Petrofac Limited (PFC)

[monabri]

Interested to hear where you think PFC might win their next significant contract? I think their main sources of previously successful major bids will remain in fact closed despite what official sources are saying. Nobody "has" to go to Petrofac. Everyone understands that.

You're right about the war of attrition. The competitors need to do nothing. The work will flow in their direction anyway. I am sad to be so negative about a company I used to like a lot. But I don't see anyway PFC is going to win any really significant work going forward. The competition is more than intense and the levers PFC need to pull to gain work are not reachable for them to pull.

Sad really and I would like to be wrong about PFC.

I don't know about "major" contracts, I was thinking of new contracts in general as they seem to be well regarded in the industry. The concern is that they feel obliged to bid at low margins to "win" work. All these contractors chasing for work just to keep the order books filled is reminiscent of the likes of Carillion & Kier. I'm "down" a chunk of change on my early investment in PFC (a couple of weeks before the SFO* investigation announced - bad timing !!). What have I learned.....don't invest in low margin businesses. My inexperience in early 2017 had me fixed on the "yield on offer" rather than the fundamentals of the business. Would I invest in PFC (or similar) today ?....absolutley no way! I licked my wounds on PFC a while ago and moved on.




(*) I said FCA investigation in a previous post..apologies, I meant SFO.

[BullDog]

Interested to hear where you think PFC might win their next significant contract? I think their main sources of previously successful major bids will remain in fact closed despite what official sources are saying. Nobody "has" to go to Petrofac. Everyone understands that.

You're right about the war of attrition. The competitors need to do nothing. The work will flow in their direction anyway. I am sad to be so negative about a company I used to like a lot. But I don't see anyway PFC is going to win any really significant work going forward. The competition is more than intense and the levers PFC need to pull to gain work are not reachable for them to pull.

Sad really and I would like to be wrong about PFC.

I don't know about "major" contracts, I was thinking of new contracts in general as they seem to be well regarded in the industry. The concern is that they feel obliged to bid at low margins to "win" work. All these contractors chasing for work just to keep the order books filled is reminiscent of the likes of Carillion & Kier. I'm "down" a chunk of change on my early investment in PFC (a couple of weeks before the SFO* investigation announced - bad timing !!). What have I learned.....don't invest in low margin businesses. My inexperience in early 2017 had me fixed on the "yield on offer" rather than the fundamentals of the business. Would I invest in PFC (or similar) today ?....absolutley no way! I licked my wounds on PFC a while ago and moved on.




(*) I said FCA investigation in a previous post..apologies, I meant SFO.

Thanks. I have changed my description of the company from well regarded in the industry. To formerly well regarded the industry. I don't know how many if any major EPC jobs they still have running. They must have worked though the project backlog order book by now. Fact is for the kind of remaiming low margin operations support type contracts, it doesn't matter much whether you award the management of the contract to Petrofac or another company. It's pretty much exactly the same set of sub contractors who actually execute the work anyway. Often for decades as the various service companies and their management come and go. Reputation is everything because it is perfectly normal for operator client companies to award a support contract to a different service company at each contract renewal. Once your Reputation as a safe pair of hands is gone you don't really have much left to offer.

Apologies for being so gloomy, it's one of the industries I know about. All the best for the future to PFC shareholders.

[spiderbill]

"TenneT, the Dutch-German electricity grid operator, has struck an agreement for Hitachi Energy and Petrofac to work on two 2 gigawatt (GW) conversion stations it is planning in the North Sea.."
https://uk.finance.yahoo.com/news/hitatchi-petrofac-tennet-offshore-power-080956178.html

Shares up around 10%, presumably on the back of this, although no financial terms have been announced yet.

Only need a similar result about 25 times and I'd get my investment back!

cheers
Spiderbill

[spiderbill]

Some much-needed good news, again involving TenneT

Petrofac and Hitachi Energy secure landmark offshore wind framework worth approximately 13 billion euros
https://www.petrofac.com/media/news/petrofac-and-hitachi-energy-secure-landmark-offshore-wind-framework-worth-approximately-13-billion-euros/

Shares up around 70% currently at 83p

cheers
Spiderbill

[daveh]

Some much-needed good news, again involving TenneT

Petrofac and Hitachi Energy secure landmark offshore wind framework worth approximately 13 billion euros
https://www.petrofac.com/media/news/petrofac-and-hitachi-energy-secure-landmark-offshore-wind-framework-worth-approximately-13-billion-euros/

Shares up around 70% currently at 83p

cheers
Spiderbill

That's good as when I checked in a couple of days ago they'd plummeted 18% and I couldn't see any obvious news that might have caused it.

[Bouleversee]

Still a heck of a long way below year's high, let alone earlier highs.

[kempiejon]

Petrofac was a casulty, or perhaps mercy killing of my tax planning. I sold in February for around today's price. Funds in PFC have been sent to the SIPP/ISA fund for the new tax year.

[monabri]

Trading update

I shouldn't ruin your morning by actually reading it would be my advice!

https://www.investegate.co.uk/petrofac- ... 0005EYTEM/

[daveh]

Extends banking facility by 12 months and delays results by 48hrs to 27th April.

https://www.investegate.co.uk/petrofac- ... 0003EWRSQ/

[daveh]

Full year results:
https://www.investegate.co.uk/petrofac- ... 0011EEXBI/

PETROFAC LIMITED
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2022



Challenges in E&C partially offset by strong performance in Asset Solutions and IES
Business performance EBIT loss of US$(205) million(1)
Reported net loss of US$(310) million(2) inclusive of separately disclosed items
Healthy total Group pipeline of US$51 billion scheduled for award in the period to June 2024
Net debt of US$349 million(3) and liquidity of US$506 million (4) at 31 December 2022
Bank facilities extended to October 2024
Backlog of US$3.4 billion at 31 December 2022
Share of €13 billion TenneT framework agreement and first contract award secured in Q1 2023

I sold yesterday on a HSDL cheap dealing day. So maybe the price will go up now (though they look to be down again today.

[daveh]

Contract:

https://www.investegate.co.uk/petrofac- ... 0522EQQAH/

Petrofac secures new EPC contract as it continues to support Lithuanian refinery upgrade


Petrofac has secured an Engineering, Procurement and Construction (EPC) lump sum contract from ORLEN Lietuva, as it continues to support a comprehensive modernisation, environmental upgrade, and expansion Programme at the Mažeikiai Refinery in North-West Lithuania.

The project has a value less than 200 million euros. Petrofac’s scope of work encompasses the design, procurement, construction, and commissioning of new facilities, as ORLEN Lietuva invests to expand the existing refinery complex. Petrofac’s scope will further enhance the plant’s capability to meet requirements for cleaner fuels by improving its operational and carbon efficiency.

Shares up 6%.

Guess who sold 2 days ago?

[monabri]

Contract:

https://www.investegate.co.uk/petrofac- ... 0522EQQAH/

Petrofac secures new EPC contract as it continues to support Lithuanian refinery upgrade


Petrofac has secured an Engineering, Procurement and Construction (EPC) lump sum contract from ORLEN Lietuva, as it continues to support a comprehensive modernisation, environmental upgrade, and expansion Programme at the Mažeikiai Refinery in North-West Lithuania.

The project has a value less than 200 million euros. Petrofac’s scope of work encompasses the design, procurement, construction, and commissioning of new facilities, as ORLEN Lietuva invests to expand the existing refinery complex. Petrofac’s scope will further enhance the plant’s capability to meet requirements for cleaner fuels by improving its operational and carbon efficiency.

Shares up 6%.

Guess who sold 2 days ago?

Tell me when it is up 600%...

[Tedx]

Contract:

https://www.investegate.co.uk/petrofac- ... 0522EQQAH/



Shares up 6%.

Guess who sold 2 days ago?

Tell me when it is up 600%...

Aye, 6% of f-all is still f-all.

[Clitheroekid]

Some more potentially good news - I'd like to think that PFC is gradually being rehabilitated, but it might also be called grasping at straws!

https://www.proactiveinvestors.co.uk/co ... 15407.html

[daveh]

Contract
https://www.investegate.co.uk/announcem ... 569441/PFC

Petrofac confirms signing of US$1.5 billion
EPC contract in Algeria

Further to the announcement of 18 May 2023, Petrofac today confirms it has entered into a definitive agreement with STEP Polymers SPA (‘STEP’, a 100% subsidiary of Sonatrach) for the design and build of its petrochemical complex in the Arzew Industrial Zone in Algeria. As previously announced, Petrofac will deliver the US$1.5 billion project with its joint venture partner China Huanqiu Contracting & Engineering Corporation (HQC), with Petrofac’s share valued at over US$1 billion. The contract was signed at an official ceremony in Algiers by representatives of Petrofac, HQC and STEP.

I no longer hold

[daveh]

Trading statement:

https://www.investegate.co.uk/announcem ... te/7596555

PETROFAC LIMITED
TRADING UPDATE

Petrofac issues the following pre-close trading update for the six months ending 30 June 2023.



Significant increase in Group backlog to US$5.6 billion at 30 June 2023 (31 December 2022: US$3.4 billion) with strong order intake in both E&C and Asset Solutions
Asset Solutions and IES performance in line with expectations
E&C expecting an EBIT loss of approximately 20% on revenues of US$0.5 billion, which includes write-downs of over US$50 million on receivables from historical contracts to protect full year cash flows
Well positioned to continue backlog growth in both E&C and Asset Solutions, with a healthy Group pipeline scheduled for award in the next 18 months of US$73 billion
Free cash flow negative in the first half, continue to target broadly neutral free cash flow for the full year


Tareq Kawash, Petrofac's Group Chief Executive, commented:



"In the first six months of the year we have announced over three and a half billion dollars in new work across E&C and Asset Solutions, in both the traditional and new energy sectors, and continue to pursue a strong pipeline of future opportunities in core geographies. By further progressing our plans to strengthen the financial position of the Group by unlocking the working capital built up through the pandemic, and building on the momentum of the significant awards won in the first half, we are focused on delivering Petrofac’s potential. We have an exceptional EPC and Operations capability that is well positioned to deliver and support critical energy infrastructure for the world’s leading resource holders.”

I no longer have a holding - sold at 64p in April

[Clitheroekid]

Some more good news - https://www.proactiveinvestors.co.uk/co ... 19447.html

I'd like to think that these contract wins are a sign of a gradual rehabilitation within the industry, my main worry being that they may be taking on work at uncompetitive rates just to keep the lights on.

No doubt next week's trading statement will give a better indication of their financial health.

[daveh]

Half year results:
https://www.investegate.co.uk/announcem ... s-/7687351

Major increase in Group backlog to US$6.6 billion at 30 June 2023 (31 December 2022: US$3.4 billion) with strong order intake in both E&C and Asset Solutions
Strong operating performance in Asset Solutions and IES, in line with expectations
E&C first half EBIT loss of US$122 million reflecting the combination of lower levels of activity, onerous contracts with no margin recognition, adverse operating leverage, and US$67 million one-off write downs in contract settlements resulting from measures taken to protect full year cash flows
Good progress in resolving historical contractual disputes to release working capital in the second half
As a result of these actions, the free cash outflow of US$225 million in the first half is expected to largely reverse in the second half, maintaining a target of broadly neutral free cash flow for the full year
Well positioned to continue backlog growth in both E&C and Asset Solutions, with a healthy pipeline scheduled for award in the next 16 months of US$60 billion

Still loss making. Down ~4% today. No longer a share holder, though the price is now above what I sold at.

[spiderbill]

Unexpected bright spot in an otherwise poor day -
Fitch Revises Petrofac's Outlook to Stable; Affirms IDR at 'B+'
https://www.fitchratings.com/research/corporate-finance/fitch-revises-petrofac-outlook-to-stable-affirms-idr-at-b-27-09-2023

Share price up 8%. Wil be interested to see what happens tomorrow.
Barely registers on the actual money value of course but if it was the start of a recovery then I might even get back to being only 80% down

cheers
Spiderbill

[daveh]

Contract win:

https://www.investegate.co.uk/announcem ... c-/7792448

DNOC GAS AWARDS PETROFAC CONTRACT FOR LANDMARK CARBON CAPTURE, UTILISATION AND STORAGE PROJECT



Petrofac, a leading international service provider to the energy industry, has been awarded an Engineering, Procurement and Construction (EPC) contract by ADNOC Gas for its Habshan Carbon Capture, Utilisation and Storage (CCUS) project, one of the largest carbon capture projects in the Middle East and North Africa region.

The contract is valued at more than US$600 million and involves the delivery of carbon capture units, associated pipeline infrastructure and a network of wells for carbon dioxide (CO2) recovery and injection. Located at the Habshan gas processing plant, 150 kilometres southwest of Abu Dhabi, the project is part of ADNOC’s accelerated decarbonisation plan.

No holding anymore sold out at 64p in April. Up 3% today at 75p