Petrofac reveals profit drop on oil price slide
Contractor expects further decline in 2015 if current values are maintained
Oil & gas contracting specialist Petrofac saw its net profit drop by 11% in 2014 to $581m and has warned that profits are likely to fall further still in 2015 if the oil price remains as low as it is.
The contractor, which is listed on the UK stock exchange and has a considerable regional presence in Abu Dhabi, announced that its 2014 revenues fell by around 2% to $6.2bn, but added that its project backlog increased by 26% to a record $18.9bn.
The company has also received orders of $3.5bn in the early part of 2015, and argued that it has "excellent revenue visibility" for 2015 and beyond. It also said it managed to trim $170m off its costs last year and is targeting further savings in 2014.
Petrofac had previously given guidance to the market that based on recent years it should achieve a net profit of around $500m. However, that was when oil was at $82 per barrel and on the current price of around $60 per barrel this is likely to fall to around $460m.
A consensus of 17 analysts who have published forecasts for the firm have set a profit target of $470m based on an average oil price of $66.
Group CEO Ayman Asfari said: "Notwithstanding the current lower oil price environment, we continue to see an attractive pipeline of bidding opportunities in the year ahead, reflecting Petrofac's core geographies and client base."
Within the past year, the company's engineering and consulting services arm won its biggest project to date - a $1bn EPC contract at the Rabab Harweel Integrated Project facility in Oman, while in February last year it confirmed that its consortium had won a $3.7bn contract as part of the $12bn Clean Fuels project in Kuwait.