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Petrofac reports record order book on Middle-East demand

(Reuters) - British oilfield services company Petrofac Ltd PFC.L said its full-year revenue grew 10 percent and that its order book stood at record levels at the end of the year, sending shares up more than 12 percent on Wednesday morning.

Petrofac said most of the $20.7 billion backlog came from its core Middle Eastern markets.

“The pipeline appears strong, although we have concerns that it may be much weaker if further contracts are deferred/cancelled as a result of the continuing low oil price environment” analysts at Cenkos Securities said.

Oil producers have announced billions of dollars of spending cuts in the face of prices that have dipped to $30 per barrel, hurting demand for oilfield services companies.

Petrofac recorded a $431 million loss in 2015 on the Laggan Tormore project in the North Sea, hurt by higher costs and bad weather.

“We underestimated those challenges when we entered the project,” Chief Financial Officer Tim Weller said in a media call.

Weller said unit labour costs in the UK were much higher than in the company’s core markets, and that Petrofac would not again take on a fixed-price project similar to Laggan Tormore.

He added that the company had cut about 150-160 jobs in the UK and reduced headcount by the “low hundreds” across the world.

Petrofac reported a net profit of $440 million for the year ended Dec. 31 2015, before accounting for the Laggan Tormore project, compared with a net profit of $581 million a year earlier and above a company-compiled consensus $435 million.

Shares in the company were up 12.5 percent at 832.8 pence at 0855 GMT on the London Stock Exchange, set for their sharpest rise in seven years, and were at the top of the FTSE mid-250 Index .FTMC.

Reporting by Mamidipudi Soumithri in Bengaluru and Karolin Schaps in London; Editing by Sunil Nair and Anupama Dwivedi

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