Petrofac reports substantial increase in backlog

Energy service provider Petrofac reported a substantial increase in its backlog in an update on Tuesday, as well as strong order intake and performance in line with expectations for its Asset Solutions and Integrated Energy Services (IES) divisions.

The firm said that at 30 June, its group backlog stood at $5.6bn, representing a significant rise from the $3.4bn it recorded on 31 December.

It said it witnessed robust order intake across both its Engineering and Construction (E&C) and Asset Solutions divisions, reflecting positive market demand.

The performance of Asset Solutions and IES had been in line with the company's expectations.

Petrofac's E&C division, however, anticipated an EBIT loss of around 20% on revenues of $0.5bn.

The board said the loss would include write-downs of over $50m on receivables from historical contracts - a measure taken to safeguard full-year cash flows.

Despite the E&C division's expected loss, Petrofac said it remained well-positioned for future growth.

The company said it was expecting continued expansion of its backlog in both the E&C and Asset Solutions segments.

Furthermore, Petrofac said its group pipeline remained health, with the amount scheduled to be awarded over the next 18 months having an estimated value of $73bn.

“In the first six months of the year we have announced over three and a half billion dollars in new work across E&C and Asset Solutions, in both the traditional and new energy sectors, and continue to pursue a strong pipeline of future opportunities in core geographies,” said group chief executive officer Tareq Kawash.

“By further progressing our plans to strengthen the financial position of the group by unlocking the working capital built up through the pandemic, and building on the momentum of the significant awards won in the first half, we are focused on delivering Petrofac’s potential.

“We have an exceptional EPC and Operations capability that is well positioned to deliver and support critical energy infrastructure for the world’s leading resource holders.”

At 0955 BST, shares in Petrofac were down 1.12% at 71.74p.

Reporting by Josh White for Sharecast.com.