OIL and gas services firm Petrofac has seen its shares plunge more than 26 per cent after warning profits will be at the lower end of expectations this year and cut its forecast for 2015.
The company, which employs around 4,500 people in Scotland, said low oil prices have had an impact, but also cited problems at the £800 million Laggan-Tormore gas terminal it is building for Total on Shetland.
Petrofac chief executive Ayman Asfari confirmed talks regarding a settlement are ongoing and Petrofac will recognise a loss on the development this year.
Along with that, a floating production storage and offloading vessel, being built for Ithaca Energy, for the Greater Stella field east of Aberdeen, is now expected to be in place for first oil production in the third quarter of next year.
That is a further delay from the mid-2015 Petrofac had predicted as recently as August. Petrofac has also amended its profit forecast from the FPSO build to reflect the lower oil price.
Mr Asfari said: "In the main our project portfolio is in good shape, but it is clear that on a small number of projects we have fallen short of the high standards we set for ourselves. It is rare and very, very disappointing when we don't get it right but this has been the case on two projects we have been working on in the UK."
On Laggan-Tormore, Mr Asfari pointed out the company had 300 days of interruption because of high winds and poor weather.
Petrofac expects profits for 2014 to be at the lower end of the $580m to $600m guidance it has previously given. In 2015 it expects around $500m, much lower than previous market forecasts of around $675m.
It said the lower forecast was as a result of the changes in the Greater Stella timing, rephrasing of certain activities in Mexico and investment in Romania. The expected final commercial settlement on Laggan-Tormore also means no profit or loss is likely to be recognised on it during 2015.
Shares closed down 315.5p at 877.5p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article