- Expects a reduction in net debt in H2
- Asset Solutions unit revenue up in H2
- Shares up 4.3%
June 28 (Reuters) – Oil services provider Petrofac Ltd (PFC.L) said on Tuesday it was seeing strong order intake at its Asset Solutions unit and expects the group’s net debt declines in the second half after doubling to $345 million. in the first six months of this year.
The company is seeing an increase in orders as it benefits from high oil prices, but said it expects modest free cash outflows in 2022 due to delays in collecting payments from customers.
Petrofac said its net debt had doubled to $345 million as of June 23, following a $104 million fine paid to Britain’s Serious Fraud Office (SFO) and slowing customer payments.
He was fined last year after pleading guilty to bribes related to contracts in Iraq, Saudi Arabia and the United Arab Emirates between 2011 and 2017.
“The jump in net debt will concern some, but management seems confident working capital flows will be helpful in the second half as customer payments come in,” said AJ Bell analyst Russ Mold.
So the risk is that these customers will continue to be slow payers, but if net debt declines, that could be seen as another bright spot for the stock, Mold added.
Petrofac shares rose 4.3% to 124.1 pence at 0920 GMT, after falling 10% in the past 18 months.
In the second half of the year, Petrofac expects revenue from its Asset Solutions unit to be higher, supported by strong order intake since the start of the year.
“We have a strong 18-month group tender pipeline and expect to secure significant new orders in 2023, supported by opportunities in the United Arab Emirates and in offshore wind,” said chief executive Sami Iskander in a statement.
Petrofac, which drew a line under the SFO survey, said its half-year trading was in line with expectations as higher oil prices boosted demand. Read more
“The good news is that other parts of the business are picking up some of the slack – with higher oil prices and strong demand for onshore and offshore asset management maintaining a bottom under earnings,” said Laura Hoy, equity analyst at Hargreaves Lansdown.
As demand for oil plunged during the COVID-19 pandemic, crude prices traded well above the $100 a barrel mark after Western countries imposed sanctions on the Russian oil producer for his invasion of Ukraine.
Reporting by Amna Karimi in Bangalore; Editing by Susan Fenton
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