Petrofac shares shed further 8.4p

Petrofac’s shares shed 8.4p to £4.17 following the trading update.

Financial blogger Graham Chester of investment specialist The Motley Fool said a plunge in the shares since spring, from over £9, meant the stock was now in the “bargain-basement”. But he warned the company would “have to go some” in the second-half to analysts’ consensus forecasts for full-year profits.

And he highlighted the Serious Fraud Office (SFO) investigation as “the elephant in the room”.

Mr Chester added: “It’s necessarily guesswork, but some analysts have suggested Petrofac could be vulnerable to a fine of up to $800million (£627million).

“Any substantial fine could put the dividend at risk. On the other hand, it looks like being a longrunning investigation and net debt (expected to be about £862million at the end of this month) could be considerably lower by the time of any fine, if indeed Petrofac ends up receiving one.”

Some analysts, including Mr Chester, also fear the loss of chief operating officer Marwan Chedi – who was suspended and then quit the board – and potentially Mr Asfari could hurt the business.

Nicholas Hyett, equity analyst at stockbroker Hargreaves Lansdown, said: “The Serious Fraud Office investigation will continue to drive Petrofac shares in the near term, but our bigger worry is the state of the group’s order book.

“Oil prices may have stabilised, but E&P (exploration and production) companies were too badly scarred by the crash to start splashing large sums

“The stock is now in the bargain basement”

on new projects straight away.

“Even the group’s impressive cost cutting can’t offset a lack of projects to work on.”

Ayman Asfari has talked up Petrofac’s outlook