Petrofac Share Discussion Threads

[sigala] 27/8/2014 21:36

Speedsgh - lol! Yes Questor bailing should be our cue to go all
in!

I've just finished listening to the presentation for the
interims,
I would have to recommend listening to these for all long term
investors here.

I find MR Asfari comes across a quite candid, and fair in his
answers to analysts questions.

You come away with a much clearer idea of what management are
seeing through their windscreen rather than the nervous
ramblings
of back seat drivers like Questor.

In particular it is,worth listening to the discussion on
working
capital, as that is one of the key tasks management are working
through at the moment. There are substantial work in progress
balances that are being addressed with regards to the delayed
In
Salah gas project, The Laggan Tomore project and their work for
Pemex.

I find the discussion is honest and realistic, probably because
Mr
Asfari is such a substantial owner of his business. You don't
get
the normal spin and flannel that some CEO's use to try to
window
dress results.

Mr Asfari talks about the problems they have faced as,well as what
has worked well. At least we can then make up our own minds about
where we think PFC are at.

AIMHO

[speedsgh] 27/8/2014 13:49

if ever you needed a Buy signal...

Questor share tip: Petrofac downgraded to sell as risks rise -
HTTP://www.telegraph.co.uk/finance/markets/questor/11057275/Questor-share-tip-Petrofac-downgraded-to-sell-as-risks-rise.html

[kavnish] 27/8/2014 13:28

guys I don't know how many of you have any accounting background
but here's a simple view.

If I were a short term CEO with this type of order book , I would
flatter the accounting profits to make my numbers ( SERCO
anyone)

Ayman on the other hand is an owner , not a punter. He doesn't care
too much about short term profit numbers and is more concerned with
not annoying customers by sending them a premature bill so that he
can keep shareholders happy.

The customer relationships he has cultivated over time have built
the business , hence the order book. Contractual execution issues
happen. Get over it these are complex projects we are delivering in
difficult parts of the world.

Today's move and yesterdays net each other out really so don't
stress

Great long term growing industry, good size good order book , CEO
and shareholder interests aligned

Un ashamedly extremely long here .

[hydrus] 27/8/2014 08:23

I suspect it's likely they will miss the $580-600 full year profit forecast. However in my view the market will be looking to the fantastic pipeline - this years profit decrease (and any further revised downward figure as long as not significant) will not impact share price now, it's in the price already.

[salpara111] 26/8/2014 17:03

Well, as I predicted in an earlier post, the figures were not
pretty.
I am inclined to wait it out for another few months until I see the
next update.

[its the oxman] 26/8/2014 10:11

Shares down. Promise of everything being alright but how many times have we seen companies reliant on a strong H2 come up short issue a warning and plunge. Reckon the share price here will struggle a while longer before it can recover.

[kavnish] 16/8/2014 14:14

Again , chaps their expertise is project execution and development.they should be looking to create a platform like some of the UK guys with PFI projects. They then end up with three bites at the cherry.

I) they earn profits from engineering services sold into developing a project.

Ii) they offload the investment to a fund , but now it's not a start up project so they price it using an Npv model.Thus get all their working capital back.

Iii) they end up with a cash paying customer which they don't have to bid for.

Its called services for equity , happens in lots of outsourcing industries, take a look at quintiles in pharma services.

The CEO has worked out how to be a gold miner without the risk, he gets paid for selling the shovels.

It's really not that complex.

Good use of balance sheet when you need it.

Raj

[sigala] 16/8/2014 11:18

Regarding their net debt situation, it seems to me that the recent JV with First Reserve would seem to ease the pressure somewhat, if I am understanding the arrangement correctly.

Petrofac have sold FPSO assets for $450m to the joint venture. The $450m includes cash and the,assumption of about $130m of project finance remaining on one of the FPSO's.

I think Petrofac are evolving their strategy and releasing some of the capital tied up in their balance sheet. I think what they are saying is that Petrofac's exertise is in project execution. By finding cash rich partners like First Reserve the Petrofac can access more projects and quicker, the idea being that First Reserve bring the cash and Petrofac bring the know how.

In the conference call for the First Reserve rns, Ayman Asfari said that one of the first tasks he gave CFO Tim Weller when Tim joined Petrofac was to look for well heeled infrastructure investment funds like First Reserve who Petrofac could partner with.

This strategy should enable PFC to retain an efficient, asset-light balance sheet which should help keep their Return on Capital Employed at high levels.

Also by cultivating a long term financial partner PFC will hopefully have a more reasonable and sensible partner than if they were relying on bank debt.

Aimho

[meijiman] 16/8/2014 09:09

Don't disagree with you. Basic point I originally made was that the ceo of Petrofac made some unnecessarily optimistic noises about Petrofac's future growth rates. These were quite specific and I think related to profits/earnings rather than revenues. Thus the share price went up more than it would have otherwise done and the share price fall was much more severe when he couldn't deliver.
I have noted your coments-hopefully he is working hard to get Petrofac back on track.

[kavnish] 15/8/2014 00:05

Gents the CEO is behaving like an owner. He is completely alligned with investors.

When the mkt gifts you these type of deals , well worth stepping up.

Fundamentals are strong, order book is excellent ,CEO is alligned , growth in the industry is great.

Could you buy cheaper , probably , the reality is if you could really time the bottoms you wouldn't bother posting.

Unashamedly long.

[meijiman] 14/8/2014 16:28

Having a look at this board-some decent posts. Its nice to see that the ceo has plenty of skin in the game. But wasn't he making absurdly over optimistic noises about the company's progress and future growth a year or so ago. clearly markets change and things can get tougher so why make yourself hostage to fortune.
The share responded to the positivity and analysts forecasts factored this in-not therefore surprising that the share price then tanks when you can't deliver -as can be seen from the charts. Anyway lets hope that he doesn't repeat on that. Interims 26 August.

[sigala] 08/8/2014 21:22

As another poster pointed out previously, it's always nice to know that the CEO is aligned with shareholders interests.

Mr Asfari holds ca. 63m shares, so he has seen his stake in the company decline in value by £240m since early May.

He is not a here today, gone tomorrow hired hand of a CEO. His personal wealth is directly tied to the performance of Petrofac.

Aimho

[hydrus] 08/8/2014 09:30

Well I've bought some, just decided long term a few pence here or there won't make much difference

[sigala] 07/8/2014 20:49

Just went back to listen to their Q&A on 26th Feb for their final results. There is a question about forecasting net debt for the year ahead at about 53mins into the presentation.



CFO Tim Weller states that their aim is to keep net debt below 1X EBITDA, and EBITDA was ca. $1bn for 2013, I guess EBITDA will be a bit lower than that for 2014.

So, net debt of $1.3bn as at 31 May stands considerably above that level.

It wasn't clear to me whether the 1X EBITDA was an actual covenant of their debt, or just a self imposed target, I will see if I can resolve this from the annual accounts, it should be buried in there somewhere!

Tim Weller makes the point in the Q&A that because of the nature of their business then PFC sees large swings in working capital. Cashflow can be very lumpy.

He also talked about the difficulties in having payment from Pemex actioned by them, but mentioned that they had received a substantial payment in early Jan from Pemex.

There was an analyst presentation for the IMS in may, but unfortunately this was a conference call presentation that has lapsed now, and can't be accessed. I did listen to it at the time, but unfortunately can't recall any specific details about net debt that might have been discussed at that presentation.

Personally, I have a fair degree of confidence in CEO Ayman Asfari, and also CFO Tim Weller who appears to be a man of integrity given his decision to resign from Cable & Wireless when the board allegedly failed to heed his warning that they needed to indicate a profit warning, instead the BOD carried on regardless before having to shock the market a few weeks later when an accurate picture had to be presented to the market.



I like to see tough mindedness and integrity in a CFO. A good CEO wouldn't want a "yes man" in such a vital position.

Having said all that, it is a bit disconcerting to see PFC's net debt sail well over the 1X EBITDA ratio. To lay out your own borrowing guidelines and then break them, will understandably cause a few flutters amongst the investing community.

AIMHO.

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[hydrus] 06/8/2014 21:39

I'm no chart specialist I was just looking at previous troughs. I am interested in PFC but i try not to catch a falling knife. Therefore will wait until it turns even if that means I miss out on 100p

[stpalm] 06/8/2014 21:22

Hydrus, they gamble on your fear, are you short? cos you're not strictly right. yes it has broken some resistance but there is strong resistance at £10 or there abouts, now if it breaks that then i would say it has broken resistance but only till it reaches £5, painful! If it gets to £10 im in but it'll be small with a stop around 9.30. Really dont think it will get below £10 the valuation will just look too tempting. unless of course the dow gets below 10,000 ebola, war etc. unlikely but possible! no position, yet!

[hydrus] 06/8/2014 13:07

It's on a very low rating already, the continued drop though is concerning. I will wait until the results also to see if there is anything scary. In the meantime I fear this will confine to slide as its broken resistance.

[salpara111] 06/8/2014 10:28

Well, I pulled my 1080 buy order.
The next set of results will not be flattering in £ due to the drop of the $.
Given the various risk elements involved in a company like this I do feel it could sit on a lower rating.
I will be paying close attention to the imminent results.

[2ngh] 06/8/2014 08:55

Major panic in the markets at the moment and many stocks taking a hit.

Will be a good opportunity to load up when its all over, just depends where the panic takes us.

[sigala] 05/8/2014 22:56

Interim results announced Tuesday 26th August

[dimerose] 05/8/2014 22:53

does anyone know the company's reporting date?

thanks.