Published on 19th December 2012
While the decrease in Petrofac´s – the oil engineering and services group – cash on hand evident in yesterday´s trading update was startling, upon closer inspection it is not as alarming as it seems. That is because one needs to understand that the company´s business model involves the payment up front of huge sums from customers to allow the company to get on with the work, which then get used up. The advancement of several big projects, mainly the South Yoloten gasfield in Turkmenistan, accounted for $800m of that decrease. Similarly, the company´s Integrated Energy Services (IES) division put another $700m to work in different projects, including one in Mexico.