Petrofac sees big growth in Middle East

City A.M. Reporter
OIL services firm Petrofac said yesterday it was confident about profit growth of at least 15 per cent this year, after posting a 58 per cent jump in profits in 2010.

Petrofac posted a pre-tax profit of $663.5m (£409.7m) for the year, up from $432m in 2009 on revenues up 18.8 per cent to $4.35bn.

Underlying net profit also rose 26 per cent, even when gains from de-merging North Sea oil assets from the firm’s energy developments last March were stripped out.

Petrofac generated around three quarters of its revenue in 2010 from oil and gas infrastructure projects in countries such as Algeria, Oman and Saudi Arabia, but said yesterday the impact of unrest in the region on its operations had so far been minimal.

“We’re monitoring the developments very, very carefully,” said chief financial officer Keith Roberts in a call with reporters, adding that the company had only been affected in Tunisia so far, where operations had now returned to normal.

“These countries, their oil and gas industries are very important hard currency earners for them, so in a sense whatever happens I think it would be a national priority to get continued production of oil and gas and that is a medium-term positive.”

Analysts at JP Morgan said Petrofac had given one of the most confident and bullish outlooks statements they had seen for a long time in the oil field services sector, and said the stock deserves a significant re-rating once the Middle East outlook becomes clearer.

Chief executive Ayman Asfari also hinted that the firm is looking to expand in Nigeria, after revealing in a presentation yesterday that its partner Seven Energy, 15 per cent owned by Petrofac, has bid for one of Shell’s four blocks being sold in the country.