LONDON (ShareCast) - (Sharecast News) - Shares in Petrofac surged on Wednesday after the oilfield services company said it had secured performance guarantee for the first contract awarded under its agreement with Dutch electricity company TenneT.
Petrofac's will get a $1.4bn share of the $14bn multi-year contract. Share in the firm rocketed by 42% in London trade.

In a trading update, the company also forecast a smaller annual loss of $180m for the group, compared with a loss of $205m last year, and forecast annual revenue of $2.5bn, compared with the $2.67 billion that analysts expect, according to a company-compiled consensus.

Net debt is expected to be higher at the year-end, due to a delay in securing advance payments on contracts and a subsequent increase of more than $100m in collateral for the guarantees, it added.

Petrofac, which has been struggling with payment delays and cost overruns at its engineering and construction unit earlier this month warned it would no longer be able to meet its annual forecast of "broadly neutral free cash flow".

AJ Bell investment director Russ Mould said Petrofac "has been deeply unpopular with investors after a chequered history which included fines for corruption, uneven financial performance and a weak balance sheet. Therefore, any good news was always going to spark a positive share price reaction".

"This has proved correct with short sellers caught out after Petrofac secured a big North Sea contract and confirmed revenue roughly in line with guidance. The shares may have surged 50% but the company's market value is still just a fraction of what it was at the company's zenith in the early 2010s."

Reporting by Frank Prenesti for Sharecast.com

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