Petrofac expects annual loss, led by Engineering & Construction

(Alliance News) - Petrofac Ltd on Tuesday said it expects an annual loss before interest and taxes, especially in engineering and construction, due to adverse commercial settlements and cost increases.

The London-based energy services company in oil, gas, refining, petrochemicals and renewable energy infrastructure said it expects a group Ebit loss of around USD100 million in 2022, alongside USD190 million in E&C Ebit loss.

Shares in Petrofac were down 11% to 64.76 pence each in London on Tuesday morning.

It said this was due to adverse commercial settlements and unrecovered cost overruns in legacy, alongside cost increases on its Thai Oil clean fuel joint-venture contract.

In 2021, the firm posted an Ebit loss of USD14 million for E&C, and an overall reported operating loss of USD130 million.

Net debt on December 15 was around USD396 million, while it said it had a group pipeline of around USD68 billion scheduled for award over the next 18 months. This includes USD5.5 billion in bids submitted, of which around USD1.5 billion where it claims it is the preferred bidder.

Petrofac said E&C awards have been slower than expected in 2022, but it maintained a positive outlook for E&C recovery and continued growth in asset solutions.

"We expect these opportunities to provide backlog growth in 2023 and lay the foundations for a return to profitability, positive free cash flow and continued recovery thereafter," said Chief Executive Officer Sami Iskander.

By Greg Rosenvinge, Alliance News reporter

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