PSN says growth will storm ahead as revenues top $1bn

ENERGY support specialist Production Services Network (PSN) is predicting continued double-digit profit growth after annual revenues remained above $1 billion (£662 million) despite the adverse market conditions of 2009.

Aberdeen-based PSN, which ranks among Scotland's largest private companies and employs 8,000 people globally, said earnings last year amounted to $85.5 million before interest, tax, depreciation and amortisation. That compared with its 2008 Ebitda of $75.6m.

While revenues dipped to $1.15bn, chief financial officer Duncan Skinner said this was primarily the result of translating work paid in sterling into the dollars favoured by the global energy sector. Although PSN operates in 26 countries, about one third of its business is transacted in pounds, which lost roughly 15 per cent of their value against the greenback during 2009.

Were it not for exchange rate fluctuations, PSN would have increased its revenues by 10 per cent last year to nearly $1.4bn.

PSN's focus on the operational expenditure end of the market – providing services such as engineering and maintenance support to exploration and production companies – helped insulate its business from the effects of last year's low oil prices and low investment levels. The only exception was in Calgary, Canada, where PSN's Tartan Engineering subsidiary struggled.

Tartan, acquired by PSN in March 2008, is a boutique operation highly reliant upon the tar sands extraction that dominates its local market. This controversial extraction method is expensive, and therefore only cost-effective when energy prices are high.

"The overall impact on our business was minimal because it is such a small part of our operations – less than 1 per cent," stressed Skinner.

PSN's backlog of work under contract stood at $2.35bn by the end of last year, bolstered in part by winning a head-to-head battle with Scottish rival Wood Group to provide federal engineering and construction services to BP operations across the UK.

That work was previously shared between Wood and PSN, with the former accounting for about 60 per cent of the undertaking. PSN is now the sole contractor for that activity, valued at 330m over five years.

"It is the biggest single contract we have ever secured since the management buyout," Skinner said.

PSN was created in 2006 when chief executive Bob Keiller led a 280m management buyout from the KBR subsidiary of Halliburton.

The business is currently 43 per cent owned by management, with a further 16 per cent in the hands of syndicated shareholders including West Coast Capital. The remainder of PSN is owned by Bank of Scotland.