Petrofac, the oil services company, raised its full-year profits guidance as a higher oil price pushed its order book to nearly $8bn (£4.9bn) in value.
The Aberdeen-based company, which guided the market in October to expect “at least 20 per cent” earnings growth year-on-year, said on Wednesday that profits would grow to “at least $330m”. That would mark a 25 per cent year-on-year rise from $265m in 2008.
Much of the profit represents the fulfilment of long-term contracts signed before the financial crisis. That is why analysts focused on guidance on the value of Petrofac’s undelivered orders on its books as a sign of how the company has been influenced by this year’s volatility.
The company expects the backlog on orders to be $7.8bn at the end of the year, a record year-end figure and a jump from $4bn at the close of 2008. Most of that gain came from its engineering and construction division.
The company’s activities range from engineering and maintaining offshore oil rigs to training workers.
New contract wins from BP and Apache in the North Sea have added to its lucrative business in the Middle East, where its Petrofac Emirates joint venture handles oil and gas projects in Abu Dhabi and Dubai. The company has been helped by its national oil company clients, including Dubai Petroleum, whose annual capital spending does not necessarily fluctuate with the oil price.
Petrofac said in October an “improving oil price environment is beginning to encourage our customers to resume some of their more discretionary expenditure”.
The benchmark price of oil has risen from an average of $52 per barrel in the first half of the year to $71 on Wednesday, a paring down of prices that have hovered at about $80 in recent months.
“Oil services have been affected by this [downturn] quite badly,” said Keith Roberts, finance director. “The reason why we have grown is because we win new business and execute it, and national oil companies are still spending money, whereas international oil companies are in retrenchment mode. We have definitely outperformed this year because of those factors.”
Petrofac expects its cash balance at the year end to be $1.2bn, considerably higher than the $694m balance at the end of 2008.
The shares rose 7½p to 978½p on Wednesday.
Petrofac, the biggest listed oil services company in the UK, kicks off a round of pre-close trading statements in the oil services sector. John Wood Group will report on Thursday.
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