Petrofac, the oilfield services company under investigation by the UK’s Serious Fraud Office, has warned revenues will continue to slide in 2020 as it suffers a hangover from low orders taken in recent years.
The company last year admitted that it failed to win any new orders in Saudi Arabia and Iraq, two key markets, in the first half of 2019 following concerns from clients in those countries connected to the SFO probe, which was launched in 2017.
Petrofac said in its full-year results on Tuesday that the general outlook for the wider oilfield services market was improving but “we continue to expect a decrease in group revenue in 2020 reflecting low new order intake in recent years”.
The value of Petrofac’s backlog of work stood at $7.4bn at the end of December, versus $9.6bn a year earlier. Revenues in 2019 slid 5 per cent to $5.53bn while earnings before interest, tax, depreciation and amortisation (ebitda) dropped to $559m from $671m a year earlier, which the company blamed on a series of factors, including a different mix of projects in its key engineering and construction division, as well as pressure on margins and investments made at its engineering and production services division.
However, pre-tax profit for 2019 was higher at $192m versus $107m in 2018, as the company booked fewer one-off exceptional costs and re-measurements.
Ayman Asfari, Petrofac’s chief executive, sought on Tuesday to cast an optimistic light on the year ahead, saying the company had the opportunity to bid for $37bn worth of contracts by the end of 2020, which he described as a “year of transition”.
However, Mr Asfari also conceded that investments to maintain “market-leading execution capability”, together with “project mix and the low new order intake of recent years . . . will impact financial performance in 2020”.
On the SFO probe, the company said: “Petrofac continues to engage with the SFO and will respond to any further developments as appropriate. We are focused on bringing this matter to closure as quickly as possible and believe this is in the best interests of all stakeholders.”
The SFO confirmed its investigation against the company in May 2017 as part of a wider probe into Unaoil, a Monaco-based oil consultancy.
“Petrofac continues to engage with the SFO and will respond to any further developments as appropriate,” the company said on Tuesday. “We are focused on bringing this matter to closure as quickly as possible and believe this is in the best interests of all stakeholders.”
Analysts at RBC Capital Markets called the 2019 results “mixed”.