Petrofac Limited (PFC)

[spiderbill]

Pre close trading statement:
https://www.investegate.co.uk/petrofac- ... 0005EUNFJ/

Looking generally positive, and that's not something we've been able to say too often in the last few years. Doubt I'll ever see anything like break-even on capital, but if they can continue to re-establish themselves and to further their involvement in wind power then maybe there's some chance of re-starting the dividend in the forseeable future.

cheers
Spiderbill

[daveh]

Pre close trading statement:
https://www.investegate.co.uk/petrofac- ... 0005EUNFJ/

Looking generally positive, and that's not something we've been able to say too often in the last few years. Doubt I'll ever see anything like break-even on capital, but if they can continue to re-establish themselves and to further their involvement in wind power then maybe there's some chance of re-starting the dividend in the forseeable future.

cheers
Spiderbill

Yes a poor purchase on my part too. I bought at ~350p after the SFO enquiry was launched. They were yielding a lot at the time and I was expecting the initial cut which left them yielding about 4-5% I was expecting that and thought that would be reasonable going ahead. They'd dropped by more than 50% from their pre SFO price 0f~800p and I thought that they were a decent company (bar the past bribery), that any SFO fines were priced in and that they would do well from future green (offshore windfarm etc) projects on top of continuing oil and gas projects and future decommissioning and the price might rebound once the SFO enquiry was complete. Initially it looked a good shout, with the reduced but still significant dividend being paid and the price sitting at above £4 so a capital gain too. However the covid oil price collapse did for them and they seem to have been stuck at 100-150p since.

With no dividend till 23 at the earliest, they are on my to sell list if they get to what I consider a fair price (around the 200p mark, which may be wishful thinking on my part). I may reconsider if they reinstate the dividend and I may change my fair value when I see the next set of accounts.

[BullDog]

Pre close trading statement:
https://www.investegate.co.uk/petrofac- ... 0005EUNFJ/

Looking generally positive, and that's not something we've been able to say too often in the last few years. Doubt I'll ever see anything like break-even on capital, but if they can continue to re-establish themselves and to further their involvement in wind power then maybe there's some chance of re-starting the dividend in the forseeable future.

cheers
Spiderbill

Yes a poor purchase on my part too. I bought at ~350p after the SFO enquiry was launched. They were yielding a lot at the time and I was expecting the initial cut which left them yielding about 4-5% I was expecting that and thought that would be reasonable going ahead. They'd dropped by more than 50% from their pre SFO price 0f~800p and I thought that they were a decent company (bar the past bribery), that any SFO fines were priced in and that they would do well from future green (offshore windfarm etc) projects on top of continuing oil and gas projects and future decommissioning and the price might rebound once the SFO enquiry was complete. Initially it looked a good shout, with the reduced but still significant dividend being paid and the price sitting at above £4 so a capital gain too. However the covid oil price collapse did for them and they seem to have been stuck at 100-150p since.

With no dividend till 23 at the earliest, they are on my to sell list if they get to what I consider a fair price (around the 200p mark, which may be wishful thinking on my part). I may reconsider if they reinstate the dividend and I may change my fair value when I see the next set of accounts.

Not on your own. I thought exactly that. Sadly, I missed selling on a bounce that from memory, for a short period took PFC above ~600p. I ended up with a nasty loss and a promise to myself that contractors weren't a reliable investment afterall. Professionally, I knew PFC very well indeed and I remember the shares being up around 1300p at one time, I think. I reckon that if the company was going to return to anything like it's previous valuation then a predator would have appeared and bought them out a long time ago now. It hasn't happened. The massive issue now going forward is that the majority of projects and ongoing service work is either done by Asian companies or by Western companies employing Asian workers. Although that was also PFC's business model, they are going to find it very tough getting back into markets where they have been blocked from bidding for several years. Their workers are now elsewhere and they've taken the skill with them. They will not be going back unless PFC ups it's hourly rates. They can't because it's dog eat dog and the market has been in a race to the bottom since mid 2014. That would make PFC uncompetitive. Despite the nasty loss I incurred, I am glad I sold PFC when I did and redeployed the remaining capital into far more promising ventures. Good luck anyone still holding PFC. I think you're going to need it.

[spiderbill]

Yes a poor purchase on my part too. I bought at ~350p after the SFO enquiry was launched. They were yielding a lot at the time and I was expecting the initial cut which left them yielding about 4-5% I was expecting that and thought that would be reasonable going ahead. They'd dropped by more than 50% from their pre SFO price 0f~800p and I thought that they were a decent company (bar the past bribery), that any SFO fines were priced in and that they would do well from future green (offshore windfarm etc) projects on top of continuing oil and gas projects and future decommissioning and the price might rebound once the SFO enquiry was complete. Initially it looked a good shout, with the reduced but still significant dividend being paid and the price sitting at above £4 so a capital gain too. However the covid oil price collapse did for them and they seem to have been stuck at 100-150p since.

With no dividend till 23 at the earliest, they are on my to sell list if they get to what I consider a fair price (around the 200p mark, which may be wishful thinking on my part). I may reconsider if they reinstate the dividend and I may change my fair value when I see the next set of accounts.

My first purchases - away back in 2013 and thankfully quite small as I was still learning - were around 12 quid!! I think it was a Motley Fool membership recommendation. 90% down.

For some reason I bought some more in 2016 at around 8 quid but the SFO just destroyed them and the longer it went on the worse it got. I'm so far under that it's just not worth selling, but I reckon if it does get to 200p and there is a renewed divi then it might go higher. But then I don't exactly have a good record of predictions with them!

cheers
Spiderbill

[daveh]

Petrofac continues growth in Africa

https://www.investegate.co.uk/petrofac- ... 3402EAFOQ/

Petrofac continues growth in Africa
with Tullow’s Jubilee award

Petrofac, a leading provider of services to the global energy industry, sees further growth in Africa having been selected by Tullow Oil to provide operations services for their world-class Jubilee Development in Ghana, West Africa.

Petrofac’s role on the Jubilee Development in Ghana – one of the largest oil fields discovered offshore West Africa in 20 years – includes the provision of operations, maintenance and technical support services for Tullow Oil’s Kwame Nkrumah (KNK) Floating Production Storage and Offloading (FPSO) vessel.

Nick Shorten, Chief Operating Officer for Petrofac’s Asset Solutions business said: “I’m delighted that we are continuing to grow our presence in Africa with valued long-term partner Tullow Oil. We bring our considerable global FPSO experience to Ghana, also putting us in a good position to support other similar facilities in the region.

[monabri]

With PFC we get these grains of comfort but the shareprice seems to be in a permanent doldrum. I'm sort of tempted to cut my losses but as soon as I do something majorly positive might happen ...

[daveh]

With PFC we get these grains of comfort but the shareprice seems to be in a permanent doldrum. I'm sort of tempted to cut my losses but as soon as I do something majorly positive might happen ...

Go for it and then when the share price goes up after you sell I can also sell out

Being serious it is on my sell list, I'm just waiting for the right price - maybe it won't come and I should sell now.

[monabri]

With PFC we get these grains of comfort but the shareprice seems to be in a permanent doldrum. I'm sort of tempted to cut my losses but as soon as I do something majorly positive might happen ...

Go for it and then when the share price goes up after you sell I can also sell out

Being serious it is on my sell list, I'm just waiting for the right price - maybe it won't come and I should sell now.

Same...waiting for an "exit"!

[kempiejon]

Anchoring has no value in investing, look at the company assess it's prospects and move on. Not advice I'm good at but I avoid selling.

Anchoring is a cognitive bias in which the use of an arbitrary benchmark such as a purchase price or sticker price carries a disproportionately high weight in one's decision-making process. The concept is part of the field of behavioral finance, which studies how emotions and other extraneous factors influence economic choices.

https://www.investopedia.com/terms/a/an ... %20process.

[spiderbill]

Petrofac awarded $200 million project in Algeria
https://uk.finance.yahoo.com/news/petrofac-limited-petrofac-consortium-awarded-060006802.html

Every little helps....

[daveh]

Interims:
https://www.investegate.co.uk/petrofac- ... 0039EOCMJ/

First half highlights



- H1 financial performance in line with guidance with good momentum in AS and IES, offset by challenges in E&C’s mature portfolio
- Business performance EBIT of US$2 million(1)(2)
- Reported net loss of US$(14) million(2) inclusive of separately disclosed items
- Group order intake of US$1.1 billion(3) with book-to-bill of 0.9x
- Healthy 18-month Group pipeline of US$57 billion
- High levels of bidding activity in E&C with opportunities expected to be awarded evenly over the second half
- Backlog of US$3.7 billion
- Net debt of US$341 million(6) and liquidity of US$511 million(7)
- Free cash flow in second half expected to be broadly neutral

“Our performance in the first half continues to reflect the COVID-19 related industry challenges, as we work towards completion on many of the projects in the legacy E&C portfolio. Moving into the second half of 2022, a significant increase in bidding activity has put us firmly on the path to grow backlog over the full year. Supported by a strong commodity price environment and an increasing focus on energy security, the outlook for the industry is robust and the work we have done over the past 18 months means that Petrofac enters this important period in a strong competitive position.



“We made good progress on our new energies strategy having entered into a collaboration with Hitachi Energy, a leading player in HVDC and HVAC technology, to provide joint grid integration and associated infrastructure for the rapidly growing offshore wind market. This collaboration strengthens our market position and the large pipeline of opportunities supports our US$1 billion revenue ambition from new energies in the medium term.



“Our priorities in the second half of the year are clear. First, we will continue to safely deliver the existing backlog for our clients, while maintaining cost discipline. Second, we will focus on closing out the delayed commercial settlements, to unwind working capital and return to positive free cash flow from 2023. Lastly, we will make progress in securing awards in E&C to deliver growth in full year backlog. Our recent US$200 million provisional award in Algeria, while small, is evidence of our competitiveness and marks the beginning of a multi-year upcycle.”

Not brilliant, but seems to be what was expected as the share price is little moved this morning.

[daveh]

Board changes at Petrofac

https://www.investegate.co.uk/petrofac- ... 0007EMJHH/

Petrofac Limited (“Petrofac” or “the Company”) announces today that Sami Iskander, Group Chief Executive, will leave the business at the end of March 2023 in order to pursue other interests.



Tareq Kawash will be appointed Group Chief Executive from 1 April 2023, following an orderly handover. Tareq will also be appointed as an Executive Director to Petrofac’s Board of Directors at that time.

[spiderbill]

Board changes at Petrofac

Which didn't seem to go down well yesterday - 10% down.
Only about 87% down on my holdings; could be worse - could be Carillion.
Ah well, it'll at least offset some capital gains now that the allowance is being cut.

[daveh]

Board changes at Petrofac

Which didn't seem to go down well yesterday - 10% down.
Only about 87% down on my holdings; could be worse - could be Carillion.
Ah well, it'll at least offset some capital gains now that the allowance is being cut.

Just run HPTUSS for the first time this week and its 14% down compared to last week. Showing a 60% loss for me, but the loss is no usable as it is in my ISA.

It is on my to be sold list, but I was thinking it was too cheap and was going to wait for a better price before i sold, but clearly the market doesn't share that view.

[daveh]

A not very positive trading statement:
https://www.investegate.co.uk/petrofac- ... 0006EPNDU/

PETROFAC LIMITED
TRADING UPDATE

Continued strong performance in Asset Solutions and IES offset by challenges in E&C

Expect a full year EBIT loss in E&C of approximately US$190 million for 2022, yielding a total Group EBIT loss of approximately US$100 million
Reflecting adverse commercial settlements, further unrecovered cost overruns in the legacy portfolio and cost increases on the Thai Oil Clean Fuel joint venture contract

We will seek, working closely with our Thai Oil joint venture partners, to mitigate those increases over the remainder of that contract in addition to seeking to realise other portfolio upsides

Six legacy E&C lump-sum contracts were completed or substantially completed (1) in the second half

Asset Solutions on track to deliver full year EBIT margin of 5-6%

Robust IES performance driven by high production, operational performance and oil prices

Positive outlook for the recovery in E&C and continued growth in Asset Solutions, with a healthy total Group pipeline of US$68 billion scheduled for award in the next 18 months

Pipeline includes bids submitted of US$5.5 billion, and a further US$1.5 billion where we are at preferred bidder stage

Net debt was US$396 million (2) at 15 December 2022, with cash management partly offsetting the delays in E&C contract awards and the unrecovered cost overruns in the E&C legacy portfolio during the second half

Sami Iskander, Petrofac’s Group Chief Executive, commented:
"We have maintained strong momentum in Asset Solutions and IES, however Group performance for 2022 has been impacted by further cost recovery challenges in E&C. Good progress has been made in the second half where we have completed or substantially completed (1) six lump-sum contracts, with five of the remaining eight active lump-sum contracts scheduled to complete in 2023. This will largely close-out the mature E&C portfolio that was heavily impacted by pandemic delays. On the Thai Oil Clean Fuel contract, we are working closely with our joint venutre partners to pursue the recovery of costs over the remaining course of the contract.



“Looking forward, whilst E&C awards were slower than expected in 2022, the market outlook remains positive and we are well positioned on a number of near-term prospects, with US$1.5 billion of E&C opportunities where we are at preferred bidder stage, and a further US$3.5 billion of bids submitted in E&C. We expect these opportunities to provide backlog growth in 2023 and lay the foundations for a return to profitability, positive free cash flow and continued recovery thereafter.



“In 2023, we will continue to close out the legacy E&C portfolio and associated commercial settlements. We retain our focus on cost discipline, unwinding working capital and ensuring Petrofac has sufficient liquidity to support our growth ambitions.”

[/quote]

[spiderbill]

[quote="daveh"]A not very positive trading statement:
https://www.investegate.co.uk/petrofac- ... 0006EPNDU/
[quote]

Indeed, some of it sounded like clutching at straws. 10.5% down so far today - under 65p.
Oh well, it's only money

[spiderbill]

Interesting that despite the doom and gloom the directors are buying
https://uk.finance.yahoo.com/news/petrofac-limited-notification-transaction-persons-160530360.html

Spiderbill

[BullDog]

Interesting that despite the doom and gloom the directors are buying
https://uk.finance.yahoo.com/news/petrofac-limited-notification-transaction-persons-160530360.html

Spiderbill

I think it says a lot about Petrofac's future that as far as we know, there hasn't been a single approach about takeover from a competitor company. The amount of time the company value has been under the cosh is astonishing. I can only assume that competitor companies rather than buying an order book from PFC are just sitting waiting for attrition to redirect future work their way, away from Petrofac. It's absolutely happening.

A once very healthy future work flow pipeline is withering away. One day there probably won't be a future work book at all. I used to have a lot of time for the company. But I think the outlook is now beyond dire. The industry is absolutely ruthless and PFC got caught doing what all their competitors do all day long. They're now at a massive permanent competitive disadvantage.

I unfortunately sold PFC shares at a thumping loss but it was obviously the right course of action. Perhaps there's a much smaller future privately owned Petrofac inside there yet to emerge?

[monabri]

Short interest has been building but it has been higher in the past!

https://shorttracker.co.uk/company/GB00B0H2K534/



As for competitors buying them out...I feel it is a case of a war of attrition. Their competition is in a similar leaky boat. The gross and resultant net margins for PFC are poor (and currently loss making). I see similarities to the construction industry (especially the "C" word). All these companies bidding for low/no margin work and then "something goes wrong". In the case of PFC, it was the FCA investigation and they've not recovered. I don't see any upside, not in the short to medium term. PFC will win more work but at what margin?

I'm not hopeful!

[BullDog]

Short interest has been building but it has been higher in the past!

https://shorttracker.co.uk/company/GB00B0H2K534/



As for competitors buying them out...I feel it is a case of a war of attrition. Their competition is in a similar leaky boat. The gross and resultant net margins for PFC are poor (and currently loss making). I see similarities to the construction industry (especially the "C" word). All these companies bidding for low/no margin work and then "something goes wrong". In the case of PFC, it was the FCA investigation and they've not recovered. I don't see any upside, not in the short to medium term. PFC will win more work but at what margin?

I'm not hopeful!

Interested to hear where you think PFC might win their next significant contract? I think their main sources of previously successful major bids will remain in fact closed despite what official sources are saying. Nobody "has" to go to Petrofac. Everyone understands that.

You're right about the war of attrition. The competitors need to do nothing. The work will flow in their direction anyway. I am sad to be so negative about a company I used to like a lot. But I don't see anyway PFC is going to win any really significant work going forward. The competition is more than intense and the levers PFC need to pull to gain work are not reachable for them to pull.

Sad really and I would like to be wrong about PFC.