Petrofac Limited: Trading Update

DJ Petrofac Limited: Trading Update

Petrofac Limited ( PFC) 
Petrofac Limited: Trading Update 
27-Jun-2023 / 07:00 GMT/BST 
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PETROFAC LIMITED 
TRADING UPDATE 
Petrofac issues the following pre-close trading update for the six months ending 30 June 2023. 
 
   -- Significant increase in Group backlog to USUSD5.6 billion at 30 June 2023 (31 December 2022: USUSD3.4 
  billion) with strong order intake in both E&C and Asset Solutions 
   -- Asset Solutions and IES performance in line with expectations 
   -- E&C expecting an EBIT loss of approximately 20% on revenues of USUSD0.5 billion, which includes write-downs 
  of over USUSD50 million on receivables from historical contracts to protect full year cash flows 
   -- Well positioned to continue backlog growth in both E&C and Asset Solutions, with a healthy Group pipeline 
  scheduled for award in the next 18 months of USUSD73 billion 
   -- Free cash flow negative in the first half, continue to target broadly neutral free cash flow for the full 
  year 
 
Tareq Kawash, Petrofac's Group Chief Executive, commented: 
 
"In the first six months of the year we have announced over three and a half billion dollars in new work across E&C and 
Asset Solutions, in both the traditional and new energy sectors, and continue to pursue a strong pipeline of future 
opportunities in core geographies. By further progressing our plans to strengthen the financial position of the Group 
by unlocking the working capital built up through the pandemic, and building on the momentum of the significant awards 
won in the first half, we are focused on delivering Petrofac's potential. We have an exceptional EPC and Operations 
capability that is well positioned to deliver and support critical energy infrastructure for the world's leading 
resource holders." 
 
DIVISIONAL HIGHLIGHTS 
Engineering & Construction (E&C) 
Order intake(1) in the first half is expected to be approximately USUSD2.5 billion, resulting in more than a doubling of 
E&C backlog. Awards comprise the first platform contract under the framework agreement with TenneT to deliver 2GW 
offshore wind transmission systems in partnership with Hitachi, a major petrochemical project for Sonatrach in Algeria, 
and a follow-on EPC contract with ORLEN Lietuva on the existing project site in Lithuania. Of the USUSD1.5 billion of 
opportunities at preferred bidder stage at the end of 2022, approximately USUSD1.2 billion have now been awarded. 
 
First half revenues are expected to be around USUSD0.5 billion reflecting the lower levels of activity due to lower 
opening backlog compared with the prior year. E&C is expected to report a first half EBIT loss of approximately 20%, 
comprising an operating loss and one-off write-downs of more than USUSD50 million in receivables from historical 
contracts to protect full year cash flows. E&C results continue to reflect the impact of onerous contracts with no 
margin recognition and adverse operating leverage due to low levels of activity. 
 
We remain focused on closing out legacy contracts, with five of the remaining eight contracts expected to be completed 
(2) during the second half of the year or early in 2024. On the Thai Oil Clean Fuels contract, good progress is being 
made on the construction phases of the project. The execution plan remains in line with the update provided with the 
FY22 year end results and discussions with the client in relation to cost recoveries are ongoing. 
 
Bidding activity remains high with a total pipeline scheduled for award by December 2024 of approximately USUSD57 
billion, of which USUSD14 billion is scheduled for award in 2023. 
 
Asset Solutions 
Order intake(1) in the first half is expected to be approximately USUSD1.0 billion, with a book-to-bill of approximately 
1.4x, comprising both new contract awards and extensions in both the Asset Operations and Wells and Decommissioning 
service lines. 
 
Asset Solutions continued to deliver robust performance in the first half, with revenue expected to be approximately 
USUSD0.7 billion. 
 
The EBIT margin in the first half is expected to be between 2%-3%. We expect EBIT to be weighted to the second half of 
the year, with full year EBIT in line with guidance. 
 
Asset Solutions has a strong pipeline of opportunities with USUSD16 billion scheduled for award by December 2024, of 
which USUSD7 billion is scheduled for award in 2023. 
 
In New Energies, we have continued to secure further early-stage awards and strategic alliances with technology 
providers in the first half, including an exclusive partnership with OCI Global to deliver their gasification-based 
green methanol projects. We remain well positioned over the medium-term to secure engineering, procurement, and 
construction scopes of work, as well as other execution phase project work, as projects reach final investment 
decision. 
 
Integrated Energy Services (IES) 
IES' financial performance in the first half of the year is expected to be in line with the guidance provided in April 
2023. Net production is expected to be 0.6 million barrels of oil (mboe) for the first half of the year (H1 2022: 0.6 
mboe). 
 
ORDER BACKLOG 
The Group's backlog(3) is expected to significantly increase to approximately USUSD5.6 billion at 30 June 2023 (31 
December 2022: USUSD3.4 billion), reflecting strong order intake in both E&C and Asset Solutions. 
 
              30 June 2023 31 December 2022 
              USUSD billion USUSD billion 
Engineering & Construction 3.5     1.6 
Asset Solutions       2.1     1.8 
Group backlog        5.6     3.4 

CASH FLOW AND NET DEBT

We continue to target a broadly neutral free cash flow for the full year, with a reduction in working capital weighted to the second half. We therefore expect free cashflow to be negative in the first half, reversing in the second half. As a consequence, net debt is expected to increase at 30 June 2023, and to reduce by year end.

Conference call

Afonso Reis e Sousa, Chief Financial Officer, will host a conference call for analysts and investors at 8.30am today.

Analysts and investors can access the call on: [phone]. Password: Quote 'Petrofac Trading Update' when prompted by the operator.

NOTES 1. New order intake is defined as new contract awards and extensions, net variation orders and the rollingincrement attributable to Asset Solutions contracts which extend beyond five years. 2. Completed and substantially completed contracts: contracts where (i) a Provisional Acceptance Certificate(PAC) has been issued by the client, or (ii) transfer of care and custody (TCC) to the client has taken place, or(iii) PAC or TCC are imminent, and no substantive work remains to be performed by Petrofac. 3. Backlog consists of: the estimated revenue attributable to the uncompleted portion of Engineering &Construction division projects; and, for the Asset Solutions division, the estimated revenue attributable to thelesser of the remaining term of the contract and five years.

ENDS

Disclaimer:

This announcement contains forward-looking statements relating to the business, financial performance and results of Petrofac and the industry in which Petrofac operates. These statements may be identified by words such as "expect", "believe", "estimate", "plan", "target", or "forecast" and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those expressed in these statements and neither Petrofac nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.

For further information contact:

Petrofac Limited

[phone]

James Boothroyd, Head of Investor Relations

[e-mail]

Sophie Reid, Group Head of Communications

[e-mail]

Teneo (for Petrofac)

[phone]

[e-mail]

Martin Robinson

NOTES TO EDITORS

Petrofac

Petrofac is a leading international service provider to the energy industry, with a diverse client portfolio including many of the world's leading energy companies.

Petrofac designs, builds, manages and maintains oil, gas, refining, petrochemicals and renewable energy infrastructure. Our purpose is to enable our clients to meet the world's evolving energy needs. Our four values - driven, agile, respectful and open - are at the heart of everything we do.

Petrofac's core markets are in the Middle East and North Africa (MENA) region and the UK North Sea, where we have built a long and successful track record of safe, reliable and innovative execution, underpinned by a cost effective and local delivery model with a strong focus on in-country value. We operate in several other significant markets, including India, South East Asia and the United States. We have 7,950 employees based across 31 offices globally.

Petrofac is quoted on the London Stock Exchange (symbol: PFC).

For additional information, please refer to the Petrofac website at petrofac.com

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ISIN:      GB00B0H2K534 
Category Code: TST 
TIDM:      PFC 
LEI Code:    2138004624W8CKCSJ177 
OAM Categories: 3.1. Additional regulated information required to be disclosed under the laws of a Member State 
Sequence No.:  253515 
EQS News ID:  1665999 
 
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June 27, 2023 02:00 ET (06:00 GMT)