Petrofac Fails to Ignite the Market

LONDON -- Petrofac (LSE: PFC.L  ) , the provider of oil and gas facilities solutions, saw its share price dip by 5.69% to 1,478 pence despite posting encouraging results for the first half of 2012.

Revenue was up 20% to $3.2 billion, and net profit was up 32% to $325.3 million. With earnings per share up 32% to $0.95, the interim dividend was declared at $0.21 per share -- an increase of 21%.

Ayman Asfari, Petrofac's group chief executive, commented on the interim results:

We have delivered good operational and financial performance in the first half of the year and remain on course to deliver net profit growth in 2012 of at least 15%.

Our strategy for future growth is based on three key drivers: geographical expansion; broadening our offshore engineering, procurement and construction capability; and implementing our Integrated Energy Services strategy. As previously indicated, over the past few months we have seen delays in certain contract tender processes with a number of anticipated awards moving from 2012 into 2013. While these delays impact the expected level of 2012 new orders for Onshore Engineering & Construction, we continue to expect our strategy to deliver earnings growth in 2013 and beyond.

As a result, we remain confident of achieving our target of more than doubling our recurring Group 2010 earnings by 2015.

The disappointing market reaction could be due to the fact that year-on-year growth in net profit in the second half of 2012 will be lower than in the first half of the year. Additionally, the group's net cash was lower at $775.3 million as of June 30. On June 30, 2011, it stood near $1.8 billion.

Petrofac, which shares the oil and gas facilities market with Technip and AMEC, showed progress in onshore engineering and construction with the award of a $330 million Badra project in Iraq. Offshore projects and operations also offered promise with the award of a $220 million contract to undertake refurbishment of the Bekok-C platform off the shoreof  Malaysia, as well as a $465 million contract to provide onshore engineering and both onshore and offshore construction services to all of Apache's North Sea assets.

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