A robust oil price certainly bodes well for support services company Petrofac (LSE, PFC). However, it is not the be all and end all. As long as the oil price remains ‘high’ and the company’s clients remain active, Petrofac’s cash register will continue to tick over.
The recent noises emanating from the International Energy Agency suggests that today’s price of oil supports investment into exploration, development and production. Whilst this will no doubt please many of its contemporaries, Petrofac’s clients tend be well heeled enough to invest irrespective of the short term price fluctuations.
During August the company reported that it had secured over US$6 billion of new business during the year to date… no mean feat when you consider that during the opening 6 months of 2009, the figure was US$1.7 billion.
In addition, Petrofac’s total backlog as at the end of September was approximately US$8.5 billion, a slight improvement on the June figure of US$8.4 billion. The company is coasting through 2009 seemingly oblivious to the woes that have forced businesses everywhere to recapitalise and restructure strategy.
The company has recently stated that over the late summer (July 1 through to October 22) it has been a case of business as usual. Both the Engineering & Construction and Offshore Engineering & Operations business units have secured further business and bidding activity continues at heightened levels. Such is the pace of business expanse management have stated that they are increasingly confident of delivering earnings growth for the full year of at least 20 per cent.
The group’s Engineering & Construction division has taken significant strides on engineering and procurement activities. In addition, during the summer, the division secured a second award in Abu Dhabi to build the fourth natural gas liquids (NGL) train at the Ruwais complex. Meanwhile, in July Petrofac’s Offshore Engineering & Operations secured a three year contract to provide engineering and offshore construction services on the Forties Field for Apache.
Although, the pace of life at Petrofac’s Engineering Services and Training Services has been relatively pedestrian, the company’s Production Solutions business continues to march forward largely as a consequence of robust operational performance on work conducted with Dubai Petroleum. Petrofac’s client base across all units is littered with seemingly perpetually active national oil companies (NOCs).
Meanwhile the group’s Energy Developments continues to make advances on the West Don field and the Don Southwest field…
