Member Info for Slift

"Sounds like they’ve found Trices billions and are double checking"
LOL, deluded.

Petrofac will benefit from either a supercycle, or peak oil with the transition to green.
Best of both worlds and this company is significantly undervalued in terms of significant future potential and growth.

SFO outcome will be a DPA with a fine.

But damage is done, time for recovery. Recovery starts with order book and backlog.

Yup, the design changes by the client (BP, Equinor, Sonatrach) had increased costs and reduced Petrofac's margins for the project.

Under the contract, Petrofac has right to request compensation for the additional costs and will likely get paid.

But the question is how much. The initial project consideration was $600m and due to changes to the design by the client, the project likely overrun (Cost, scope, timescales) reducing Petrofac's margins. I don't believe Petrofac made a loss here (really shows how experienced Petrofac is), but Petrofac does reserve the right to claim compensation for the loss in margins.

I think 20-33% of project value ($120-200m) as compensation is about the right amount.

https://www.mees.com/2020/11/6/corporate/petrofac-seeks-530mn-from-bpequinor-algeria-gas-project-as-finances-stretches-by-continued-saudi-boycott/b6b94930-2037-11eb-bf30-75721981dc59

Wonder if anything will come of this.

Current reserves sitting on c. 6.5m barrels (subject to economic limit).
I suspect at current oil price, maybe 4-5m is recoverable, but really depends on how stable watercut is.

HUR needs to make an investment to drill before the well becomes uneconomical.
If HUR is to continue being a going concern, HUR needs to raise funds, AND DRILL successfully before the well becomes uneconomical.

If they don't do the above, the company will not be a going concern and operations will have to cease. Time is running out and BOD are playing games with shareholders and paychecks :)

r7632,

SFO is the public sector. COVID has not affected SFO's programme of investigations and has not delayed anything.
This is evident by:
1. Many cases being resolved - KBR, BAT, etc.
2. COVID didn't stop SFO pressing additional 3 charges to Lufkin earlier this year.

If you ask me, they've been more efficient with COVID restrictions, somehow.
I suppose the only hinderance they've had is ability to schedule court dates for hearing with lockdown and everything.

Sub 3p next week? Or will it be positive?

y11-shx,

You don't even know if your company has debt or not.
Enough said.

Gilljoe,

Agreed. I suspect pipeline will likely be a little higher than $25b from new bids/proposals following higher oil price and companies spending CAPEX in relation to it. But hopefully Petrofac has a good pipeline for 2022 aswell.

Uganda FID should take place very soon, in the next month or so. There have been several delays to this, and with the death of Magufuli, I wouldn't be surprised if the FID is pushed back into Q2 or beyond. But up to Total based on their demand projections I suppose.

As for Kenya, the FID will take place by YE21, unless ofc the JV license period is extended again, but I wouldn't count on it.
So likely to be Q4/21 at the latest. Tullow should have completed the current re-development of Kenya by end of Q2/21.

Really hope Petrofac is able to land some of these projects this year. The africa projects will be high margin and will really be beneficial for Petrofac's recovery. Very conventional projects too, so easy for Petrofac.

Honestly, just winning a couple of these big projects will really set Petrofac on the road to recovery, sooner than anyone will expect.

Average SFO investigation = 4 years, 7 months

Petrofac SFO investigation as of 12th March 2021 = 3 years, 10 months

SFO to be resolved 2021, i'm 75% sure!

I agree that this is undervalued, but it's getting riskier, which I am not fond of.
I will hold for results, and this will be a long term hold for me if PFC secures $300-400m+ orders by June.

Paddyboy1,

If you didn't realise, the pipeline listed as "UAE" = ADNOC

Listen to half year results webcast too.

Half year results 2020

"The backlog also affects debt."
Or at least the Petrofac's ability to pay back debt*

Paddyboy1,

Sure it looked healthy in November 2020.

However, things have changed since.
ADNOC awards lost - That alone is negative $14b pipeline lost. But there's still approx. $25b+ worth of projects in the pipeline.

The backlog is poor as a result of not being awarded any projects by ADNOC this quarter.

The revenue secured for 2021 is great, and has improved to approx. c. $3.2-3.3b booked to date.
But not enough to post healthy financials by year end, but there's still 3 quarters to go for that.

At this stage, revenue and pipeline is not an issue. The backlog is as this determines whether the company is required to cut down further on costs. The backlog also affects debt.

Yes, but there isn't enough evidence that they are winning the bigger orders.

I think sooner or later, the backlog will take more priority over SFO.
Keeping backlog above $5b is key to have profitability in this business for Petrofac.

I really hope they post Q1 trading update with backlog above $5b.. I'd prefer to see this over SFO developments.

I believe that a backlog of less than $5b results in a credit rating downgrade, and that's not good for the company or the share price.

As posted before:
YE20 Backlog I estimate it to be: $5b
Current backlog I estimate it to be $4.7-4.8b

One, or multiple orders totalling $300-400m will give some relief and confidence for the company and shareholders until at least end of Q2.

Nice on JoeSoap.

So much for "good progress with Spirit" lol..
I wonder if the writedown is due to simply resources.. or whether if it includes Lincoln Crestal well too.

Yes, Petrofac had booked Stena Don for "one well" in UKNS.

To have a healthy backlog before trading update..

Hoping Petrofac just gives us something before Results day..

But at the same time..

Bluewater has completed tasks on AM as of 5th March.
So could also be a tie-back operation.