Petrofac Regulatory News (PFC)

12 Jan 2006 07:02

Petrofac Limited12 January 2006 12 JANUARY 2006 PETROFAC LIMITED ("Petrofac") TRADING UPDATE Petrofac, the international oil and gas facilities service provider, issues thefollowing pre-close trading update ahead of the preliminary announcement of itsaudited results for the year ended 31 December 2005, expected to be on 16 March2006. The market for our services has been strong during 2005 and we have achievedsignificant growth in our Engineering & Construction and Operations Servicesdivisions. In addition, we are pleased to report positive progress towardssettling outstanding claims in relation to the Baku-Tbilisi-Ceyhan and SouthCaucasian Pipeline (BTC/SCP) project. Before taking account of the positiveimpact of any write-back of provisions on the BTC/SCP project, the Boardanticipates that the Group's financial performance for 2005 will be slightlyahead of the top end of the range of current market expectations which, fornormalised net income from continuing operations, range from $57.1 million to$59.5 million. We enter 2006 with record revenue backlog, in particular in our Engineering &Construction division, and this provides the Board with confidence that we willcontinue to make good progress in the year ahead. Operational and business development During the year, we secured a significant level of new business across ourEngineering & Construction and Operations Services divisions. Our Engineering & Construction division secured new contract awards amounting tonearly $2 billion during the year, including the Harweel development in Oman(valued at approximately $1 billion), the KOC upgrade project in Kuwait ($644million), the Kauther gas plant in Oman ($246 million) and the Kovykta projectin Russia ($60 million). In addition, we were pleased to be awarded theconstruction management contract for the Kashagan onshore development inKazakhstan, which follows on from the engineering and procurement contract onthis project which we are currently undertaking. We have continued to make satisfactory physical progress on the BTC/SCP oil andgas pipelines and facilities contract in Azerbaijan and Georgia. The oilpipeline and related facilities have been completed and handed over to theclient and the gas pipeline and related infrastructure are now substantiallycomplete with all works anticipated to be concluded within the next few monthsWe are also pleased to report that positive progress is being made with regardto the settlement of outstanding claims and variation orders as a result ofwhich we expect to be able to report, as at 31 December 2005, a partialwrite-back of the provision held against this contract as at 30 June 2005. Thesematters remain subject to further discussion and the execution of formaldocumentation. The Operations Services division won a number of significant contract awards andrenewals in the UKCS including five year operations support contracts withMobil, Marathon Oil, CNR International and a one year contract with Maersk.During the year, in the UKCS, we commenced work for Lundin on the turnkeyfacilities management contract for the Heather and Thistle platforms and alsoextended our relationship with Tullow Oil in taking responsibility for theSchooner & Ketch and Horne & Wren fields. Outside the UKCS, we completed thesubstantial mobilisation required for our maintenance contract with KOC inKuwait. Following the acquisition of Paladin Resources by Talisman Energy in November2005 we have been in discussions with Talisman concerning the status of theturnkey facilities management contract for the Montrose and Arbroath platforms.Talisman has indicated that they wish us to continue to provide operationssupport services on these assets whilst they assume the duty holder role, inline with their established operating strategy in the UKCS. We are workingclosely with Talisman to finalise the details of these arrangements. Our Resources division continues to review investment opportunities where we cangenerate incremental value through the provision of engineering and operationsservices, encompassing both upstream and infrastructure developments in both theUKCS and internationally. Following an aggressive timetable for its preparation,the field development plan for the Cendor field in offshore Malaysia wasapproved in February 2005. Good progress has been made since approval, with thefield scheduled to come on-stream during the second half of 2006. Withinupstream UKCS, we were awarded the 211/18c block in the Don area in the recent23rd round and we are actively seeking further development opportunities aroundthe licence area. Backlog As at 31 December 2005, total revenue backlog(see note) amounted toapproximately $3.2 billion, an increase of approximately 28 per cent. comparedto 30 June 2005 ($2.5 billion) and an increase of approximately 88 per cent.compared to 31 December 2004 ($1.7 billion). In addition, we are also providingservices under letters of award which, when formal contracts are entered into,are expected to add a further approximately $0.3 billion to revenue backlog. Ends For further information, please contact: Petrofac Limited +44 (0) 20 7471 3500Ayman Asfari, Group Chief ExecutiveKeith Roberts, Chief Financial OfficerRobin Caiger, Head of Investor Relations Bell Pottinger Corporate & Financial +44 (0) 20 7861 3232Ann-marie WilkinsonGeoff Callow Notes to Editors Definition of backlog Backlog consists of the estimated revenue attributable to the uncompletedportion of lump sum engineering, procurement and construction contracts andvariation orders plus, with regard to engineering services and facilitiesmanagement contracts, the estimated revenue attributable to the lesser of theremaining term of the contract and, in the case of life of field facilitiesmanagement contracts, five years. To the extent work advances on thesecontracts, revenue is recognised and removed from the backlog. Where contractsextend beyond five years, the backlog relating thereto is added to the backlogon a rolling monthly basis. Backlog includes only the revenue attributable to signed contracts for which allpre-conditions to entry have been met and only the proportionate share of jointventure contracts that is attributable to Petrofac. Backlog does not include anyrevenue expected to arise from contracts where the client has no commitment todraw upon services from Petrofac. Backlog is not an audited measure. Other companies in the oil and gas industrymay calculate this measure differently. Petrofac Petrofac is a leading international provider of facilities solutions to the oiland gas production and processing industry, with a diverse client portfolioincluding many of the world's leading integrated, independent and national oiland gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC)and is a constituent of the FTSE 250 Index. Through its three divisions, Engineering & Construction (E&C), OperationsServices (OS) and Resources, Petrofac designs and builds oil and gas facilities;operates, maintains or manages facilities and trains personnel; and, wherereturn criteria are met and service revenue synergies identified, co-investswith clients and partners. Petrofac's range of services allows it to help meetits clients' needs across the life cycle of oil and gas assets. Petrofac operates out of four strategically placed international centres inAberdeen, Scotland; Sharjah, UAE; Mumbai, India; and Woking, England, and has afurther 13 offices worldwide, with approximately 5,500 employees. Petrofac's business is focused on the UK Continental Shelf (UKCS), the MiddleEast, Africa and the Former Soviet Union (FSU). Through both organic growth andstrategic acquisition, Petrofac's engineering, procurement and constructionactivities have been complemented with development planning and early stageengineering services, facilities management and training services andco-investment. For additional information, please refer to the Petrofac website atwww.petrofac.com. This information is provided by RNS The company news service from the London Stock Exchange