Petrofac retains profit guidance after steady third quarter

17th Oct 2014 07:03

Oilfield services group Petrofac said it is on track to hit profit targets this year, as its backlog improved over the third quarter and net debt reduced.The group's backlog expanded to $21.2bn by 30 September, up from $20.3bn at 30 June, helped by growth in the Engineering, Construction, Operations & Maintenance (ECOM) division.The company said that activity levels have stepped up over the second half, as expected, as it retained its guidance for net profits of $580m-600m for 2014, though this remains down on $650m the year before after a profit warning earlier in the year.Project delays and lower-than-expected production from the Integrated Energy Services (IES) business were to blame for Petrofac cutting guidance at the first-quarter stage in May.Nevertheless, Chief executive Ayman Asfari said 2014 is already the "most successful year for new awards" at ECOM, with order intake at $9.4bn in the year-to-date. This compares with just $5.9bn at the same point last year.Activity levels in ECOM's onshore engineering and construction activities, in particular, have increased "substantially" during the second half as the company moves into execution phase on a number of projects. Onshore backlog rose to $12.2bn from $11.3bn three months earlier.Offshore, the company said it continues to perform well, helped by recent contract wins, with the backlog rising to $3.7bn from $3.4bn. Engineering and consulting services, which also form part of the ECOM division, saw flat backlog at $1.5bn."In IES, our focus remains on the delivery of key operational milestones on the existing project portfolio," Asfari said, as the backlog declined to $3.8bn from $4.1bn.During the third quarter, Petrofac achieved first oil from Cendor phase-two, Malaysia, in early September, marking a "major milestone" in the development of Block PM304. Production is expected to ramp up in the near term.Net debt fell to $1.1bn by the end of September, from $1.3bn three months earlier.