SHARES in oilfield services giant Petrofac have surged by more than seven per cent as it declared construction work on the giant Laggan-Tormore plant on Shetland was "substantially complete".
But it revealed the project will incur further costs of £30 million as the construction manhours directly employed on the project are higher than previously expected.
The total loss on the plant, which will handle output from Total's Laggan-Tormore development, now stands £140m for the year to date. Petrofac said the additional costs reflect its commitment to devoting the "necessary resources to the project".
The update came as Jersey-registered Petrofac revealed an order uptake of US $4.7bn for its engineering, construction, operations and maintenance arm in the year to date.
This includes the US$ 900m deal to provide services the Yibal Khuff field in Oman, secured from Petroleum Development Oman this month.
Its offshore projects and operations (OPO) division recently won a number of contract extensions totalling $400m, the largest being a deal to provide operations and maintenance support for three platforms for CNR International east of Shetland. The five-year deal covers the Canadian firm's North Sea assets.
A three-year contract worth $45m was secured earlier this month to provide support Oranje-Nassau Energie (ONE), which has become the operator of the Sean gas field in the southern North Sea.
Petrofac said its group backlog stood at a record US$ 20.5bn at May 31, compared with $18.9bn on December 31. ECOM backlog had risen by 12 per cent to $17.4bn at May 31, the company said, with the backlog also rising to $12.5bn in its onshore engineering and construction arm, compared with $10.8bn at December 31.
In a pre-close statement, announced ahead of its interim results for the six months ending June 30, Petrofac confirmed its net debt stood at $ 1.2bn at May 31, up from $0.7bn on December 31.
It said the rise was primarily down to ongoing investment in IES's Greater Stella project and its offshore installation vessel, as well as the payment of the final dividend for 2014 and the costs on Laggan-Tormore.
Group chief executive Ayman Asfari said: "We have had a good start to the year in ECOM, securing more than $4.7bn of order intake and, putting the challenges we have faced on Laggan-Tormore to one side, the rest of our portfolio continues to perform well.
"The group's backlog stands at record levels, giving us excellent revenue visibility for the rest of this year and beyond. Our pipeline of bidding opportunities remains attractive, and ongoing investment by our clients in large strategic projects in our core markets, together with our strong competitive position, should see us secure a number of awards over the second half of the year.
"In integrated energy services, our focus remains on generating value from the existing project portfolio and reducing the capital intensity of this business."
Shares in Petrofac closed up...
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