Chief executive admits oilfield services group must ‘do better to restore confidence’
The new chief executive of oilfield services group Petrofac has admitted the company needs to “do better to restore confidence” after it swung to a loss last year and posted its lowest revenues since an ongoing corruption probe began in 2017.
Sami Iskander, who took over from Petrofac's longstanding chief executive Ayman Asfari in January, warned that the start to this year had also been “challenging” after the Abu Dhabi National Oil Company last month suspended it from competing for contract awards until further notice.
The announcement came after a former global head of sales at Petrofac pleaded guilty in January to three further bribery offences, as part of the ongoing probe by the UK’s Serious Fraud Office.
Petrofac’s shares have lost nearly 85 per cent of their value since May 2017 when the SFO confirmed its investigation. The probe has affected its ability to win work in a number of key territories, including Saudi Arabia and Iraq, in recent years, although no charges have been brought against the company or any current employees.
Last year’s commodity price slump, triggered by the pandemic, added to the company’s problems as oil and gas explorers and producers delayed projects and cut back on spending, although Petrofac has expanded its clean energy business in recent years.
Its work ranges from building oil refineries in the Middle East to installing substations for North Sea offshore wind projects. The group swung to a $180m net loss for 2020, compared with a $73m profit in 2019, while revenues slid by almost $1.5bn to $4.1bn. In 2016, before the SFO probe, Petrofac’s revenues were nearly $8bn. Its order backlog at the end of 2020 was $2.4bn lower than a year earlier, at $5bn. New order intake in 2020 halved to $1.6bn. It will not pay a dividend for the year.
Profits were also dragged down by higher exceptional items, including adjustments related to the sale last year of a remaining 51 per cent stake in its Mexico business to Perenco.
Petrofac said in its full-year results on Tuesday that the amount received was lower than expected and it had started legal proceedings to recover a “disputed consideration of $80m”.
Mr Iskander also on Tuesday set out a strategy to return the company to growth, including accelerating its push into renewables and a focus on core markets in the Middle East and north Africa. Shares fell more than 5 per cent on Tuesday morning as analysts highlighted the challenging outlook.
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