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Petrofac Says H1 Trading Materially Impacted By COVID-19, Weak Oil And Gas Prices

Petrofac Limited (POFCF.PK,PFC.L), in its pre-close trading update, reported Wednesday that trading and awards for the first-half year-to-date period was materially impacted by COVID-19 and the sharp fall in oil and gas prices.

Engineering & Construction first- half revenues are expected to be around $1.6 billion, driven by COVID-19 related project delays. The results will be significantly impacted by the deterioration in market conditions.

Engineering & Production Services revenue is expected to be around $450 million, in line with the prior year.

In the Integrated Energy Services segment, net production is expected to be about 2.2 million barrels of oil equivalent or mmboe, up from 2.1 mmboe last year, and in line with management expectations. The average realised oil price is expected to be approximately $39 per boe, sharply lower than $69/boe a year ago, largely reflecting the fall in oil prices in the second quarter.

New order intake was $1.0 billion in the year to date, and group order backlog was $6.4 billion on May 31.

The company further said on track to deliver $125 million of cost savings in 2020 and up to $200 million in 2021.

Looking ahead, it remains unclear how long COVID-19 and low oil prices will continue to disrupt business activity and impact business performance. As a result, full year 2020 revenue and margin guidance remains suspended.

Ayman Asfari, Petrofac's Group Chief Executive, "..the COVID-19 pandemic and sharp fall in oil prices have materially impacted financial performance and new orders in the first half of the year..... we have a tendering pipeline of US$48 billion of opportunities scheduled for award by the end of 2021 and an order book that gives us good near-term revenue visibility."

Petrofac is scheduled to announce its first-half results on August 11.

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