Investec downgrades Petrofac after share price rally

“Debt is a dirty word in the oilfield services sector currently, and the unexpectedly sharp reduction in debt overshadowed bigger-than-expected losses at Laggan,” Investec said.

Last week, Petrofac reported a sharp big drop in its annual profit due to delays in getting production up and running at its Laggan-Tormore plant and the costs associated with it.

Investec noted that Petrofac has a strong order backlog and good prospects for further contract wins in 2016, given its essentially 100% MENA exposure.

However, the ongoing farm-down process in Mexico may not result in a large cash release, it said.

Investec said the company’s underlying full year results were broadly in line and Petrofac is confident that losses at Laggan project are behind it.

At 1127 GMT, Petrofac shares were down 2% to 892.50p.