Petrofac rises as order boost counters delay at North Sea fields

ANGELINA RASCOUET

LONDON (Bloomberg) -- Petrofac Plc, a UK oil-services provider, rose the most in five weeks in London trading as an expanding order backlog countered setbacks in the North Sea.

Petrofac jumped as much as 4.8%, the biggest intraday gain since July 21, and was up 2.5% at 749 pence as of 8:45 a.m. local time. The backlog climbed to $20.9 billion as of June 30 from $18.9 billion at the end of last year, the London-based company said in a statement. 

While lower crude prices have forced international producers to retrench, most of Petrofac’s revenue comes from national oil companies, which have continued to invest in large projects in its “core markets,” according to the statement. Petrofac shares have gained 6.5% this year, compared with losses of more than 10% at competitors Technip SA and Saipem SpA.

New orders for Petrofac’s engineering, construction, operations and maintenance unit totaled $6 billion so far this year. That’s helped offset delays at the North Sea Laggan-Tormore project, where the company took an impairment charge of $263 million after tax.

“We are having to do a significant amount of rework on the project just as we’re doing the final testing of individual systems,” CFO Tim Weller said Tuesday on a conference call. The first natural-gas output from the deepwater fields—about 125 km (80 miles) northwest of the Shetland Islands—has been pushed back to the fourth quarter from the third.

Underlying earnings before interest, taxes, depreciation and amortization fell to $305 million in the first half from $340 million a year earlier, Petrofac said in the statement. The net loss was $133 million.

Total SA, the operator of Laggan-Tormore, estimates the fields’ capacity at 90,000 boed. Petrofac said costs at the project have risen by about 30 million pounds ($47 million).

The company declared an interim dividend of 22 cents a share, matching the estimate from analysts at Bloomberg Dividend Forecasting.