COVID-19, oil crash hit Petrofac revenue

industry 525119 640Oilfield service provider Petrofac reported a loss of US$78mn in the first half of the year and decided to continue to suspend dividend payments and thus not to pay an interim dividend in 2020 to conserve cash

Petrofac reported a loss of US$78mn from US$139mn profit recorded a year ago. Revenue fell from US$2.82bn to US$ 2.10bn

The COVID-19 pandemic has materially impacted financial performance, disrupting project schedules and increasing costs. In addition, the decline in oil prices has resulted in a decline in clients’ capital expenditure over the period, leading to delays in tender awards, the termination of the Dalma contracts and a tighter business environment.

In the first half, Engineering and Construction saw revenues fall 28 per cent to US$1.6bn, driven by COVID-19 related project delays.

The Engineering and Production Services financial results for the six months ended 30 June 2020 saw revenues fall to US$426mn by five per cent.

Integrated Energy Services experienced from the decline in oil price, with revenue falling 39 per cent to US$61mn despite an increase in production of 10 per cent.

The company said it is on track to deliver US$125mn of cost savings in 2020 and up to US$200mn in 2021.

Ayman Asfari, Petrofac’s Group CEO, said, “Our first-half results reflect the deterioration in market conditions triggered by the COVID-19 pandemic and subsequent decline in oil prices. In response, we are doing everything in our control to protect both the health and well-being of our people, suppliers and communities, as well as the long-term health of the business.

“These swift and decisive actions are structurally reducing costs, conserving cash and maintaining our competitiveness. At the same time, we have preserved core capability whilst continuing to invest in digitalisation and client relationships.

“Furthermore, our longer-term strategy has transformed Petrofac into a more resilient, capital-light business with a strengthened balance sheet and a clear commitment to sustainability. I am confident that this strategy and our actions best position Petrofac for the recovery when it occurs. In the meantime, I want to thank all our people and suppliers for their hard work, commitment and support in continuing to deliver best-in-class execution for our clients.”

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