Mideast contracts getting delayed: Petrofac
London, August 13, 2012
British oil services firm Petrofac warned that customers were delaying the award of contracts in its core Middle East market from this year to next, raising analysts' concerns about its profit outlook.
Petrofac, which designs and builds oil and gas infrastructure, counts state-run national oil companies among its largest customers.
Chief financial officer Tim Weller said Petrofac was seeing a slowdown in awards in Iraq and Saudi Arabia in particular, where it is bidding for contracts to construct the pipelines and plants that help extract and process oil and gas.
"The economic situation may be one of the drivers but we're not seeing awards or processes being canceled," Weller said.
The slowdown in contract awards was difficult to attribute to just one factor, he added.
"The outlook statement is quite negative. They're seeing delays in their core markets in the Middle East," Numis analyst Sanjeev Bahl said.
"Management have suggested the potential for a flurry of larger awards post-Ramadan, which we believe is required to provide comfort in 2013 consensus forecasts," Bahl added referring to the Muslim holy month which ends later in August.
Petrofac said the contract delays would not impact its target of more than doubling 2010 recurring group earnings by 2015, a goal it was still confident of meeting. - Reuters
The company said it expects to deliver net profit growth of at least 15 percent in 2012, in line with its target, as it reported a forecast-beating 32 percent jump in first-half profit.
Petrofac posted net profit of $325.3 million ahead of a consensus forecast of $314.4 million from a company-supplied poll of nine analysts. (Editing by Erica Billingham)
