18 December, 2006
Petrofac, the international oil & gas facilities service provider, issues the following pre-close trading update ahead of the announcement of its audited results for the year ending 31 December 2006, expected to be on 5 March 2007.
Petrofac is pleased to confirm that good progress in the Group's performance has continued during the second half of the year with a particularly strong contribution from our Engineering & Construction (E&C) division and the successful start-up of production from the Cendor field, offshore Malaysia. As a consequence, the Board anticipates that, in the absence of unforeseen circumstances, the Group's net profit for 2006 will be towards the top end of current market expectations (see note below).
In the second half of the year, our E&C division secured major new EPC awards in Egypt and Tunisia which will enable us to develop our capabilities in two important new geographic markets. These awards, together with existing backlog from contracts already in progress, substantially underpin our E&C revenue targets for 2007.
In August, our Operations Services (OS) division announced that it had been awarded a turnkey contract for well and facilities management of Dubai's offshore oil and gas assets on behalf of Dubai Petroleum Establishment, an entity wholly owned by the Government of Dubai. This contract, which comes into full operation in April 2007, is believed to represent the first time a national government entity has chosen to exploit its hydrocarbon resources through direct contracting with an international service provider.
In September, our Resources division announced the milestone of achieving first oil from the Cendor field, Block PM304, in which we hold a 30% operated interest. With the initial drilling programme now complete, the Cendor field is currently producing, on average, approximately 14,000 barrels of oil per day, ahead of initial expectations. More recently the division announced two new investments in Tunisia and the UK North Sea. Subject to certain government approvals, we will acquire a 45% operated interest in Tunisia's Chergui concession, where construction of the production facilities and associated pipeline is already underway, with production expected to commence before the end of 2007. As announced earlier today, we have acquired a 60% operated interest in the Don Southwest field within Block 211/18a in the UK North Sea, building on our existing interests in the area (comprising interests in the West Don field, which is also part of Block 211/18a, and Block 211/18c).
As at 31 December 2006, total backlog is expected to be at a record level of approximately USD 4.0 billion (30 June 2006: USD 3.3 billion; 31 December 2005: USD 3.2 billion) comprising approximately USD 2.1 billion from our E&C division (30 June 2006: USD 1.6 billion; 31 December 2005: USD 2.1 billion) and approximately USD 1.9 billion from our OS division (30 June 2006: USD 1.7 billion; 31 December 2005: USD 1.1 billion).
Ayman Asfari, Group Chief Executive of Petrofac, commented: "We are very pleased with the way the business has progressed over the year and we continue to see good demand for our services. Our rigorous focus on project execution and risk
management, combined with our strong order book, positions us well for further growth in the coming financial year."
The current market expectations for Petrofac's net profit for the year ending 31 December 2006, referred to earlier in this announcement, are based on forecasts provided to Petrofac by eight equity analysts since publication of the Group's interim results in September 2006. The range of those forecasts is from USD 96.7 million to USD 120.3 million.