Oilfield services provider Petrofac said on Friday it was still facing challenges in securing performance guarantees for new contracts and that it remains in talks with lenders to restructure its debt in exchange for equity.
Performance guarantees refer to a commitment to honour the terms of the deal.
WHY IT’S IMPORTANT
After a boom in orders due to high oil prices in 2022, Petrofac has been struggling with payment delays and cost overruns at its engineering and construction unit.
Its shares have suffered — first due to a UK Serious Fraud Office investigation and then due to a string of profit warnings related to legacy contracts. The stock has dropped 54% over the last 12 months.
MARKET REACTION
Petrofac’s shares sank 22% to 26.6 pence in early trading on Friday, bringing it among the top losers across London equities.
CONTEXT
In order to strengthen its balance sheet and improve liquidity, Petrofac is mulling the sale of its non-core assets and said on Friday it remains in discussions with major shareholders to further invest in the company.
“All options remain under consideration,” Petrofac said.
The London-listed firm has also blamed delays in advance payments on new contracts for its rising debt levels, which led to a cash flow warning in December.
BY THE NUMBERS
Petrofac’s net debt was $584 million as of June 30 and the company expects that to have increased as of last December, when its full-year ended.
It has a contract backlog of $8 billion.
WHAT’S NEXT
Full-year results are expected to be announced in April.
