Petrofac counts cost of SFO interest

The company's $37bn (£29bn) in forecast bidding opportunities for 2020 does not include Saudi and Iraqi projects, which chief executive Ayman Asfari said would have added another $10bn in possible work. To make up for this, Mr Asfari said the company was working hard to find new markets. Half of the 2020 biddable projects are in “new geographies”, including India and central Asia, although Mr Asfari also told analysts that Saudi Arabia would welcome Petrofac back once there is a “resolution” to the SFO investigation. 

Looking at existing projects, the contract book value fell $2.2bn between the end of 2018 and the end of 2019 to $7.4bn. Margins were also down last year, with the highest-earning division, engineering and construction, seeing a one percentage point drop in the net profit margin to 6.2 per cent, and guidance of 5-5.75 per cent for 2020. Despite this, the company will maintain its dividend at the current level of 38ȼ a year. Petrofac is targeting an overall book-to-bill ratio of at least 1.0, but it was well off this figure in 2019 at 0.6 times. 

The plan to get back to growth comes at a shaky time for oil and gas, with gas prices weak all over the world and oil down 16 per cent on the start of the year. Mr Asfari said the company was working with national companies looking at more than the gas price, using the example of Abu Dhabi looking for alternatives to importing gas from regional adversary Qatar. The $1.65bn contract for the Dalma gas project in Abu Dhabi was announced this month, and Petrofac also got the nod to build the Seagreen wind farm substation in Scotland in January. 

Berenberg forecasts a 10 per cent drop in revenue to $4.96bn in 2020 and a 22 per cent drop in cash profit to $434m.