The Press and Journal (Aberdeen and Aberdeenshire)
Energy service company Petrofac back in the black
North Sea: Turnaround due to record revenue and cost reductions
Energy service firm Petrofac was back in the black in 2016, squeezing out net profits of around £800,000.
Chief executive Ayman Asfari said yesterday the company’s “positive” results were driven by record revenue, significant cost reduction and strong cash generation. And he claimed the end may be in sight for job cuts at the firm after a spell of low oil prices.
“We have worked very hard on right-sizing the business for the future,” he said, adding: “We have largely taken care of the big reductions. We are down to a size of a machine which is a lot more efficient.
“I do have to emphasise we have gone down to this size while delivering record revenue last year. We’ve been busier than ever, we just did it with less people.”
Staffing levels at the London headquartered company fell by nearly onethird last year to 13,500.
Petrofac said its cost-cutting efforts to “right-size” the business delivered about £96million of annualised savings.
The net profits for 2016 followed shareholder attributable losses of £280.5million the year before, while revenue surged by 15% to £6.3billion.
“We’ve been busier, we just did it with less people”
Pre-tax profits for the latest period came in at £80.4million, against losses of £269.3million a year earlier. Petrofac said it cut its net debt by 10% to £496million. Chief financial officer Alastair Cochran said the slimmed down company’s improved performance was the result of careful restructuring. “We’ve focused on cash flow and reducing capital intensity,” he added.
Mr Cochran said the job cuts had made the company a sleeker, more agile supplier. A raft of recent North Sea asset deals like Shell's Chrysaor sell-off, meant there was more “potential work in the pipeline,” he said, adding: “We have some really good positions in core markets both in the UK and the Middle East. In the UK, we are seeing a lot of mature assets starting to transition to new owners – many of whom are smaller independents who look to someone like Petrofac to help provide them with operations and maintenance service.
“Everybody involved in the North Sea has really been going after their cost base and trying to ensure there is as competitive and efficient an operating model as possible. What I'm seeing now is a more stable oil price, which can only be good for the industry and for the North Sea."