Petrofac’s new orders suffer as Serious Fraud Office probe deters clients
Oil and gas firm Petrofac today said new orders had slowed because a fraud probe scared off some customers.
New order intake at the FTSE 250 business which builds oil rigs and provides support services was $1.7 billion (£1.3 billion) for the six months ending June, down from $1.8 billion a year earlier.
The slowdown was caused by a February announcement from the Serious Fraud Office that Petrofac’s former global sales head David Lufkin had pleaded guilty to 11 counts of bribery linked to deals in Iraq and Saudi Arabia.
That coincided with a flurry of new bids coming up for tender and prompted some firms to think again about signing with Petrofac. Shares fell 19p, or 4%, to 414p.
“We continue to maintain excellent client relationships in all of our markets, although new order intake in the year to date reflects our recent challenges in Saudi Arabia and Iraq,” said chief executive Ayman Asfari.
“Looking forward, the group has a busy tendering pipeline in other markets with around $15 billion of bid opportunities due for award in the second half of the year.”
The Lufkin scandal involved paying middle men to secure two Iraqi projects worth $730 million and three projects in Saudi worth $3.5 billion.
The SFO is still investigating Petrofac’s use of agents in Iraq and Saudi Arabia.
Petrofac’s finance chief Alastair Cochran tried to reassure the City today by telling analysts: “We have continued to engage with the clients in these markets to address these concerns and assure them that their bid processes were completely respected. I want to make quite clear that we have not been banned from any territory in our portfolio.”
Sales for its high-margin engineering and construction division are in line with full-year guidance at $4.5 billion. New orders worth $1.6 billion were won, including in Algeria and Oman.