In “another challenging period for Petrofac” the firm has reported a net loss of $162 million in the first half of 2024.
This comes during a restructuring period for the firm as it recently stepped away from “legacy contracts”.
The firm shared that its net debt stood at $622 million while its free cash flow for the first half of the year was reported to be $36m.
In November 2023, the UK-based business took a $110m write-down for the year on contract agreement issues.
The firm shared that the initial phases of new contracts secured in 2023 are “progressing well.”
Petrofac (LON: PFC) chief executive Tareq Kawash said: “While this has impacted the Group’s performance during the first half, our new projects are performing well, and we continue to make progress in closing our legacy contracts in E&C [Engineering and Construction].
“The markets we operate in remain robust and we have secured a good level of new order intake in Asset Solutions.”
Last week, Petrofac extended its existing forbearance agreement on a missed interest payment with a group of lenders from 20 September to 18 October 2024.
Petrofac has been struggling with rising debt, having missed a 30-day grace period on a coupon that was supposed to be paid 15 May on $600m loan notes due in 2026.
This saw the company miss the deadline to deliver its full year report for 2023, resulting in a temporary suspension of trading in its shares.
Petrofac is seeking a financial restructure to improve liquidity and secure bank guarantees to support current and future contracts, and is in talk with lenders to see some of the debt swapped for equity.
Kawash added: “The Board is grateful for the support of our stakeholders during this period and remains focused on delivering the best possible outcome for Petrofac and capitalise on the opportunities ahead of us.
“I am particularly proud of the continued dedication and commitment of our people and thank them for their ongoing and relentless focus on our customers at this important time.”
On Friday, Petrofac reached an in-principle agreement with some of its key stakeholders on the framework for its financial restructuring.
The firm said that its financial restructure hinges on “approvals” from third parties and “reaching agreements” with them.
Petrofac’s $8 billion backlog
Petrofac shared that a “strong order intake in its Asset Solutions division of US$0.9 billion in the first half of the year.”
The firm’s revenue has grown 13% year-on-year to $0.6 bn something it said reflects “the initial phases of the new contracts secured in 2023.”
Petrofac’s E&C division had a loss in earnings before interest and taxes (EBIT) of $103m, which is higher than 2023’s $98 loss.
The firm with a base in Aberdeen argued that this was an “impact of onerous contracts with no margin recognition and adverse operating leverage due to low levels of activity.”
The group’s order backlog currently stands at $8 billion with E&C accounting for the majority of value while asset solutions accounts for $2.3bn.
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