- ‘Exceptional’ flow of new orders
- Net loss smaller than expected
- Most shorted listed UK company
Oilfield services group Petrofac (PFC) delivered a triple whammy of good news to investors today with a positive trading update and a narrower projected loss for the full year.
The firm also revealed it had secured a performance guarantee for $1.4 billion from Dutch utility company TeneT under a multi-year contract, helping send the shares up as much as 66% to 37.2p at one point before they settled at 31.5p for a gain on the day of 40%.
FALLEN ON HARD TIMES
Petrofac has had a chequered history since joining the stock market in 2005, winning promotion to the FTSE 100 blue-chip benchmark three years later in June 2008 on the eve of the great financial crisis.
From 600p, by the end of 2008 its share price had sunk as low as 300p, before soaring as high as £18.00 in 2013, from where they began their inexorable slide until they reached an all-time closing low of 17p at the start of this month.
For the year to December 2022, the firm recorded a loss of $310 million due to pandemic-related delays in its legacy engineering and construction portfolio although its energy services business performed relatively well and won several decent contracts.
This year, under new chief executive Tareq Kawash, the firm has won numerous new plant engineering and construction contracts in markets as diverse as Abu Dhabi, Algeria and Lithuania, as well as a role in a North Sea wind project with a total value of $14 billion..
The company ended 2023 with an ‘exceptional’ level of new orders at $6.8 billion, taking its backlog to $8 billion, and described the outlook for 2024 as ‘robust’.
The total order pipeline scheduled for the next 18 months comes to $62 billion including the remaining projects in the TeneT framework.
For the year to December 31, the firm expects to post a loss of $180 million on turnover of $2.5 billion, slightly below market forecasts, while net debt is seen rising due to a delay in securing advance payments on some contracts.
MOST SHORTED UK STOCK
According to analysis by ETP (exchange-traded products) provider GraniteShares, Petrofac is the most-shorted UK listed company with 7% of its shares held by seven hedge funds.
Short sellers borrow shares in companies from institutional fund managers for a fee and sell them in the market with the aim of buying them back later a much lower price and banking a profit.
The largest short-seller in Petrofac is Helikon Investments, based in London and Milan, which has sold 1.76% of the shares according to GraniteShares.
