Petrofac issues the following pre-close trading update ahead of the announcement of its results for the six months ending 30 June 2018 on 29 August 2018.
Trading in line with expectations
New order intake of US$1.8 billion in the year to date
Net debt is expected to be around US$0.9 billion at 30 June 2018 in line with expectations
Ayman Asfari, Petrofac’s Group Chief Executive, commented:
“We are trading in line with expectations, delivering best-in-class project execution, continued momentum in new orders and further progress in our strategy.
“We have secured new orders in the year to date of US$1.8 billion(1), with awards in both our core and growth markets. We are well-positioned on several bids and tendering activity remains high with around US$20 billion of bid opportunities due for award in the second half of the year.
“We delivered a major milestone in April with the sale of the JSD6000 installation vessel, in line with our strategy of focusing on our core and reducing capital intensity. Furthermore, we are well positioned for the second half with good revenue visibility, a strong competitive position and healthy liquidity.”
Engineering & Construction
We are making good progress on several major projects that are expected to be substantially complete around the end of the year, including the KNPC Clean Fuels project, Lower Fars Heavy Oil project, Upper Zakum Field Development and Fadhili Sulphur Recovery Plant. We have successfully installed the jacket for the Borwin 3 offshore wind project in the North Sea and expect sail-away of the topside platform from the UAE in Q3. In Oman, the full notice to proceed on the Duqm refinery project was received in early June.
We have secured new order intake of US$1.2 billion in the year to date, including a major upstream project in the GCC and three awards in India.
Engineering & Production Services (EPS)
We have delivered good performance on international operations and maintenance (O&M) contracts and EPCm projects. In the UK North Sea we are seeing early signs of recovery in the UK North Sea despite continued low activity, utilisation and order intake.
We have secured US$0.6 billion of new order intake in the year to date. In Oman, we announced the award of the US$265 million Marmul Polymer Phase 3 Project in March, the first award under the 10-year framework agreement we signed with PDO Oman in June 2017. In the UK, we secured extensions and new awards with a range of clients, including Chevron and ENI.
Integrated Energy Services (IES)
In IES, production is broadly in line with expectations year to date(2). The average realised oil price (net of royalties) for the first half of the year is expected to be approximately US$58 per barrel of oil equivalent, reflecting production mix and hedging activity.
Group backlog stood at US$9.7 billion at 31 May 2018:
31 May 2018
31 December 2017
Engineering & Construction
Engineering & Production Services
Net debt(3) is expected to be around US$0.9 billion at 30 June 2018 (31 December 2017: US$0.6 billion), in line with expectations and largely reflecting the unwind of temporary favourable working capital movements at the end of 2017, the phasing of tax and dividend payments, as well as the repurchase of treasury shares. Net debt is expected to decrease during the second half of the year. Liquidity is expected to be around US$1.3 billion at 30 June 2018 (31 December 2017: US$1.6 billion).
(1) New order intake comprises new contract awards and extensions, net variation orders and the rolling increment attributable to EPS contracts which extend beyond five years. Order intake is not an audited measure.
(2) 2018 full year net production guidance is 6-7 million barrels of oil equivalent (boe).
(3) Includes US$92 million of disposal proceeds received in the year to date from the disposal of the JSD6000 installation vessel.