Petrofac shares dip with reserved guidance expectations

Petrofac shares dip with reserved guidance expectations

Oilfield services provider Petrofac Limited (LON: PFC) has said it expects its annual margins to be at the lower end of its guidance range for its engineering and construction businesses.

Falls in on-year production

The Company’s integrated energy division stated that it expected a fall in net production on-year, from 3.1 million barrels of oil equivalent to 2.1 million boe; this being in line with expectations and reflecting divestments during the second half of 2018.

The separate engineering and production services division was performing in line with expectations for the first half, with lower activity from operations being offset by growth in projects.

Engineering and construction revenue was expected to be around $4.5 billion for the full year, while overall new order intake for the year to-date stands at $1.7 billion, the company stated.

Petrofac comments

“We are trading in line with our prior guidance reflecting solid operational performance across the business,” said chief executive Ayman Asfari.

“We continue to maintain excellent client relationships in all of our markets, although new order intake in the year to date reflects our recent challenges in Saudi Arabia and Iraq.”

“Looking forward, the group has a busy tendering pipeline in other markets with around US$15bn of bid opportunities due for award in the second half of the year.”

“We are making good progress delivering our strategic objectives.”

“We continue to target best-in-class delivery for our clients and are improving our competitiveness by reducing costs, driving digitalisation, increasing local content and investing in talent.”

“Furthermore, we are well positioned in the second half with good revenue visibility, a strong balance sheet and high levels of tendering activity.”

Trading notes

The Company’s shares are currently trading down 4.89% or 21.22p at 412.28p per share. Analysts were not in consensus with their ratings, with Credit Suisse reiterating their ‘neutral’ stance and Numis reiterating their ‘Buy’ stance on Petrofac stock.