Petrofac swung to a profit last year as project activity picked up pace in the second half, signalling a market rebound with new opportunities in downstream, the oil services company said on Wednesday.
The London-listed oil and gas services provider reported a US$1 million net profit impacted by $319m of exceptional items including a write-down on its investment in Nigerian gas producer Seven Energy. In 2015, Petrofac lost $349m.
“We had a tough year last year, but that’s behind us,” said Ayman Asfari, the chief executive of Petrofac. “We’ve seen improvements in bidding in our core markets and these encouraging signs give me confidence that we’re well positioned to rebound.”
Marwan Chedid, Petrofac’s chief operating officer, said that delays on new business were a response to the low oil price environment, but this is beginning to resolve.
“We had an initial bid pipeline of $29 billion, but more than one-third was cancelled,” he said. “A number of cancellations took place in Abu Dhabi where the national oil company rescoped, but we’ve seen some projects come back.”
The company, which has operations in Sharjah and Abu Dhabi, said revenue last year increased by 15 per cent to $7.87bn from $6.84bn, driven by engineering and construction projects. And Petrofac is now looking for more downstream investment opportunities such as creating a joint venture with a more established petrochemical company to help capture more of the value chain.
“The trend over the last few months is upstream gas processing and downstream opportunities,” Mr Asfari said, pointing to Abu Dhabi and Saudi Arabia’s push to expand gas processing capacity.
Petrofac is hoping to make headway in Russia, reopening an office in Moscow and exploring downstream brownfield opportunities. Mr Asfari said that the firm is also looking to increase its exposure to renewables, particularly in transmission systems.
Despite this positive outlook, more job cuts may be on the horizon. The company slashed 29 per cent of its workforce to about 13,500 employees, saving $120m annually. Mr Asfari said that the company was “largely done” with reductions in headcount.
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