S&P downgrades Petrofac's debt rating after profit warning

Ratings agency Standard and Poor's downgraded its rating on Petrofac's long-term debt in light of the company's latest announcement of cost overruns.

On 21 April the oil field services firm warned that it would book an additional £130m provision on its Laggan-Tormore project in the Shetlands as a result of poor weather and industrial action.

"We understand these further cost overruns cannot be recovered from the client, Total S.A., and imply a cumulative loss of about $375m on this project for Petrofac," S&P said in a statement issued on the following day.

The ratings agency revised down its assessment of Petrofac's financial risk profile to "intermediate", resulting in a downgrade in the company's long-term debt rating to BBB from BBB+.

Petrofac's shares finished the session 0.8% lower to 867.5p.