Petrofac chief executive Ayman Asfari delivered an upbeat outlook for the international oil and gas service firm’s North Sea business yesterday, saying the economic climate created many opportunities.
Contracts were increasingly coming up for open tender rather than them simply being rolled over as clients looked to cut costs, Mr Asfari added.
This meant more work up for grabs and potentially many new jobs at Petrofac as the firm ramped up efforts to gain a larger market share, according to its boss.
He was speaking after Petrofac posted a 20% increase in first-half pre-tax profits to just under £90million, compared with £73.5million a year earlier.
Revenue was roughly unchanged at £962million as the company wrestled with the impact of a “significantly lower oil price environment” during the six months to June 30, 2009.
Mr Asfari said the changed circumstances and Petrofac’s own cost-cutting meant it was well placed to pick up new work in offshore markets, including in the North Sea. Looking further forward, he said the UK continental shelf (UKCS) would continue to play a key role in the group’s global activities, adding: “We remain very excited over the long-term outlook for the area and are continuing to invest heavily there.”
Petrofac’s first-half highlights included the start of production from the West Don field, in the North Sea, less than a year after development approval was granted.
The company also operates Don South-west, from which production commenced at the start of July.
Early second-half successes also include a three-year contract, worth £75millon, from Apache for engineering and construction services in the Forties field.
Mr Asfari told the Press and Journal that including its Don field work, the North Sea now accounted for nearly one-third of bottom-line profits at Petrofac.
The firm employs about 4,000 people in operations managed from Aberdeen, which is more than one-third of its total workforce.
It has recently consolidated North Sea operational offices at just one location – Bridge View, North Esplanade West – in an effort to drive down costs.
At the same time, overall job numbers at the company have risen to about 11,400 at the end of June from 11,100 six months earlier, and Mr Asfari said they could increase again. He added: “If we can maintain our present contracts and also increase our market share, our headcount will increase further.”
Petrofac – whose activities range from designing and building oil and gas infrastructure to safety training – reported order intake of £3.53billion for the first half, which was up from just over £1billion in the same period last year.
The FTSE 100-listed company does not expect orders to match this level in the second half, however, with £365.3million of work secured since the start of July.
Despite this, the group predicts full-year earnings growth of at least 20%. Investment bank Goldman Sachs said it was upgrading its 2009 and 2010 earnings per share estimates for Petrofac by 8% and 22% respectively, because of higher net margins in its engineering and construction division.
Petrofac has in five operational centres, in Aberdeen, Woking, Sharjah, Chennai and Mumbai, and a further 19 offices globally.
Recommended for you
