Petrofac Expects Loss at Energy Services Unit in 2016
LONDON, Dec 15 (Reuters) – British oilfield services company Petrofac said its integrated energy services (IES) division, whose performance is linked to oil price moves, will post a loss in 2016 due to the slump in crude prices.
The company, a member of the FTSE 250 index of mid-sized stocks, said it will move parts of the expected loss-making business into its main engineering and construction unit on Jan. 1, leading to a small number of mainly administrative job losses, Chief Financial Officer Tim Weller told Reuters.
The company said every $1 move in global oil prices has a $2.5 million impact on the profit of the IES division.
Benchmark Brent crude prices fell within touching distance of 11-year lows on Monday, as a lingering supply glut swamped the market.
Businesses providing services to oil and gas companies have been hit hard by a slump in crude prices, as their clients slashed spending, though Petrofac said its strong presence in the Middle East and North Africa meant it was placed better than some rivals to weather the downturn.
"National oil company clients in the Middle East (and) North Africa have continued to spend. That is the one bright spot on the global horizon of oil and gas spend," Weller said.
Strong demand from that area boosted the order book of Petrofac's engineering and construction business to a record $18.5 billion by Nov. 30, the company said in a trading update ahead of its full-year results expected on Feb. 24.
Analysts at Bernstein said: "We expect the full-year 2015 dividend to remain in place ... Overall we believe investors should react positively to this statement.
Petrofac rival Amec Foster Wheeler last month said it would halve its 2015 dividend as it reins in spending.
Shares in Petrofac were trading up 0.8 percent at 1011 GMT.
Analysts polled by the company expected full-year net profit of $170 million, after accounting for a loss on the North Sea Laggan-Tormore project.
Petrofac also warned on Tuesday it could incur further costs in relation to the project of a few tens of millions of dollars, or up to $100 million in a worst-case scenario.
Petrofac's net debt for the second half of 2015 will be broadly flat, the company said. It stood at $1 billion on June 30.
(Editing by Louise Heavens and David Holmes)
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