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North Sea oil development setbacks weigh on engineering giant

North Sea oil development setbacks weigh on engineering giant


OIL services giant Petrofac, which is a big employer in Scotland, has taken a $95 million (£72m) hit to profits as it counts the cost of its investment in a big North Sea development.

The company recorded the charges after selling out of the Greater Stella development 175 miles east of Aberdeen last year.

Petrofac took a stake in the Ithaca Energy-operated field in a sign of confidence in the prospects for the development, which it also worked on.

However, the company suffered reverses on Greater Stella that proved costly.

One of the biggest North Sea developments completed in recent years, Stella came onstream late following delays in the completion of work in Poland on the giant floating production facility supplied by Petrofac for use on the field. Petrofac subsequently found the ramp up in production of the field to planned levels was slower than expected.

The company reduced the valuation of its stake by around £65 million in 2017, partly to reflect the impact of the crude price plunge from 2014 on the development.

Announcing a two per cent fall in annual net profits to $353m yesterday, Petrofac said it booked an exceptional impairment charge of $79m in respect of Greater Stella last year.

The company recorded a $16m loss on the sale of its stakes in Greater Stella and the production facility to Israeli-owned Ithaca in August.

UK revenues totalled $575m last year, out of a group total of $5.8bn.

Chief executive Ayman Asfari said the group was well-positioned for 2019 with good revenue visibility and a busy tendering pipeline. It had $90m net cash at December 31.

Last month David Lufkin, the former global head of sales at Petrofac, pleaded guilty to offering corrupt payments in an attempt to secure contracts in Saudi Arabia and Iraq. The plea followed a Serious Fraud Office investigation. Petrofac reiterated yesterday that no charges had been brought against the firm or any other officers or employees.

Source: The Herald

Published: 01-03-2019

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