Petrofac Ltd issued a warning that its earnings will be lower than expected due to project delays, which were a result of declining oil prices.
The U.K.-based company warned its investors that the difficult oil price environment is likely to affect its net profit, reducing it to $500 million in 2015. This projection is 25% lower than the analysts forecasts, which pointed to $675 million. Petrofac itself has initially projected a net profit in the lower end of the range of $580 million to $600 million.
The companys Chief Executive Officer, Ayman Asfari, explained that the board had made a “critical assessment” of expectations for project delivery next year after a “difficult period for Petrofac and the industry”, which came after a decrease of oil prices. As reported by Bloomberg, The Chief Executive Officer of the U.K.-based company said: “On a small number of projects our execution has fallen short of the high standards we set for ourselves. This has been a difficult period for Petrofac and the industry.”
Mr. Asfari also noted in a statement, cited by the Financial Times: “It is clear that on a small number of projects our execution has fallen short of the high standards we set for ourselves. We have faced these difficulties and have taken robust action to address them and believe this leaves us on a surer footing for the future.”
Petrofac was hit by the constant decline of oil prices since the summer, as well as by decreasing demand in Europe and Asia.
The company, which is engaged in building and maintaining oil and gas facilities, and also invests in oil fields, revealed that delays and operational matters related to several projects adversely affected it as well.
Petrofac has set a target of doubling the net income generated in 2010 by next year, but in November 2013 warned of little or no growth in 2014.
Petrofac Ltd lost 25.48% to trade at GBX 889.00 per share as of 14:47 GMT, marking a one-year decrease of 25.36%. The company is valued at GBP 4.13 billion.
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