International oil and gas facilities and service provider Petrofac, has announced that it made a net profit of US$557.8 million in 2010, up 58% from its 2009 figure of $353.6 million.
Its revenue was up 19% at $4.4 billion from $3.7 billion in 2009. The company reported a year-end backlog of $11.7 billion, 45% up from $8.1 billion a year before.
Over the past year, Petrofac substantially completed five large EPC projects across the Middle East and North Africa, Central Asia and South East Asia.
In the Middle East, Petrofac expanded its international operations with the award of a 5-year duty holder contract for the Government of Sharjah in the United Arab Emirates to take over operational responsibility and facilities management of the Sajaa Gas Plant and related assets in the emirate. The company established new training facilities in Syria and Algeria to help develop local workforces.
Commenting on the outlook, Ayman Asfari, Petrofac’s group chief executive, said: “I am delighted to present another excellent set of results. 2010 has been an exceptional year for us, with a record intake of new orders, which gives us outstanding revenue visibility and brings exciting opportunities for us to develop our capability and to deliver it into new markets.
“With this strong financial underpinning, our differentiated and competitive offering and our proven excellence in project execution, we are confident that we will continue to deliver superior value for our customers and sector-leading returns for our shareholders, with like-for-like net profit growth in 2011 of at least 15%.”
Prospects for 2011
“The significant political changes across the Middle East and North Africa have, to date, had a minimal impact on our day to day operations,” Petrofac stated.
“Of the countries substantially affected, Tunisia is the only one in which Petrofac has current operations and production at our Chergui facility has returned to normal after short periods of being shut-in. Managing country risk has always been an important part of operating in the region and we continue to monitor the evolving political situation closely to ensure that the interests of our employees, stakeholders and investors are safeguarded,” the statement went on to say.
Engineering & construction
Petrofac entered 2011 with a backlog in engineering and construction projects worth $9 billion, which has been augmented by the award of the $1.2 billion In Salah Gas project in Algeria in January. As a result, the company is raising its medium-term net margin guidance from around 10% to around 11%.
Offshore engineering & operations
Petrofac stated that is expecting strong revenue growth in 2011 on the back of recent awards in Offshore Engineering & Operations. “We expect recent high levels of bidding activity, both in the UK and internationally, to continue, which should present us with further opportunities for growth. Notwithstanding the improvement in net margin achieved in 2010, we see opportunities to improve net margins further over the medium-term,” it said in the statement.
Engineering, training services and production solutions
As well as supporting the group’s wider activities, Petrofac’s engineering services is expected to see more opportunities with external customers in 2011. Delegate numbers for its training services improved as 2010 progressed, a trend Petrofac said that it expects to continue throughout the course of this year.
“We continue to review strategic opportunities for establishing new training facilities and developing local workforces,” the company statement said.
Following the award of the Ticleni production enhancement contract in July 2010, and an improvement in general market conditions for its consultancy and technology businesses, Petrofac is expecting to deliver strong revenue growth in its Production Solutions service arm in 2011.
Petrofac said that: “Given the change in scope of our services on Dubai’s offshore oil & gas assets (now accounted for through Offshore Engineering & Operations), and given that we do not expect to recognise profit on the Ticleni contract until next year due to the long-term nature of the contract, we forecast a reduction in overall net profit for this reporting segment in 2011.”
Energy developments
With the award of the risk services contract for the development of the Berantai field and delivery of the FPSO in Malaysia, and commencement of the second phase of the Cendor field, also in Malaysia, Petrofac expects a significant increase in capital expenditure in 2011. The company’s current capital commitments are around $500 million for 2011.
