Petrofac to miss cash flow guidance; considers non-core assets sale

Alliance News) - Petrofac Ltd on Monday said it is in discussions to sell its non-core assets and ...

Alliance News 4 December, 2023 | 11:11AM
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Alliance News) - Petrofac Ltd on Monday said it is in discussions to sell its non-core assets and warned it expects to miss its cash flow guidance amid delays in payments.

Shares in Petrofac jumped 31% to 22.22 pence each in London on Monday morning.

Petrofac is a London-headquartered energy infrastructure company with core markets in the Middle East and North Africa.

Its previously forecasted "broadly neutral" cash flow guidance will not be met as it has yet to receive advance payment guarantees, Petrofac said. In 2022, Petrofac reported neutral free cash flow.

"While the group has made progress in reaching contractual settlements and unwinding working capital, given delays in securing advance payment guarantees, it no longer expects to receive these advances before the year-end," the company said.

Nevertheless, it said it continues to "deliver well" for its clients, and has a "healthy" pipeline going into 2024.

The oilfield services firm added that it is considering the sale of some of its non-core assets, noting that it is "actively engaged in discussions with financial investors to take a non-controlling position in certain other components of the business portfolio," it said.

Petrofact added that it was examining a "range of strategic and financial options with the objective of materially strengthening the company's balance sheet."

"Management has been making progress in organic actions to unwind working capital, collect receipts on ongoing and new contracts and to unlock long-outstanding commercial settlements," Petrofac commented.

Chief Executive Tareq Kawash said: "Petrofac’s underlying business is robust with material growth in our backlog from approximately [USD] 5.5 billion in new awards in new and traditional energy this year. This demonstrates our competitive strength and long-term potential. To deliver on this, we are working hard to address short-term liquidity challenges and strengthen the financial position of the Group. I am grateful for the continued efforts of our people, and the support of our clients and other stakeholders, as we work to deliver a positive future for Petrofac."

Petrofac on Monday also welcomed Aidan de Brunner as non-executive director. "Aidan will commit a significant portion of his time to supporting the board for a limited period. He will drive engagement with finance providers, investors and other stakeholders in an active review of strategic and financial options to deliver on Petrofac’s potential following its most successful period for new awards in many years," Petrofac said.

By Sabrina Penty, Alliance News reporter

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Petrofac Ltd 23.85 GBX 1.07 -

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