15th May 2020 09:16
(Alliance News) - Petrofac Ltd on Friday said it expects the Covid-19 pandemic to result in delays in construction activity and tenders until 2021.
The FTSE 250-listed oil field services firm - whose annual general meeting is scheduled for today Friday - said that while its projects have continued to progress, supply chain disruption, travel restrictions and government-enforced lockdowns have resulted in "material delays" in construction activity with no catch-up expected in 2020.
Petrofac added that the fall in oil prices has caused clients to review their investment plans, noting the termination of the USD1.5 billion Dalma gas development contract by the Abu Dhabi National Oil Co in April. Petrofac predicted the majority of its 2020 tenders will be delayed until 2021.
However, it assured that contract extensions in its Engineering & Production Services business have remained "strong" with USD500 million worth of new orders won in the past year.
In April, Petrofac announced a series of cost-cutting measures which included the suspension of its 2019 final dividend payout and a reduction of expenditure expected to save USD145 million. On Friday, it said that it has implemented additional cost savings and now expects to cut overhead and project support costs by at least USD125 million in 2020 and by up to USD200 million in 2021.
"I want to thank our shareholders, clients and other stakeholders for their continued support in these challenging times. Whilst the outlook remains unclear, the board is fully supportive of the steps management are taking to preserve shareholder value," said Chair Rene Medori.
As at April 30, Petrofac had liquidity of USD1.2 billion, comprising cash of USD700 million and USD500 million of undrawn committed bank facilities. Net debt was USD241 million.
The stock was trading 0.1% higher at 162.00 pence each on Friday morning in London.
By Ife Taiwo; [email protected]
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