Profits at U.K. oilfield services provider Petrofac Ltd. rose 20% in first-half 2018 as a recovery in global crude prices drove activity, although the company said it remained some way off being able to raise prices.
The results bode well for a refocusing on core business after a difficult period marred by investments in production that fell afoul of the 2014 collapse in oil prices.
The company’s main measure of profit rose to $190 million compared to $158 million a year earlier, excluding a $207 million charge for losses on oil asset sales and helped by some of its remaining upstream businesses swinging into the black.
CFO Alastair Cochran told Reuters that Petrofac would continue on a course that has seen it agree sales of $800 million in mostly oil-producing assets this year.
“We are delivering on that core strategic ambition of reducing capital intensity (and) ... the capital-intensive businesses in Petrofac are the IES (Integrated Energy Services) upstream businesses,” he said. “There is not much left in the portfolio once we complete these divestments.”
Petrofac shares fell 41%last year, but have rebounded 30% this year as Chief Executive Ayman Asfari delivered on his promise to get back to basics. He has been helped by a tripling of oil prices since 2016.
“Petrofac had a helping hand from higher oil prices in the first half of the year,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown. “That’s not really how it’s meant to work as a services business, but Petrofac actually has a decent slug of oil and gas assets of its own—$794 million to be exact.”