Petrofac on Course for Modest Profit Growth in 2013

UK oilfield services supplier Petrofac reported Monday that a good operational performance during the second half of 2013 so far means that it is set for modest profit growth for the year as a whole.

Petroface said its engineering, procurement and construction (EPC) portfolio "remains in excellent shape" reflecting a disciplined approach to business development and project execution.  During the year so far, the firm has taken engineering, construction, operations and maintenance (ECOM) orders amounting to $5.9 billion, with its group backlog of orders maintained at $14.3 billion at the end of October – the same level it was at June 30.

A number of Petrofac's projects are in the commissioning phase, including major projects in Abu Dhabi, Algeria and Turkmenistan. The firm has commenced early work on recently awarded projects in Abu Dhabi, including on the Upper Zakum field development, where it has been undertaking capacity enhancement studies. Petrofac said these studies have the potential to increase the scale and duration of the Upper Zakum contract and the revised phasing of the project is now expected to result in the deferral of significant revenue and margin from 2014 into 2015 and beyond.

The firm also recently secured a $650 million project for the Alrar gas field in Algeria, with its joint venture partner Bonatti, taking its order intake for its Onshore Engineering & Construction business to $4.8 billion during the year to date. It said its pipeline of bidding opportunities for the remainder of 2013 and for 2014.

Petrofac said its Offshore Projects & Operations continues to perform well on its portfolio of operations support contracts and offshore capital projects. The firm continues to see an attractive pipeline of bidding opportunities and it recently secured a $95 million maintenance contract with Gazprom for the Badra oil field in Iraq. It also recently secured a number of contract extensions, including a $99 million contract extension with South Oil Company in Iraq for the operation and maintenance of offshore facilities as well as a number of smaller contract extensions in the UK North Sea.

Meanwhile, Petrofac said it continues to make good progress on its equity upstream investments, with good initial production from West Desaru on Block PM304 in Malaysia. On Cendor phase 2, also in Block PM304, Petrofac said its floating production storage and offloading (FPSO) vessel is expected to arrive in the first half of 2014 with first production expected shortly thereafter.

The firm's net debt position at the end of October was $0.5 billion.