Petrofac seen as vital source of investment for oil exploration

Published on Monday 9 March 2009 20:29

PETROFAC says it is being approached by an increasing number of oil explorers about taking equity stakes in field developments as a way of reducing costs.

The UK oil services group, which has about 4,000 employees in Aberdeen, has an energy developments unit that takes stakes in some of the projects Petrofac provides services for.

And chief financial officer Keith Roberts yesterday claimed that, because of a lack of available credit, smaller oil companies were struggling to fund projects, prompting an increasing number to approach Petrofac about taking a stake.

Roberts explained: "We're certainly seeing many more of those opportunities coming through our door, because a smaller independent (oil company] who has a development asset, is going to really struggle to raise the capital to develop it himself."

He added that the company was not seeking to build its own oil production business, but where an investment is attractive and clients wanted it to take a stake, Petrofac would consider investing. It hopes to complete "one or two" equity deals this year, he said. Petrofac reported a 39 per cent rise in pre-tax profits for 2008 to $358 million (259m) on revenue up 36 per cent to $3.33 billion.

Roberts said the North Sea, which represents about a quarter of its business, would be "more challenging" in 2009 as smaller companies struggle to fund projects, but this should be more than offset by growth in its international businesses.

Since the new year, Petrofac has signed deals in Saudi Arabia and Abu Dhabi with national oil companies worth a combined $2.8bn, on top of an order book which stood at $4bn at the end of 2008.