Last checked at 22 Oct 2009 07:00
Thursday, 22 October 2009
PETROFAC LIMITED
INTERIM MANAGEMENT STATEMENT
Petrofac, the international oil & gas facilities service provider, issues the following Interim Management Statement for the period 1 July 2009 to 22 October 2009.
General market conditions have remained in line with those reported at the time of our interim results announcement on 24 August notwithstanding that the oil price during the period from 1 July has been significantly higher than in the first half of the year¹. We have continued to win business during the period with contracts secured in both our Engineering & Construction and Offshore Engineering & Operations segments and bidding activity continues at good levels. As the year progresses we are increasingly confident that the group will deliver earnings growth for the full year of at least 20 per cent.
In Engineering & Construction, we have made good progress on engineering and procurement activities and on the placement of construction subcontracts on the awards secured in the first half of the year. This underpins our confidence in the estimates on which the bids were based. Selective bidding activity is continuing and, during the period, we secured a second award in Abu Dhabi to build the fourth natural gas liquids (NGL) train at the Ruwais complex.
In Offshore Engineering & Operations, our bid pipeline remains strong both in the UKCS and in international markets, as customers look to obtain cost efficiencies by putting contracts out to competitive bids on their scheduled expiry. Whilst this has resulted in some contracts where we are the contract holder being re-tendered, we view the re-tendering of contracts as an opportunity for growth and, in July, we were successful in securing a three year contract to provide engineering and offshore construction services on the Forties Field for Apache.
As previously reported, Engineering Services and Training Services activity levels continue to be somewhat depressed, although business development activity has improved over recent weeks and there are early signs that the improved oil price environment is beginning to encourage our customers to resume some of their more discretionary expenditure. Our Production Solutions business unit is performing well, largely as a consequence of good operational performance on our contract with Dubai Petroleum.
In Energy Developments, water injection has now commenced on the West Don field, Don Southwest water injection is due to come onstream before the end of the year and gas lift facilities have been commissioned and are currently being optimised. Intervention work on the completion blockage on one of the two production wells on the Don Southwest field will commence shortly, and while the outcome of this work will impact the level of production for the year, we expect total 2009 production to be within the 3 million to 5 million barrel range previously guided, albeit towards the lower end. Energy Developments' other assets continue to perform in line with expectations. Options for the deployment of the floating production facility acquired in July (now renamed the FPF1) are under active review, as are a number of upstream and energy infrastructure opportunities.
The group's backlog at the end of September was approximately US$8.5 billion (30 June 2009: US$8.4 billion), comprising approximately US$7.0 billion in Engineering & Construction (30 June 2009: US$6.9 billion) and approximately US$1.5 billion across the other business units (30 June 2009: US$1.5 billion). The group's gross cash balances at the end of September stood at approximately US$1.3 billion (30 June 2009: US$0.9 billion) with most of the advance payments due on awards secured in the first half of the year now received.
Notes
(1) Brent, a benchmark crude has traded in the range of US$60 to US$80 per barrel since 1 July compared with an average price of US$52 per barrel in the first half of the year.
Ends
For further information, please contact:
Petrofac Limited +44 (0) 20 7811 4900
Ayman Asfari, Group Chief Executive
Keith Roberts, Chief Financial Officer
Jonathan Low, Head of Investor Relations
Bell Pottinger Corporate & Financial +44 (0) 20 7861 3232
Charles Cook
Olly Scott
Petrofac
Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry, with a diverse customer portfolio including many of the world's leading integrated, independent and national oil & gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC).
The group delivers services through seven business units: Engineering & Construction, Engineering & Construction Ventures, Engineering Services, Offshore Engineering & Operations, Training, Production Solutions and Energy Developments.
Through these businesses Petrofac designs and builds oil & gas facilities; operates, maintains and manages facilities and trains personnel; enhances production; and, where it can leverage its service capability, develops and co-invests in upstream and infrastructure projects. Petrofac's range of services meets its customers' needs across the full life cycle of oil & gas assets.
With more than 11,000 employees, Petrofac operates out of five strategically located operational centres, in Aberdeen, Sharjah, Woking, Chennai and Mumbai and a further 19 offices worldwide. The predominant focus of Petrofac's business is on the UK Continental Shelf (UKCS), the Middle East and Africa, the Commonwealth of Independent States (CIS) and the Asia Pacific region.
For additional information, please refer to the Petrofac website at www.petrofac.com.