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Abu Dhabi, UAEWednesday 15 August 2018

Petrofac swings to loss due to $372m impairment charges

London-listed oil services firm said restrictions on CEO are also lifted

Restrictions on Ayman Asfari, Petrofac’s group chief executive have been removed, the firm noted in its full-year results. Chris Ratcliffe / Bloomberg
Restrictions on Ayman Asfari, Petrofac’s group chief executive have been removed, the firm noted in its full-year results. Chris Ratcliffe / Bloomberg

Petrofac, the London-listed oilfield services firm with offices in Sharjah, swung to a loss in 2017 due to impairments amounting to $372 million, despite a strong performance from its engineering and construction wing on the back of project awards in the Middle East.

Net loss in 2017 stood at $29m, compared with a profit of $1m in 2016, the company said in a filing to the London Stock Exchange.

Revenue fell 19 per cent to $6.39 billion from $7.87bn a year earlier.

Petrofac, which undertakes upstream and downstream works in the UAE, Oman, Iraq and Kuwait, saw its business performance profit rise 7 per cent to $343m in 2017, before impairment charges, the company said in its full-year results.

Petrofac is one of many oil and gas firms that have been battered by the fall out from lower oil prices over the past three years. Making matters worse, the UK’s Serious Fraud Office said in May 2017 it was investigating allegations of bribery, corruption and money laundering at the company, in conjunction with its dealings with Monaco’s Unaoil.

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Petrofac said in its full-year results that restrictions imposed on Petrofac group chief executive Ayman Asfari following the Unaoil corruption scandal “would no longer be appropriate”.

Mr Asfari will resume executive duties “with immediate effect and re-join the Nominations Committee”, the company said in a statement.

“Mr Asfari will continue to fully respect and support the process and independence of both the SFO investigation and the sub-committee of the Board with delegated responsibility for this matter,” the company said.

Petrofac said the exit of Marwan Chedid as the firm’s group chief operating officer is due to his decision to “pursue other interests.”

The firm had an order backlog of $10.2bn at the end of 2017, down 12.8 per cent from $11.7bn at the end of 2016. Net debt stood at $600m at the end of last year.

“Our competitive position has helped secure a strong recovery in new orders in 2017, particularly in the second half of the year. Tendering activity remains high, we are well positioned on several bids and we are maintaining our bidding discipline in a competitive market,” said Mr Asfari.

“With a healthy order backlog and good revenue visibility, I am confident that Petrofac is well positioned for 2018.”

The firm’s engineering and construction division emerged the strongest performer with net profit up 10 per cent year-on-year to $342m, on the back project activity in the oil and gas sector in the Middle East, including contracts in Oman and

Kuwait.

However, despite fervent project activity, revenue for the division declined 19 per cent to $4.8bn, attributed to “project phasing”.

Petrofac oil and gas production division however, saw performance hit by an impairment charge of $179m after tax in relation to its Greater Stella North Sea asset as well as migration of some Mexican concession to production sharing contracts.

Total production across all assets fell 34 per cent to 7.3 million barrels of oil equivalent, which the firm said was a reflection of asset sales.

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