Petrofac (LSE:PFC)
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Petrofac Limited

18 December 2018

18 December 2018

PETROFAC LIMITED

TRADING UPDATE

Petrofac issues the following pre-close trading update ahead of the announcement of its full year results for year ending 31 December 2018 on 28 February 2019.

   --      Trading in line with expectations 
   --      New order intake (1) of US$5.0 billion in the year to date 
   --      Net debt is expected to be around US$250 million at 31 December 2018 

Ayman Asfari, Petrofac's Group Chief Executive, commented:

"We are on course to report good results, which reflect solid operational performance in all our businesses and excellent progress delivering our strategy.

"Healthy new order intake in both our core and growth markets reflects our competitiveness in a market that has seen some delays in contract awards. We have also made excellent progress transitioning back to a capital light business with US$0.8 billion (2) of divestments of non-core assets, realising US$0.5 billion of net divestment proceeds to date.

"Looking forward, we remain focused on securing new orders, delivering operational excellence and maintaining a strong balance sheet. We are well-positioned with a differentiated offering, good backlog and revenue visibility, and high levels of tendering for award in 2019."

Engineering & Construction (E&C)

We have made solid progress delivering our portfolio of projects. In Kuwait, the Lower Fars Heavy Oil, Manifold Group Trunkline and KNPC Clean Fuels projects are in pre-commissioning or phased hand-over stages. In Abu Dhabi, we recently achieved a major milestone on the Upper Zakum Field Development with the oil facility ready for start up. Elsewhere, the Jazan North and South tank farms, Fadhili sulphur recovery plant and RAPID projects are nearing completion. The topside platform has also been successfully installed on the Borwin 3 offshore wind project in the North Sea.

We have been awarded new orders worth US$3.8 billion in E&C year to date. Of these, US$2.2 billion were awarded in growth markets, including the Thai Oil refinery project in Thailand, three projects in India and an offshore wind project in The Netherlands. We are currently bidding on more than US$15 billion of tenders scheduled for award in the first half of 2019.

Engineering & Production Services (EPS)

The continued resilience of our operations business, short-term extensions of historical contracts in EPS East and good progress on our EPCm (3) projects are off-setting a challenging market environment for brownfield projects in the North Sea.

We have secured US$1.2 billion of awards and extensions in EPS year to date, predominantly in the UK, Oman, Turkey and Iraq.

Integrated Energy Services (IES)

Net production is forecast to be approximately 6.1 mmboe in 2018, in line with guidance (4) . The average realised oil price (net of royalties) for the year is expected to be approximately US$61 per barrel of oil equivalent (2017: US$51/boe) reflecting higher oil prices, production mix and hedging activity.

Financial position

Group backlog stood at US$10.2 billion at 30 November 2018:

 
                                      30 November   31 December 
                                          2018          2017 
                                      US$ billion   US$ billion 
 Engineering & Construction               7.8           7.5 
 Engineering & Production Services        2.4           2.7 
 Total                                   10.2          10.2 
 
 

Net debt is expected to be around US$250 million at 31 December 2018 (2017: US$0.6 billion), benefitting from lower capital expenditure, a working capital inflow in the second half of 2018 and approximately US$0.5 billion of net divestment proceeds. We continue to review options for our remaining non-core assets, consistent with our strategy to reduce capital intensity.

Conference call

Alastair Cochran, Chief Financial Officer, will host a conference call for analysts and investors at 8am today.

Notes

(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)    Gross consideration, including firm, deferred and contingent consideration. 
   (3)    Engineering, Procurement and Construction Management. 
   (4)    2018 full year net production guidance is 6-7 million barrels of oil equivalent (mmboe). 

Ends

Disclaimer:

This announcement contains forward-looking statements relating to the business, financial performance and results of Petrofac and the industry in which Petrofac operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those expressed in these statements and neither Petrofac nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.

For further information contact:

Petrofac Limited

+44 (0) 207 811 4900

Jonathan Low, Head of Investor Relations

jonathan.low@petrofac.com

Alison Flynn, Group Head of Communications

alison.flynn@petrofac.com

+44 (0) 207 811 4913

Tulchan Communications Group

+44 (0) 207 353 4200

petrofac@tulchangroup.com

Martin Robinson

LEI 2138004624W8CKCSJ177

Notes to Editors

Petrofac

Petrofac is a leading international service provider to the oil & gas production and processing industry, with a diverse client 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).

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 clients' needs across the full life cycle of oil & gas assets.

With around 12,750 employees, Petrofac operates out of seven strategically located operational centres, in Aberdeen, Sharjah, Abu Dhabi, Woking, Chennai, Mumbai and Kuala Lumpur and has a further 24 offices worldwide.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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December 18, 2018 02:00 ET (07:00 GMT)