Petrofac swings to first-half loss; Algeria contract won

Oilfield services provider Petrofac said on Wednesday that it swung to a net loss in the first half, as it announced an engineering, procurement and construction contract worth $600m with Algeria’s Sonatrach.

In the six months to 30 June, the company made a net loss of $17m versus a net profit of $70m in the same period a year ago, as it took a hit from the sale of some assets and other exceptional items.

Meanwhile, revenue in the period fell to $2.79bn from $3.13bn in the first half of 2017.

Petrofac said it is trading in line with expectations in its core engineering & construction and engineering & production services businesses, with integrated energy services expected to continue to benefit from the recovery in oil prices.

It said it was "well positioned" for the second half, with a healthy order backlog of $9.7bn at 30 June 2018 versus $10.2bn at the end of December 2017 and $3bn of secured revenue for the second half of the year.

As far as the contract is concerned, Petrofac said it had received a provisional letter of award, with formal signing expected to take place next month. Under the terms of the 36-month contract, the scope of work includes a pipeline network of approximately 400 km to connect 36 wells, along with commissioning, start-up and performance testing of facilities.

Chief executive Ayman Asfari said: "We have reported a good set of first half results that reflect strong execution and excellent progress delivering our strategy.

"We remain focused on our core and delivering organic growth as the market recovers. The group has secured $3.3bn of new orders in both established and adjacent markets year to date, and is well placed on several bids due for award before the end of the year. Our focus on operational excellence is reflected in improved margins and continued good progress across our project portfolio in the first half. Furthermore, we are well positioned for the second half with good revenue visibility, a strong competitive position and healthy liquidity.”