Petrofac: profit primed for 15% hike in 2012

Interim statement reveals ECOM backlog down $1.7bn this year

Petrofac reports $7.5 billion in core ECOM division, and says it is on track for 15% net profit growth this year.
Petrofac reports $7.5 billion in core ECOM division, and says it is on track for 15% net profit growth this year.

Sharjah-based oil & gas EPC giant Petrofac has confirmed its net profit growth guidance of “at least 15%” for 2012 in a bullish interim update to investors.

The company says ECOM order intake over the year to date is $1.3 billion, with a further $1.1 billion of contracts pending signature waiting to be added to backlog figures.

Based on the contracts signed in the year so far, Petrofac's expects its group-wide backlog to be around $9.1bn by the end of the first half, comprising US$7.5 billion from ECOM (31 December 2011: US$9.2 billion) and US$1.6 billion from IES (31 December 2011: US$1.6 billion), down from $10.8bn at the start of the year.

The company’s backlog is a key focus for investors as other EPC firms have reported slippages in contract awards.

Petrofac’s shares on the London Stock Exchange have retreated almost 23% since the start of last month to 1,368p before trading this morning, as a tumbling oil price has weighed on the sector. Shares were up 2.43% at the time of writing to 1,390p.

Petrofac’s operational strength continues, with the firm reporting good performance across its portfolio of projects in the year to date.

Petrofac’s new IES division is performing well, and recently secured its first joint production enhancement contract with oilfield services giant Schlumberger, on the Pánuco Contract Area in Mexico.

So far this year, Petrofac has been awarded a $330 million EPC project by Gazprom at its Badra field in Iraq and has secured further awards worth approximately $500 million, which are pending contract signature.

“Notwithstanding some slippage in the timing of certain contract tender processes, we continue to see a good pipeline of bidding opportunities in our core markets in the Middle East, North Africa and the Commonwealth of Independent States (CIS),” said the company statement.

Ayman Asfari, Petrofac's Chief Executive, commented: "It is a year since we rolled out our IES strategy and we are making excellent progress in building the business. We were selected as preferred bidder for our third production enhancement contract in Mexico, which we are delighted to be delivering in partnership with Schlumberger.

"We see strong industry demand for commercially innovative, integrated oilfield service developments, which, together with our strong ECOM prospects, continue to give us confidence of achieving our target of more than doubling our recurring 2010 group earnings by 2015."

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