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(Alliance News) - Petrofac Ltd on Wednesday said Covid-19 and weak oil and gas prices hurt its performance in the first half of 2020, and noted it remains unclear how long oil prices will remain at low levels.
The Jersey-based oilfield services provider said Engineering & Construction division performance in the first six months of 2020 was been hurt by the deterioration in market conditions.
Petrofac said it expects first-half revenue for E&C to be around USD1.6 billion, driven by Covid-19-related project delays. In comparison, for the first half of 2019, the company reported revenue of USD2.3 billion for the division.
Petrofac said it has secured new orders worth USD400 million in Engineering & Construction in the year to date compared to USD1.6 billion a year before.
Petrofac said its Engineering & Production Services division also was hurt by the deterioration in market conditions.
First half EPS revenue is expected to be around USD450 million, in line with the prior year comparable period. The company explained that modest growth in projects has been offset by a decline in operations activity and the Covid-19 related closure of its training centres.
The company noted that EPS has secured USD600 million of awards and extensions in the year to date, higher that USD200 million a year prior.
Turning to the Integrated Energy Services unit, Petrofac said it expects net production to be about 2.2 million barrels of oil equivalent for the first half, up from 2.1 million barrels of oil equivalent a year earlier.
The average realised oil price - net of royalties - for the first half was USD39 per barrel of oil equivalent, the company said, down from USD69 per barrel of oil equivalent a year ago, largely reflecting the fall in oil prices in the second quarter.
Performance in the period has benefited from a reduction in operating and other cost savings, Petrofac said.
Looking ahead, the company said it remains unclear how long Covid-19 and low oil prices will continue to disrupt business activity and hurt business performance. As a result, full year 2020 revenue and margin guidance remains suspended.
"Notwithstanding this, we have a tendering pipeline of USD48 billion of opportunities scheduled for award by the end of 2021 and an order book that gives us good near-term revenue visibility," said Chief Executive Ayman Asfari.
The company said its new order intake has totalled USD1.0 billion so far in 2020.
Petrofac said it will report its half-year results on August 11.
The stock was down 9.7% in London on Wednesday morning at 199.00 pence.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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