The Lemon Fool

Trading statement can be found here:
www.investegate.co.uk/article.aspx?id=2 ... 2678D&fe=1

Petrofac issues the following pre-close trading update ahead of the announcement of its results for the six months ending 30 June 2019 on 28 August 2019.

· Trading in line with prior guidance
· New order intake (1) of US$1.7 billion in the year to date
· Net debt (2) expected to be around US$0.1 billion at 30 June 2019

Rightly or wrongly, I think the market has over-reacted to what's a fairly reasonable trading statement, so it's time for another purchase.

Clitheroekid wrote:Rightly or wrongly, I think the market has over-reacted to what's a fairly reasonable trading statement, so it's time for another purchase.

Yes 5th on my top up list. ( 1st DC.- but v poor final results; 2 WMH - possibility for purchase, but worry about UK regulation; 3 GFRD I'll say no more, but not going to purchase at the moment; 4 BT also a possible purchase , but capital expenditure and regulation are both worries). So PFC stands a good chance of being top up. Other possibilities are TRIG (but the money is available in the wrong account) IMB (but its tobacco and I wouldn't normally purchase for moral reasons - but the yield is so high!) or VWRL to diversify away from the UK.

https://www.hl.co.uk/shares/share-resea ... h-guidance

"However, a more serious problem in our view is protecting the group's reputation."

Oh, the irony!

"Prosecutors have dropped a criminal investigation into three businessmen who had been accused of paying huge bribes in the energy industry, sources with knowledge of the inquiry have said. The Serious Fraud Office had been investigating claims that Unaoil, a firm formerly owned and controlled by its chairman Ata Ahsani and his sons Cyrus and Saman, paid multimillion-pound bribes to land contracts in the oil and gas industry. On Tuesday, the SFO declined to say why its investigation into the trio had been dropped."

https://www.theguardian.com/business/20 ... bes-unaoil

Need the SFO to say the same for PFC.

Clitheroekid wrote:Rightly or wrongly, I think the market has over-reacted to what's a fairly reasonable trading statement, so it's time for another purchase.

Market Summary > Petrofac Limited
LON: PFC
461.70 GBX +56.70 (14.00%)

Now that's what I consider a well-timed purchase! (Though admittedly, more by good luck than by good management).

PFC - the gift that keeps on giving!

Clitheroekid wrote:

Clitheroekid wrote:Rightly or wrongly, I think the market has over-reacted to what's a fairly reasonable trading statement, so it's time for another purchase.

Market Summary > Petrofac Limited
LON: PFC
461.70 GBX +56.70 (14.00%)

Now that's what I consider a well-timed purchase! (Though admittedly, more by good luck than by good management).

PFC - the gift that keeps on giving!

Timely indeed!

I wonder where the price will be in a month. Shame I hadn’t finished rebuilding my holding after my last profit taking

Wasron

Yes, I'd been pondering a speculative buy a couple of weeks ago but was distracted by a family illness and never followed through. Most of my holdings are from when it was riding high so I'm well under water; so a little profit swoop would have brought some welcome relief.

I decided that an immediate 15% profit was far too good to miss, and I was also not quite as sanguine as some commentators that the SFO's interest in PFC has ended.

I therefore sold them yesterday afternoon - and it appears to have been another lucky decision, as they're down over 4% today.

But in general terms I think they're a pretty good company, and that any action taken by the SFO is unlikely to have a long term effect. They also have a very attractive yield, so that when I do buy in the hope of a successful trade if the trade doesn't work out I can always justify holding them just on the basis of that yield.

However, I think I'll be lucky to get such an attractive buying opportunity again. Particularly if the SFO do confirm they've dropped their investigations I think the long term trend is now likely to be fairly steadily upwards.

Having bought my holding all at below £4 it is one of only a couple of bright spots in my ill fated, capital obliterating flirtation with HYP!

A reuters report yesterday said Iraq had banned PFC from bidding for new contracts but that PFC denied any country had banned them from doing so. This morning The Times says (under day's biggest movers) "Petrofac Reports that Iran has temporarily suspended it from bidding for new contracts." So which is it: Iran, Iraq, neither or both? And how significant is all this?

Bouleversee wrote:A reuters report yesterday said Iraq had banned PFC from bidding for new contracts but that PFC denied any country had banned them from doing so. This morning The Times says (under day's biggest movers) "Petrofac Reports that Iran has temporarily suspended it from bidding for new contracts." So which is it: Iran, Iraq, neither or both? And how significant is all this?

From PFC's 2018 annual report ..buried on page 133 (of 215). Revenue from Iraq being $211m (3.6% of $5829m). Iran not stated in the table ("others"?)

Revenue from contracts with customers




The trading update this week said

""We continue to maintain excellent client relationships in all of our markets, although new order intake in the year to date reflects our recent challenges in Saudi Arabia and Iraq. Looking forward, the Group has a busy tendering pipeline in other markets with around US$15 billion of bid opportunities due for award in the second half of the year."

In the update there are only two mentions of "Saudi" (the other mentions work nearing completion on a certain project). The "challenge" is, I believe, the ongoing issue with the SFO which has been discussed previously on TLF.

https://www.euronews.com/2019/06/27/oil ... tract-bids

"LONDON (Reuters) – Iraq has temporarily suspended Petrofac <PFC.L> from bidding on new contracts, although existing deals are not affected, the head of an Iraqi state oil firm said on Thursday. The Director General of Iraq’s Basra Oil Company Ihsan Abdul Jabbar told reporters at the CWC Iraq Petroleum Conference in London that Iraq had taken “preventive action to freeze the relation for new bids with Petrofac”.

“It is a freezing, suspended,” the Iraqi official said."

Petrofac’s Chief Financial Officer Alastair Cochran said

"Existing contracts were not affected and ongoing talks might yield a resolution of the issue within days, the Iraqi oil company chief said. Asked how long the suspension had been in place, he said about two months."

(what could he possibly mean here - "resolution in days"?)

Thanks, Mon. I suppose he means that he is hoping to persuade them to thaw the freeze.

Over on ADVFN, a poster has suggested the following reason for the ban:

"I read an article a few days ago about how 27% of the oil produced in Iraqi Kurdistan was going into the president's back pocket via Turkey. With that level of corruption I suggest NOT offering a bribe is definitely going to get you barred from bidding." I couldn't possibly comment.

SFO names 4 pfc managers over multimillion pound bribe scheme


https://www.theguardian.com/business/20 ... ibe-scheme

Bouleversee wrote:SFO names 4 pfc managers over multimillion pound bribe scheme


https://www.theguardian.com/business/20 ... ibe-scheme

It's not been a good weekend!

With the price back down to £3.93 I decided it was time for another purchase. With the latest SFO revelations and the depressed POO it may take longer to make a recovery this time, but I'm pretty confident that it will eventually bounce back again.

And even if I have to wait longer than anticipated a 7% yield provides a very reassuring comfort blanket.

Petrofac are just one of those Companies that have always bounced back no matter what so I can't see why they can't continue to do so.

Petrofac are just one of those Companies that have always bounced back no matter what so I can't see why they can't continue to do so.

Really? When this thread started in February 2019 the share price talked about was 489p. The last price mentioned in this thread is393p. Now, I dont follow this share, but that sounds like pretty poor performance to me. Why should the price bounce back? The price is what it is because that is Mr Market's valuation of the share. I get the feeling that this is exactly the type of share that is the reason that 70% of retail traders lose money.

miner1000 wrote:

Petrofac are just one of those Companies that have always bounced back no matter what so I can't see why they can't continue to do so.

Really? When this thread started in February 2019 the share price talked about was 489p. The last price mentioned in this thread is393p. Now, I dont follow this share, but that sounds like pretty poor performance to me. Why should the price bounce back? The price is what it is because that is Mr Market's valuation of the share. I get the feeling that this is exactly the type of share that is the reason that 70% of retail traders lose money.

If you've not been following the share you can hardly expect to understand Stan's comment, but it's quite correct.

The share price of 489 was a snapshot from a day in which the price fell from 559 to 395 because of further SFO revelations. However, I've come to see the SFO as a great ally, as every time they pop their head over the parapet the share price drops, providing another buying opportunity. And when they go back under their stone the SP gradually rises again. In fact, I can't help wondering whether someone at the SFO holds shares in PFC ...

Have a look at the recent history of the share price, and you can see the amazing trading opportunities the volatility has presented:

03.03.17 - 938
09.06.17 - 354
04.08.17 - 483
01.09.17 - 403
19.01.18 - 548
09.02.18 - 408
11.05.18 - 651
14.12.18 - 460
06.02.19 - 559
12.02.19 - 381
12.04.19 - 527
23.05.19 - 398
26.06.19 - 465
07.08.19 - 388

This is (OK, tempting fate, has been so far!) an excellent share in which to trade. It's a very substantial company, which pays high dividends, and it's frankly not one that I can imagine going bust in the foreseeable future. And even if the price doesn't rise again to any significant degree it's an excellent income stock.

Without a doubt my favourite trading share