Petrofac said to sell Mexico oil fields, seeks upstream exit

Petrofac is looking to refocus on core activities such as onshore engineering and construction. (Reuters)
Updated 11 May 2018
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Petrofac said to sell Mexico oil fields, seeks upstream exit

  • Petrofac looking to focus on core strengths of onshore engineering and construction
  • Company might also consider selling its Greater Stella assets in the UK North Sea

Oilfield services provider Petrofac Ltd. has hired investment banks Barclays and HSBC to help with the sale of its oil fields in Mexico, as it prepares to scale back its oil and gas production operations, several banking sources said.
Petrofac, which designs, builds, operates and maintains oil and gas facilities, expanded into oil and gas production projects during the oil price boom earlier this decade.
The strategy didn’t last and last year the company warned that the integrated energy services (IES) division would have lower than expected profits, hit by weaker oil prices, lower capital investment by clients in Mexico, and a delayed entry into the Greater Stella Area in the North Sea.
The company is now looking to refocus on core activities such as onshore engineering and construction.
Petrofac, Barclays and HSBC declined to comment.
Petrofac, the subject of a Serious Fraud Office (SFO) investigation in Britain in connection with a probe into Monaco-based Unaoil on suspected bribery, might also consider selling its Greater Stella assets in the UK North Sea, the sources said.
One of the sources said that Ithaca Energy, a company owned by Israeli Delek Group, would consider making an offer for these assets, because it already holds a 54.66 working interesting in the Greater Stella Area.
Ithaca Energy was not available to comment. Its parent company, Israel-based Delek Group did not reply to a request for comment.
In early 2012, Petrofac became the first foreign company for more than 70 years to operate state oil fields in Mexico, when it was awarded two integrated services contracts by Petróleos Mexicanos (PEMEX), Mexico’s National Oil Company.
Petrofac’s net debt was about $600 million at the end of 2017, below the $850 million it forecast. It reported a net loss of $29 million for the year.
Oilfield service companies had been hurt by weak demand as recent subdued oil prices forced explorers and producers to cut capital expenditure and defer or cancel contracts.
Alongside oil producers, companies that drill wells, haul water and provide other services to energy exploration firms had been hit by a slump in oil prices, with benchmark Brent tumbling to about $27 a barrel in 2016 from more than $100 in 2014. It is now trading at $77.
In recent months, oil firms have returned to profits due to higher oil prices and the benefits of deep cost cuts they made during the downturn. But their suppliers are still feeling the squeeze and trying to cope with low profitability.
This has led to a wave of consolidation in the sector, with the merger of France’s Technip and US rival FMC Technologies and the acquisition of Baker Hughes by GE’s oil and gas equipment and services operations.


IDEX 2019: UAE armed forces sign new defense deals

Updated 19 February 2019
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IDEX 2019: UAE armed forces sign new defense deals

  • Falcon was developed in response to the UAE’s request to replace the Hawk Air Defense System

ABU DHABI: The UAE armed forces has signed $1.17 million worth of defense contracts with local companies and $514.8 million with international companies, military spokesperson Brigadier General Mohammed Al-Hassani said on Tuesday.

The Emirates on Monday also awarded Raytheon a $1.55 billion contract to supply its air force with platform systems to launch missiles.

The agreement was signed at the week-long IDEX military exhibition in Abu Dhabi and followed the award on Sunday of a 1.3 billion-dirham contract to Raytheon to supply the UAE with patriot missiles.

The UAE armed forces signed a total of 7.2 billion dirhams in contracts on Monday, including 5.8 billion dirhams with international companies, Brig. Gen. Mohammed Al-Hassani said, speaking through a translator.

The UAE has signed a total of 12 billion dirhams in contracts since the IDEX exhibition started on Sunday, he said.

Lockheed Martin, Germany’s Diehl Defense, and Sweden’s Saab on Monday launched at IDEX the Falcon air defense weapon system, billed as a replacement to the Hawk system used by countries in the Middle East.

Falcon was developed in response to a UAE request for a replacement for the Hawk system and talks are underway to sell it to the Gulf state, Scott Arnold, Lockheed Martin’s vice president and deputy head of Integrated Air and Missile Defense said.

Weapons sales to the UAE have come under scrutiny over the past year due to the country’s involvement in the Yemen war that has killed tens of thousands of people and pushed the country to the brink of starvation.

The UAE and Saudi Arabia are leading a military coalition, which includes local forces drawn from Yemeni factions, that is trying to restore the internationally recognized government ousted from power in 2014 by the Iran-aligned Houthi movement.