Petrofac swings back into profit after end to gas project charges

OIL services company Petrofac has narrowly returned to profit after drawing a line under the spiralling costs of a troubled gas project off the Shetland islands.

Petrofac’s meagre $12m (£9.2m) profit for the first half of 2016 follows a $182m loss in the same months last year when the spiralling costs of construction delays at the Laggan-Tormore gas processing plant took a heavy toll on the company.

The oil and gas plant, which pumps in gas from the Laggan-Tormore field in the North Atlantic for onward delivery to mainland UK, has been exporting gas since February, and is operated by French giant Total.

Petrofac has also named Alastair Cochran, a former strategy boss for gas giant BG Group, as its new chief financial officer. Mr Cochran will join Petrofac on October 3, taking over from Tim Weller, who will leave later in the month to take up the same role at security company G4S.

In its latest update Petrofac reported it had cut debt to $877m, down from $1.1bn in February, and drawn a line under the Laggan-Tormore charges at a total of $410m. The final charge was $101m in the first six months of the year. At the same time the company has increased its revenue by 22pc to $3.89bn in the first half of 2016 as a result of strong growth in the engineering and construction business.

Petrofac chief executive Ayman Asfari said the company was on track to meet its full-year targets due to a strong pipeline of contract opportunities.

“While there have been few project awards in our core markets in the year to date, we have a strong pipeline of bidding opportunities and we are actively bidding on a large number of projects,” Mr Asfari said. “We have one of the most cost-competitive delivery capabilities in our industry, enabling us to maintain our bidding discipline while delivering value for our clients.”