Energy service giant Petrofac said yesterday it expected demand to remain strong in the North Sea after a string of contract wins in the region.
Chief financial officer Tim Weller said fears over a dip in investment following last year’s tax rise on oil and gas operators had not materialised and he was optimistic about the future of the North Sea.
It came as Petrofac reported a 20% rise in turnover to £2billion in the first six months of the year, but shares dropped 5.2% to £14.86 after it said there had been delays to large contract awards in the Middle East.
Mr Weller said deals, including the agreement signed last month with Apache – which will lead to Petrofac providing onshore engineering and onshore and offshore construction services for all of its North Sea assets – had boosted the company’s performance.
He added that he was confident Petrofac would continue to win new work in the region for years to come.
He said: “If you roll back a year there was a great hoo-ha about the North Sea tax change in the Budget creating a step down in investment plans. We have not seen that and commodity prices have remained strong, so we expect to see continued investment in the North Sea in the short to medium term.
“In the long term, reserves will dwindle, but then you move into the decommissioning phase of investment.
“That is a while off yet, however, and we are continuing to see a positive flow of work for us in the North Sea.”
Petrofac’s results for the six months to June 30 revealed operating profits were £263million, up from £189.8million in the same period last year, while earnings before interest, tax, depreciation and amortisation rose to £289.8million from £211.6million. It said announcements on some contracts its onshore engineering and construction division had bid for had been pushed back until next year, leading to analyst concerns about its profit outlook for next year.
Mr Weller said the delays could mean 2013 would be a bumper year, however, adding: “There are contract awards worth several hundred million dollars or more in places like Iraq and Saudi Arabia, but the award dates have slipped from late 2012 to early 2013. These awards will still happen though and they have not been won by someone else.”
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