Petrofac introduces new division, eyes growth
EPC powerhouse also announces shift to performance-based contracts
At a Capital Markets announcement today, Petrofac have announced
Oil infrastructure giant Petrofac said it is aiming to double its earnings in the next five years by expanding their services division in oilfield development projects.
Petrofac CEO Ayman Asfari said he expects substantial growth to come from the newly formed Integrated Energy Services (IES) division.
"I am confident that the Integrated Energy Services business will enable us to take advantage of a substantial and underdeveloped market opportunity," Asfari said.
National Oil are increasingly pushing to retain ownership of their reserves, and Petrofac see an opportunity to shift away from revenue-sharing returns to performance-based remuneration. He noted a benefit of this is that operators will not have to disclose reserves to investors.
BP's former head of drilling operations Andy Inglis, has been hired to head up Petrofac's IES offering, which will carry out drilling, well engineering and other services via mostly long-term contracts, combining the company's former production solutions, energy developments and training services units.
Noting the reduction in size of oilfields by more than 50% since the 1970s, Inglis sees a gap in the market for proving National Oil Companies with oilfield services on a non-owning performance-based basis, particular on smaller 'tier 2' reservoirs.
Asfari sees IES generating "strong sustainable growth for the business and create significant value for our customers and our shareholders.” He cited the current situation where a trainee accountant working on Petrofac's audit charges more per hour than an engineer with 30 years' experience in explaining the need to capture more value from National Oil Companies on the service side.
He said Petrofac is also looking to expand into a full offshore EPC offering, where profit margins are generally higher.
Asfari recognises that Petrofac is not going to continue it's level of breakneck growth, citing 10-20% annual growth as reasonable. The copany remains ambitious, aiming to more than double its recurring revenue recorded in 2010 by 2015.