Further blow to Petrofac as continued oil glut sparks profit warning

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The tumbling price of oil sparked a profit warning at Petrofac, wiping 26 per cent from the company’s shares in early trading.

The firm, which provides services for oil fields such as design and construction, has been blighted with a series of problems, including delays to projects.

It has also suffered a long-running dispute with unions at a site in Scotland, which was compounded by poor weather.

Spiralling prices: The tumbling price of oil sparked a profit warning at Petrofac, wiping 26 per cent from the company’s shares in early trading

The oil price has fallen over the summer due to a glut of crude as developed economies required less due to the downturn.

Falling crude prices are also causing problems for Russia, which has lost up to $100billion a year from oil prices dropping 30 per cent. 

Additionally the country has lost a further $40billion from Western financial sanctions imposed over the Ukraine crisis.

Russian finance minister Anton Siluanov said: ‘The main issue that affects the budget and economy and financial system is the price of oil and the fall in monetary flows from the sale of energy resources.’

Petrofac shares fell 315.5p to 877.5p – its biggest ever one-day fall – as it warned annual profit would now be £319million, much lower than previous forecasts.

Stormy waters: The tumbling price of oil sparked a profit warning at Petrofac, wiping 26 per cent from the company’s shares in early trading

Chief executive Ayman Asfari said: ‘This has been a difficult period for Petrofac and the industry. The board has analysed the potential impact of a lower price environment... and made a critical assessment of our expectations for project delivery in 2015.

‘We have faced these difficulties and have taken action to address them and believe this leaves us on a surer footing for the future.’

Experts say analysts should have factored lower oil prices into projections but the operational issues raised were new and could prompt downgrades in the firm’s rating.

Last November Petrofac warned of little or no growth in 2014. It had been aiming to double its 2010 net income by 2015, but this latest profit warning is another blow.