Markets: Petrofac sinks on deepwater scheme

Shares in oilfield services group Petrofac dropped more than 6 per cent yesterday as investors took fright at vague forecasts and plans to invest $1 billion (£660 million) in deepwater capability.

The firm, which has bases in Aberdeen and Montrose, met profit expectations for last year and said it would deliver “good growth” in 2013. That was not enough to reassure investors already spooked by a recent profit warning from European peer Saipem, and the shares fell 100p to 1,497p despite a 17 per cent increase in the dividend.

James Evans, an analyst at Canaccord Genuity, said: “Petrofac is to invest $1bn into its offshore division over the next five years, primarily into a ‘world-class’ vessel to target the deepwater sector. We expect the market to be wary of such a significant capital outlay into a new division.”

The group’s fortunes were in sharp contrast to engineering firm Weir Group, which led the market higher after posting record profits and hiking its full-year dividend for the 29th year running. Shares in the Glasgow-headquartered company added 7.3 per cent at 2,322p.

Improving news on the American economy helped the FTSE 100 Index re-coup a large chunk of the losses seen during the previous session in a late rally that saw it close 55.4 points or 0.9 per cent higher at 6,325.9.

On the Alternative Investment Market, shares in shopfitter Havelock Europa were almost 10 per cent higher as private investor Andrew Burgess continued to build his stake in the Fife-based firm. They added 1.6p at 18.4p as his holding passed 22 per cent.

But Edinburgh-based hospital billing software specialist Craneware shed 2.5p to 392.5p despite chief executive Keith Neilson buying 12,800 shares.

NEW YORK: All three major US indices rose more than 1 per cent last night, with the Standard & Poor’s 500 posting its best daily percentage gain since 2 January as Fed chairman Ben Bernanke remained steadfast in his support of its stimulus policy.

The Dow Jones industrial average closed up 175.24 points, or 1.26 per cent, at 14,075.37 while the S&P 500 ended the day up 19.05 points, or 1.27 per cent, at 1,515.99. The Nasdaq Composite Index finished up 32.61 points, or 1.04 per cent, at 3,162.26.