Petrofac Fails to Ignite the Market

Before you go, we thought you'd like these...
Before you go close icon

LONDON -- Petrofac (ISE: PFC.L) , the provider of oil and gas facilities solutions, saw its share price dip by 5.69% to 1,478 pence despite posting encouraging results for the first half of 2012.

Revenue was up 20% to $3.2 billion, and net profit was up 32% to $325.3 million. With earnings per share up 32% to $0.95, the interim dividend was declared at $0.21 per share -- an increase of 21%.

Ayman Asfari, Petrofac's group chief executive, commented on the interim results:

We have delivered good operational and financial performance in the first half of the year and remain on course to deliver net profit growth in 2012 of at least 15%.

Our strategy for future growth is based on three key drivers: geographical expansion; broadening our offshore engineering, procurement and construction capability; and implementing our Integrated Energy Services strategy. As previously indicated, over the past few months we have seen delays in certain contract tender processes with a number of anticipated awards moving from 2012 into 2013. While these delays impact the expected level of 2012 new orders for Onshore Engineering & Construction, we continue to expect our strategy to deliver earnings growth in 2013 and beyond.

As a result, we remain confident of achieving our target of more than doubling our recurring Group 2010 earnings by 2015.


The disappointing market reaction could be due to the fact that year-on-year growth in net profit in the second half of 2012 will be lower than in the first half of the year. Additionally, the group's net cash was lower at $775.3 million as of June 30. On June 30, 2011, it stood near $1.8 billion.

Petrofac, which shares the oil and gas facilities market with Technip and AMEC, showed progress in onshore engineering and construction with the award of a $330 million Badra project in Iraq. Offshore projects and operations also offered promise with the award of a $220 million contract to undertake refurbishment of the Bekok-C platform off the shoreof  Malaysia, as well as a $465 million contract to provide onshore engineering and both onshore and offshore construction services to all of Apache's North Sea assets.

With the unpopular Petrofac among several share price falls in the sector today, could the oil and gas sector be ripe for investment now? Find out what sectors we like in our special report "Three Top Sectors for 2012." It's absolutely free and will be in your inbox right away.

If you don't fancy Petrofac as a company, why not try a Warren Buffett favorite in the U.K.? Find out what it is in this report, "The One UK Share That Warren Buffett Loves." Again, it's free, so why not take a look?

Further Motley Fool investment opportunities:

The article Petrofac Fails to Ignite the Market originally appeared on Fool.com.

Barry does not own any of the companies mentioned in this article. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners