Petrofac releases its annual results on Tuesday, but investors already know to expect bad news.
In a trading update earlier this month, the international service provider to the energy industry said it would be significantly in the red in 2022.
Shareholders in the firm, whose office locations include Aberdeen, have had a tough time of it in recent years.
Petrofac’s share price had risen to more than £15 back in 2012, but fell to less than 50p last month.
They were just under 67p this morning.
Petrofac revealed on April 12 that it was expecting last year’s earnings before interest and tax to show losses of around £120million to £136million.
Thorough review
This followed its management conducting a thorough review of the portfolio of contracts, associated outstanding contractual and commercial issues and opportunities to improve liquidity by accelerating working-capital inflows.
Petrofac added that the execution strategy for the Thai Oil Clean Fuels project had been subject to further review during Q1 2023, in consultation and co-operation with the client and joint-venture partners.
It went on: “In order to de-risk delivery, operational changes have been made, including changes to subcontractors.
“A significant proportion of the resulting costs are expected to be recovered, but discussions have not yet reached a sufficient level of maturity to recognise this incremental revenue.”
The company’s new chief executive, Tareq Kawash, commented: “Petrofac’s focus is on completing legacy contracts as quickly, efficiently and safely as possible.
“We are taking steps to ensure the financial strength of the business by unlocking working capital and, where appropriate, balancing long-term value against near-term liquidity.
Disappointed
“Although we are disappointed to announce additional costs on these legacy contracts, in particular the Thai Oil Clean Fuels project, ongoing collaboration with clients and partners will de-risk future delivery.
“I joined Petrofac because the business has a significant opportunity to deploy its leading capabilities to help clients deliver much-needed energy infrastructure.
“This was demonstrated in the recent significant award of a long-term agreement to support critical European offshore wind infrastructure.
“Alongside converting a healthy pipeline of future opportunities – with a number of awards at preferred-bidder stage – we are working to draw a line under the projects of the past, putting Petrofac in a strong position to deliver future growth.”
At the end of March, Petrofac and Hitachi Energy said they had secured a landmark offshore wind framework deal worth around £11.6billion.
The multi-year contract is with TenneT, the Dutch-German transmission system operator, which is working to expand offshore wind capacity.
Six projects
The framework agreement, which represents the largest in Petrofac’s history, covers six projects.
The deal includes an initial commitment to deploy six renewable integration systems - five of which will connect offshore wind farms to the Dutch grid and the sixth to the German grid.
FTSE 100
The UK's top share index, the FTSE 100, was down 34 points at 7,879 shortly after opening this morning, following Friday’s 11-point gain.
Brent crude futures were 0.69% lower at $81.10 a barrel.
Companies reporting today