Under investigation Petrofac says it’s made ‘positive’ start to financial year

● But energy services firm’s backlog of work declines to $13 billion from $14.3bn

Aberdeen-based energy services firm Petrofac has made a “positive” start to its financial year despite seeing its backlog of work slip and remaining under investigation by Britain’s fraud squad.

Petrofac said in a trading update yesterday that interim underlying net profit would come in between $135 million (£106m) and $145m (£114m), with full-year profits skewed to the second trading half.

The firm said that its backlog of work was lower at $13 billion at the end of May, down from $14.3bn at end-2016. New orders stood at $1.7bn for the year to date.

Group chief executive Ayman Asfari said: “We have made a positive start to the year, driven by good project execution and financial discipline.

“Our core business contin- ues to trade in line with expectations and we remain competitive, securing new contract awards in both our E&C and EPS divisions throughout the last six months.

“The high level of tendering activity is evidence of greater confidence in our core markets and we continue to have a very good pipeline of bidding opportunities.”

The update comes after Petrofac’schiefoperatingofficer Marwan Chedid was suspended and resigned from the board in May after the Serious Fraud Office (SFO) launched a probe into the firm’s activities under suspicion of bribery, corruption and money laundering in relation to oil contractor Unaoil.

Chedid and Asfari had been arrested by the SFO and were later released without charge.

Asfari has continued in his role, but has not been involved with the investigation and has had “no role or responsibilities for engaging with or liaising with agents and consultants”.

Petrofac chairman Rijnhard van Tets said yesterday: “An independent committee of the board will continue to engage with the SFO and its investigation.”

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said if new contracts continue to struggle then Petrofac’s order book would “drain away”.

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

Petrofac’s shares fell 2 per cent.