29th Aug 2018 09:17
LONDON (Alliance News) - Oilfield service provider Petrofac Ltd on Wednesday reported a swing to an interim loss due to impairment charges, but the company also said it has secured a new USD600 million contract in Algeria.
In the six months ended June 30, the FTSE 250-listed company swung to a pretax loss of USD52 million from a profit of USD109 million a year before.
Revenue decreased 11% to USD2.79 billion from USD3.13 billion the year before.
Exceptional items and certain re-measurements in the half increased to USD279 million from USD93 million the year before, of which about USD188 million, according to Petrofac, were non-cash impairments.
Agreed asset sales in the period triggered USD173 million of non-cash impairments - including the JSD6000 installation vessel, Petrofac's interest in the Chergui gas concession and Greater Stella Area, as well as a 49% interest in its Mexican operations.
Petrofac said these moves will "significantly reduce capital intensity" and "strengthen" its balance sheet.
The company said trading in its core Engineering & Construction and Engineering & Production Services businesses was in line with expectations, with its Integrated Energy Services business expected to benefit from the recovery in oil prices.
Petrofac's new order intake, year to date, is USD3.3 billion with a backlog of USD9.7 billion at the end of the half, down from USD10.2 billion at the end of the previous year.
The FTSE 250 company announced an interim dividend of 12.7 cents, flat on the year before.
In a separate announcement, Petrofac said it has received a provisional letter of award for an engineering, procurement & construction contract worth USD600 million with Sonatrach for EPC1 of the Tinhert field development project onshore in Algeria.
Petrofac expects the formal contract signing to take place in September.
EPC1 is about 1,500 kilometres south east of Algiers, in Ohanet. The contract is for 36 months, where the scope of work includes a pipeline network of about 400 kilometres to connect 36 wells, along with commissioning, start-up and performance testing of facilities.
Chief Executive Ayman Asfari said: "We have reported a good set of first half results that reflect strong execution and excellent progress delivering our strategy.
"We remain focused on our core and delivering organic growth as the market recovers. The group has secured USD3.3 billion of new orders in both established and adjacent markets year to date, and is well placed on several bids due for award before the end of the year. Our focus on operational excellence is reflected in improved margins and continued good progress across our project portfolio in the first half. Furthermore, we are well positioned for the second half with good revenue visibility, a strong competitive position and healthy liquidity."
Shares in Petrofac were up 1.1% Wednesday morning at 667.40 pence each.
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