Scottish oil firms’ focus on overseas growth is paying off

Petrofac, the FTSE 100 constituent that services one-quarter of the UK’s oil production from its base in Aberdeen, expects this year’s profits to be up 20 per cent year-on-year and forecasts for them to double by 2015.

News of the growth came as Aberdeen-based EnerMech said its sales will have doubled to break through the £100 million barrier this year and will have pushed the fast-growing firm into profit for the first time.

Analysts at Investec Securities now expect Petrofac’s profits haul for 2011 will be more than $520 million (£333m) after the company’s growth estimate accelerated from 15 per cent at the third-quarter trading update to 20 per cent in yesterday’s pre-close statement.

Investec analyst Ben Snow highlighted progress at the company’s on-shore engineering project in Turkmenistan and said there was potential for further contract wins in the Middle East, including Iraq, other parts of the former Soviet Union and in North Africa.

In the offshore division, he noted record levels of activity, including a big contract for BP and work in Thailand.

Snow added: “The newly-created integrated energy services division could offer meaningful growth and returns, within five years this segment could become as large as the whole group was during 2010.

“While it is arguably too early to decide on the level of success of this division’s operations, we think the focus on exploiting less complex, smaller, marginal and often mature fields is a sensible strategy and the track record of its predecessor energy developments division instils some confidence.”

Nick Raynor, an investment research analyst at the Share Centre, added: “Petrofac has a strong cash balance of $1.3 billion, however we hope to see Petrofac utilise this. This could be by increasing the dividend or by looking to make acquisitions, both of which are positive for investors.”

Meanwhile, mechanical engineering firm EnerMech yesterday forecast that its turnover for 2011 will hit £103m, up from £49.5m in 2010, and will then grow to £142m in 2012.

The crane specialist expects to return a maiden profit of £10m this year – compared with losses of £13.7m racked up over the past two years – before the surplus accelerates to £20m next year.

Lloyds Banking Group has also promised to extend the company’s credit to £40m from £20m to help it continue with its overseas growth.

EnerMech managing director Doug Duguid said: “We have invested over £60m in facilities, equipment and five acquisitions since mid 2008 and that investment will deliver £10m of profits this year.”

Duguid said the investments had included setting up 17 bases in the eastern hemisphere.