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UK's Petrofac sees outlook improving as it rebuilds

By Reuters

By Muhammed Husain

-British oil services firm Petrofac said on Thursday it had won new contracts worth $1.5 billion in the second half of the year while flagging lower annual revenue on weakness at its largest division.

Petrofac reached a settlement with Britain’s Serious Fraud Office (SFO) in September after a four-year investigation, which had hindered its ability to secure contracts in key Middle Eastern markets.

“Our priority is now to rebuild our order backlog,” Chief Executive Officer Sami Iskander said.

“The outlook for awards is improving in a more supportive macro environment,” he added. The company did not provide any details on the new agreements reached in recent months.

Petrofac’s measured optimism comes as the oil market has gained globally in recent months, with economic activity rising amid a softening in COVID-19 restrictions worldwide.

Fellow London-listed energy services company Hunting PLC, which is focussed in the United States, reported an order book that rose 20% for the three months to the end of November.

Analysts believe that the order book at Petrofac’s largest division Engineering & Construction (E&C), badly hit by the SFO probe, can improve given rising activities in the Middle East and North Africa, helping its future earnings.

In October, it was handed a fine of more than $100 million after pleading guilty to bribes related to contracts in Iraq, Saudi Arabia and the United Arab Emirates between 2011 and 2017.

Petrofac then raised $275 million through a stock sale to cut its debt and pay off the fine.

Shares in the company, which have gained some ground since the close of the investigation, were up 3.2% by 1040 GMT.

The company forecasts its annual revenue to come in at about $3 billion, compared with a revenue of about $4.1 billion last year, due to lower revenue at E&C.

The outlook is at the lower end of a company-compiled analyst consensus in which they estimated revenue to come in between $3.04 billion and $3.26 billion.

($1 = 0.7534 pounds)