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Petrofac says performance in H1 in line, backlog at US$6.9bn

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Oil and gas services company and FTSE 100 constituent Petrofac (LON:PFC) said its performance was in line with expectations, projecting its backlog to amount to US$6.9 billion at 30 June 2010 compared to US$8.1 billion at the end of 2009.

The group’s engineering and construction business has made progress on its portfolio, including the initial phase of the South Yoloten project in Turkmenistan, where the decision on whether to convert into the much larger lump-sum EPC phase of this contract is set to be made in the near future.

Activity levels in the offshore engineering & operations division improved as work commenced on major contracts announced in the second half of 2009 and market conditions show a general improvement. The first half of 2010 has seen contract extensions with Petrofac’s key customers, while tendering activity in both the UK and abroad remains strong. The group is looking to position itself in the renewable energy and low carbon sector with new acquisitions, including TNEI and CO2DeepStore.

At the same time, the engineering services business continued seeing subdued activity levels.

During the first half, the group completed the sale of Energy Developments' Don assets to generate a capital gain of approximately US$125 million.

Petrofac added that its bidding pipeline remained strong in its core markets of the Middle East, Africa and the CIS (Commonwealth of Independent States), while the group has also started establishing presence in Iraq to capitalise on short term opportunities in that country for what it said would be significant levels of capital expenditure over the medium to long term.

The backlog of US$6.9 billion included US$5.5 billion from engineering & construction with the balance coming from the other businesses.

Gross cash balances are expected to be around US$1.0 billion at the end of June 2010 compared to US$1.4 billion at the end of 2009.

Quick facts: Petrofac Limited

Price: 180.6 GBX

LSE:PFC
Market: LSE
Market Cap: £624.72 m
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