Energy service group Petrofac said this morning it expects to grow the backlog of work at its Engineering and Construction division (E&C) this year and also land "significant" new orders next year.
Chief executive Sami Iskander said in a trading update: "We have made good progress in the first half of the year to position the business strategically to capitalise on the expected multi-year upcycle ahead, supported by a strong energy-price environment and ambitious growth plans from clients in our core markets."
He added that bidding activity in E&C is high, and the Asset Solutions division has secured a “strong” order intake in the year to date.
The Integrated Energy Services division (IES) is reported to have delivered a “significant” increase in production and is benefiting from high oil prices.
The CEO went on: "As previously reported, first-half financial performance has been adversely impacted by delays and cost-overruns in our small and mature existing E&C portfolio.
"Looking forward, we expect Asset Solutions and IES to continue to deliver strong performance. Notwithstanding the short-term challenges in the existing E&C portfolio, we continue to expect the second half of 2022 to mark an inflection point for a sustained period of growth in backlog.
“We have a healthy 18-month group bidding pipeline - and we expect to grow the E&C backlog in 2022 and to secure significant new orders in 2023, underpinned by opportunities in the UAE and offshore wind."
Order backlog
The group's order backlog is expected to have decreased to £3.09billion at the end of June, compared to £3.26billion at the end of last year. Petrofac said this reflected progress delivered on the existing project portfolio and low new-order intake in E&C, partially offset by strong order intake in Asset Solutions.
Petrofac explained that E&C continued to be impacted by the lingering impact of the pandemic, which has resulted in cost increases and some "relatively unfavourable" commercial settlements with clients.
It added: "These dynamics will largely play out within the year, with a number of projects scheduled for completion over the course of the year and early 2023."
The group has 8,500 employees worldwide at locations including Aberdeen.
In March, Petrofac announced that net losses widened slightly to £147million last year, compared to a deficit of £144.75million in 2020.
A big chunk of the latest losses follow a Serious Fraud Office (SFO) investigation into bribery in the Middle East.
Last October, the SFO said it had secured the conviction of Petrofac for seven separate counts of failure to prevent bribery between 2011 and 2017.
Pled guilty
The company pled guilty to failing to prevent former senior executives of the group from using agents to systematically bribe officials, to win oil contracts in Iraq, Saudi Arabia and the United Arab Emirates.
Petrofac admitted that senior executives paid £32million in bribes to corrupt the awarding of contracts worth around £2.6billion.
The company was ordered to pay confiscation of nearly £23million, fined more than £47million and the SFO's costs of £7million.
FTSE 100
The UK's top share index, the FTSE 100, was up 61 points at 7,320 shortly after opening this morning, following yesterday's 49-point gain.
Brent crude futures were 1.63% higher at $116.88 a barrel.
Companies reporting today