Petrofac Bucks Oilfield Services Downturn with Record Order Book

UK-headquartered Petrofac showed Wednesday that it is bucking the downward trend in oilfield services by posting a record order book for the end of 2015.

In its full-year results, Petrofac said its order backlog stood at $20.7 billion at Dec. 31, 2015 – an increase of 10 percent that was partly due to $6.1 billion of new orders achieved by its Onshore Engineering & Construction segment during the year, including major new awards in Kuwait and Saudi Arabia.

The company reported that it increased its total revenue for the year by 10 percent to $6.8 billion while its operating profit at the EBITDA level came in at $792 million (2014: $935 million) before taking into account a loss associated with the late start-up of Total's Laggan-Tormore project on the Shetland Islands, where Petrofac said if faced "exceptional challenges". After taking into account the loss attributable to Laggan-Tormore, EBITDA for 2015 was $312 million.

On the bottom line, Petrofac posted a net profit of $9 million against $581 million in 2014.

As far as the firm's outlook is concerned, Petrofac said that while the operating environment remains challenging it is continuing to focus on its core areas of strength along with maintaining its bidding discipline and delivery sector-leading margins. The company aims to achieve further annualized efficiency savings of up to $90 million by the end of 2016, adding to the $80 million savings it achieved in 2015.

Petrofac said it is seeing continuing investment from its clients in its core onshore markets of the Middle East and North Africa in both upstream and downstream projects.

Commenting on the results, Petrofac Group Chief Executive Ayman Asfari said in a company statement:

"Petrofac's core proposition is based on strong project execution, clear geographic focus, a disciplined approach to bidding and a sustainable, cost-effective structure. These strengths have positioned Petrofac well in a very challenging period for the oil and gas industry.
 
"Our results for 2015 were adversely affected by the Laggan-Tormore project on Shetland. However, we faced up to the exceptional challenges we encountered and honoured our commitment to our client. With the plant now successfully operational, these issues are finally behind us.
 
"We enter 2016 with a renewed focus on our core strengths. The group's backlog stands at record year-end levels, giving us excellent revenue visibility for 2016 and beyond."

Analysts at investment bank Barclays noted that the Laggan-Tormore loss was "more than forewarned" but that Petrofac "can now put the misadventure behind it and move forward".