and Kuwait.

Petrofac's Offshore Projects & Operations business also performed well and secured a number of contract wins and extensions during the year so far, while the firm's Engineering & Consulting Services operation has seen recent awards of front-end engineering and design (FEED) studies that have led to an increase in activity levels.

Petrofac's IES division has secured its fourth production enhancement contract in Mexico, with the firm recently being declared the selected bidder for the Arenque offshore contract area. The Arenque and previously-awarded Pánuco contract will both run for 30 years and are expected to start in December 2012 and 1Q 2013 respectively.

The IES division has also recently begun work on projects in Romania and Malaysia.

Petrofac's overall group backlog of orders amounted to $9.4 billion at the end of September, up from the $8.9 billion it stood at three months earlier. The firm's net cash balance on Sept. 30 was approximately $0.5 billion (June 30 2012: $0.8 billion).

Petrofac Group Chief Executive Ayman Asfari commented in a company statement:

"Given this bidding activity and our competitive positioning, we expect to grow Group backlog over the coming months. Together with our existing portfolio of ECOM and IES projects, this underpins our confidence that we will continue to deliver earnings growth in 2013 and beyond and that we will achieve our target of more than doubling our recurring group 2010 earnings by 2015."

Oil sector analysts at Paris-based investment bank Exane commented that the update "confirms the improving momentum in the business".

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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