The mature North Sea basin remains a “core market” for slimmed down oil and gas services firm Petrofac.
The London-listed business (LSE:PFC) posted a year end net profit of $421million for 2016.
But it came at a human cost of the loss of around 5,500 jobs worldwide.
The firm has reduced its global headcount by 29 percent to 13,500 in a two-year fat trimming exercise that saved the firm $120million.
Exits from fields in Malaysia and Romania accounted for the loss of around 1,500 personnel, with long-term contractors accounting for another 2,000.
The remaining approximately 2,000 redundancies were made across the firm’s engineering and construction bases in India and Dubai.
However Petrofac chief financial officer Alastair Cochran said the cuts have made the company a sleeker, more agile supplier.
And a raft of recent North Sea asset deals like Shell’s Chrysaor sell off, means more potential work in the pipeline.
Cochran said: “We took a lot of pain in late 2015 in right-sizing the organisation. We have a general philosophy of continuous improvement, driving down our costs so we are more competitive than the people we compete with
“In this environment it’s absolutely critical as every bit of business is harder to win. And at the end of the day, if you win it, you’ve got to have a margin to report.
“We’ve got a business now that is right-sized. We have some really good positions in core markets both in the UK and the Middle East.
“We are benefiting from two things really. The Middle East, more broadly, because they continue to invest in upstream and downstream to protect their market share.
“In the UK we are seeing a lot of mature assets starting to transition to new owners, many of whom are smaller independents who look to someone like Petrofac to help provide them with operations and maintenance service.
He added: “It’s been a difficult period for the group and for the industry to be perfectly honest. We faced the same winds as everyone else.
“It was a tough environment wherever you were, whether it was the North Sea or the Middle East.
“One bright spot for us ironically was the North Sea where we got a good order intake on the back of a bunch of contracts which we ran out of Aberdeen.”
Petrofac landed an order intake of $1.6billion in 2016 with a majority chunk coming through reimbursement business ran through the company’s Aberdeen office.
The firm also carried out more than 200 million man hours and worked on 20 projects in the past year.
And a backlog of $14.3billion gives the company “excellent visibility for 2017”, according to the 2016 financial report.
It also reduced its net debt by 10 per cent, taking it down to $617million while maintain its full year dividend at 65.80 cents per share.
Driving down costs is the key, according to Cochran.
“Everybody involved in the North Sea has really being going after their cost base and trying to ensure their is an as competitive and efficient operating model as possible that can continue to flourish in a stable oil price environment.
“What I’m seeing in the market just now is a more stable oil price, which can only be good for the industry and for the North Sea.”
Recommended for you
