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PFC Petrofac Limited

23.76
-0.64 (-2.62%)
18 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Petrofac Limited LSE:PFC London Ordinary Share GB00B0H2K534 ORD USD0.02
  Price Change % Change Share Price Shares Traded Last Trade
  -0.64 -2.62% 23.76 2,178,573 16:35:19
Bid Price Offer Price High Price Low Price Open Price
24.00 24.26 25.04 23.90 24.30
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Oil & Gas Field Services,nec USD 2.59B USD -310M USD -0.5948 -0.40 124.77M
Last Trade Time Trade Type Trade Size Trade Price Currency
18:06:01 O 11,276 24.536 GBX

Petrofac (PFC) Latest News

Petrofac (PFC) Discussions and Chat

Petrofac Forums and Chat

Date Time Title Posts
18/3/202418:53Petrofac39,042
16/2/202413:23Lodgeview must be right5
19/1/202407:58Any targets8
14/12/202208:46*** Petrofac ***247
22/10/201621:17Analysts' Viewpoints on Petrofac (PFC)-

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Petrofac (PFC) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2024-03-18 18:06:3224.5411,2762,766.68O
2024-03-18 18:04:4224.085,8981,420.24O
2024-03-18 17:59:5723.7622,1645,266.17O
2024-03-18 17:41:4924.306415.55O
2024-03-18 17:31:2924.70155,53138,417.71O

Petrofac (PFC) Top Chat Posts

Top Posts
Posted at 18/3/2024 08:14 by ghhghh
halfpenny

Investors and Brokers Agree this is the year for PFC to return with growth in excess of expectations.

The only thing they agree on is that there will be an significant equity raise unless preempted by a takeover!

Upstream, as of last December, claimed that the package will be valued at c. $450m.

All the Bulls here should be focused on this. Say c. $100m non core asset sales, leaving $350m.....

Can only be a mix of bond haircuts, bond D4E and equity raise?

IMO investors should always hope for the best but assume the worst, many here do the opposite.

There are three massive red flags:

Bonds trading at 43 cents versus 100 cent par.

11% short position

Upstream - $450m

It's possible that PFC can pull a rabbit from the hat but a better than 50% chance that PFC can do something that materially increases the share price and justifies the risk of currently holding equity?

Only a takeover will achieve this?
Posted at 17/3/2024 11:52 by halfpenny
Investors and Brokers Agree this is the year for PFC to return with growth in excess of expectations.

The FTSE is at a great value with PFC growth potential 80%-150% plus from these levels. It will not take much for a rapid turnaround any day from these low levels.

Future getting brighter as PFC moves forward..

PFC Quote...
The expansion of our relationship is testament to our track record of delivering value to customers' operations. Securing this contract further demonstrates our strategy to expand Asset Solutions' geographic reach..
Posted at 17/3/2024 08:25 by ghhghh
Leon

PM304 is valued at $173m at the end of last year. Today, production from this asset is exactly the same as last year. There would have been depreciation and depletion of reserves ofcourse. Again, at worst case, a 30% discount to this asset prices it at approximately $120m.

All the brokers disagree, most model at under $60m. No one is above BV of $69m. Maybe you are missing associated debt.

Worth remembering the Upstream article last December quoting two source who said that PFC are seeking to raise $450m? PFC want to pay off the $260 RCF/TL and have $200m cash boost.

Kepler think raising $200-300m will be a struggle off £125m market cap. Other brokers think will total package will be nearer $500m. When the restructuring is announced, this will be the headline figure that will instantly tell us how much of the brown stuff is hitting the equity/BH fans!

One broker has set out a path whereby equity doesn't get shafted but this was published before the December restructuring updates. However it may still be a factor.

The RCF/TLs must be 50% paid off by April, the rest by October 2024. All debt is pari passu but the RCF/TLs have tine advantage unless an act of default eg PFC can't cough up the April payments. So the RCF/TL's are incentivised to help PFC, perhaps via partial performance guarantees, to free up April payments.
I repeat this was written before the guarantees problem was announced in December but debt hierarchy will be a factor.

I'm reasonably confident that a successful restructuring will free up c. $250m cash inflow so if PFC do raise $450m as well (in order to secure the guarantees) they will go from famine to feast.

It's chicken and egg...
Posted at 14/3/2024 12:20 by jaknife
ghhghh,

"There is a near zero chance that PFC goes bust because the bottom line reconstruction is a D4E. PFC will definitely survive and very probably in a much stronger position than now."

I concur and I don't think that any sensible commentator is suggesting that PFC will go bust. Rather they're suggesting that existing shareholders will be materially diluted, from either a large dilutive equity raise or a debt for equity swap.

But even if PFC were to go bust then PFC's current clients wouldn't be worried. That's because those clients have got bank guarantees written into their contracts with PFC, which would pay out in the event of a PFC insolvency/other failure to perform.

And that's the key point: PFC's existing clients are protected from Petrofac's credit risk but Petrofac can't source new bank guarantees to protect future clients from Petrofac credit risk. And the simple explanation as to why is because Petrofac is a dreadful credit risk! The evidence for this is clear to see; on the one hand Fitch have expressly downgraded Petrofac and warned all and sundry that PFC is a dreadful credit risk and on the other hand, bondholders demand a yield to maturity of over 55% before they will invest into Petrofac credit risk!

Petrofac needs to urgently restore its balance sheet to a credit worthy state so that it can get access to the bank guarantee market again.

JakNife
Posted at 14/3/2024 08:58 by ghhghh
Some of you may remember the GKP restructuring in 2016

The Restructuring involves the implementation of a new capital structure to materially strengthen the Company's balance sheet with a significant debt reduction from over US$600 million to US$100 million through the conversion of over US$500 million of existing debt into equity of the Company by way of the Scheme.

In addition, Gulf Keystone has increased its liquidity by raising $25 million through an over-subscribed Open Offer. This improved liquidity allows the Company to implement the near-term investment plan of maintaining production at 40,000 barrels of oil per day ("bopd"), and with the potential to increase production to 55,000 bopd, subject to the Kurdistan Regional Government's Ministry of Natural Resources ("MNR") and MOL's approval.

Shares were c. 15p at start of year, sank to c. 5p in April when GKP announced the $500m D4E and then to 1p at end of August when they announced that the $25m capital raise etc was at about 0.85p.

Is GKP comparable to PCF?

GKP shareholders were absolutely convinced that their billions of barrels of oil reserves would underpin the share price at c. 15p. And again at 5p.

PFC holders believe the same about the billions of orders.

Both had/have cash flow issues. GKP had more political risk and the $600m debt was a a poison pill for any equity raise.

The PFC debt is also a poison pill, new equity won't want to sign up until that $600m cliff edge in November 2026 is resolved. PFC equity will be lowly rated until it is.

The restructuring must clean up the balance sheet to free up the guarantees

This means an equity cash injection, bond extensions and probably a partial D4E.

Asset sales could help but non core assets are not that valuable, maybe c. $100m? And will need bondholder consent, BH's won't want to lose part of their collateral to pay off RCF/TL. They might prefer D4E.

PFC could sell the UK business but this is core and would leave them very exposed to ME. However might be best for equity although unlikely bondholders will agree.

Sell say a 29% equity stake in PFC at significant premium to current share price to a potential future bidder or sell the lot. However the $600m debt at 9.75% interest is unattractive.

If PFC really do mean 'materially strengthen' then the bond debt must be reduced rather than just extended.
Posted at 13/3/2024 15:58 by loglorry1
A lot to unpick there.

Different from Metro equity as you know because PRA regulator forced cram on subbies and Gilinski didn't want to put new money in at lowest possible price because it didn't make a lot of difference to his eventual holding and more importantly didn't want to create run on bank by wiping out traded equity value. Regardless its not share price that matters its market cap and I think Metro was much lower.

Not sure how current equity can raise £100m at 20p given how much is currently in hands of private investors that's a big shout.

Equity holding up because any not held by private investors are probably inside and private investors never sell at what they regard derogatory prices. Derogatory price = less than they paid. On the other side maybe a bit of short covering here and there and borrow costs are high so its expensive to stay short.

"I can't remember such a disconnect re other reconstructions?"

Then you have a poor memory. A few months ago Casino?
Posted at 10/3/2024 00:25 by jaknife
Leoneobull,

"Yes, banks aren't very flexible are they? We had the same as a service industry business in that in return for a guarantee, they wanted to hold the pre'-financing payment, which rather defeats the object of having a pre-financing payment. As I understand, PFC are working to reduce these onerous collateral requirements which aren't PFC-specific but common for WG too."

The "onerous collateral requirements" are completely PFC specific.

1. PFC's credit rating has been downgraded by Fitch:



2. PFC's credit rating is so poor that the world bond market has to offer a yield to maturity on PFC's bonds of 66.8% in order to find buyers:



3. Providing the guarantees isn't the problem, as proven by the provision of the two guarantees noted in the 20 December RNS. Guarantees are available but only if Petrofac provide cash collateral to 100% completely mitigate the banks' credit exposure to Petrofac.

The problem is Petrofac's credit rating, even my local kebab shop has a better credit rating than Petrofac!

JakNife
Posted at 07/3/2024 09:43 by jaknife
Leoneobull,

"Log. You and Jaknife are short. Fair enough. However, a d4e was presented as a near certainty by Jaknife 18 months ago, shortly b4 pfc announced a 1 billion contract with TenneT. We were then told guaranteed d4e again by the same poster ahead of Dec 20th 2023 when a 2nd 1 billion contract was awarded to PFC. Despite the difficulties, PFC got the guarantee for TenneT 1.
The absolute certainty the shorters speak with is misleading..."

These things take time, just take a look at how long Cineworld took. It was an obvious administration case in March 2022 but it didn't actually happen until July 2023.

Yes I was on Petrofac early, much earlier than the hedge funds. Can I get some applause?. I was here in October 2022, when the share price was 120p, pointing out PFC's problems. The share price is down 80% since then and the target remains the same.

Re TenneT:

1. Despite the big contract wins with big headline revenue numbers Petrofac is still on target to (a) make losses this year, and (b) not generate enough cash to repay the banks.

Why do you get so excited about big contracts when Petrofac has a track record of losing money on them year in year out? In the last nine years it's lost just over $1bn on a post-tax basis. The share price has cratered! Petrofac has been a dreadful investment and continues to be a dreadful investment.

2. PFC only got the guarantee for Tennet 1 (and ADNOC) by providing cash collateral for that guarantee. At the same time they acknowledged that providing cash collateral for guarantees was not feasible as a long term solution.

We're getting pretty close to the conclusion now with Petrofac. The banks want a chunk of cash to be repaid in April and PFC doesn't have that cash. The banks are still refusing to provide guarantees without cash collateral and Petrofac needs those guarantees just to run its normal business. The banks have PFC over a barrel!

The best case scenario from here is a placing to raise significant equity - they always take place at a discount! But the problem is that the first $250m of placing funds are just going to disappear straight out the door to the banks so there's no real incentive for equity holders to put that sort of cash in. And, even if they could pay off the banks, then two years down the line PFC's bondholders are going to want $600m repaying. PFC needs to resolve *ALL* of its balance sheet issues now rather than kicking the can down the road for a couple of years.

I'm sorry that you can't see it, I don't understand why you can't? From my perspective I feel like Cassandra - destined to the tell the truth but never be believed!

JakNife
Posted at 07/3/2024 08:35 by armbar
No my bull thesis is do not discount all the options on the table and indeed consider the bear options My rationale at this point is pfc need a short term cash requirement and consider who has the most to lose , major shareholders and founder , then what level of control or influence do they have, then what is likely to be their preferred outcomes as many potential outcomes, the share price will be worked until the next update Nothing is certain
Posted at 05/3/2024 11:27 by gerry hatrick
What was the purpose of this RNS ?
It told us nothing more than we knew on 4 December !! If anything it has created more doubts about where things are going regarding protecting shareholders interest rather putting survival of PFC at the heart of its priorities. Hence the lacklustre share price this morning.
As a LTH I am feeling that some dilution of shares is likelier now!
Hope not but this RNS hasn't given me confidence.
Petrofac share price data is direct from the London Stock Exchange

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