Petrofac shares took a dip today on the FTSE 100 despite the oil and gas group issuing an update in which it predicted net profit growth of at least 15 per cent in 2012.
Based on its contracts to date Petrofac said it estimated its backlog for the six months ended 30 June 2012 to be $9.1 billion, down from $10.8 billion in the previous six month period.
Net cash balances are also expected to down from $1.5 million in the six months ended 31 December 2011 to $0.7 billion.
Ayman Asfari, Group Chief Executive of Petrofac, said, "It is a year since we rolled out our IES strategy and we are making excellent progress in building the business. We were selected as preferred bidder for our third production enhancement contract in Mexico, which we are delighted to be delivering in partnership with Schlumberger.
"We see strong industry demand for commercially innovative, integrated oilfield service developments, which, together with our strong ECOM prospects, continue to give us confidence of achieving our target of more than doubling our recurring 2010 Group earnings by 2015."
Richard Hunter, Head of Equities at Hargreaves Lansdown, commented, "Petrofac reported a good operational performance across its portfolio of Engineering, Construction, Operations & Maintenance (ECOM) and Integrated Energy Services (IES) projects in the year to date, and stated it remained on course to deliver net profit growth in 2012 of at least 15%.
"ECOM's order intake so far this year is US$1.3 billion. In addition, the company has secured approximately US$1.1 billion of awards which are pending contract signature and are not currently included in the Group's backlog. Within IES, Petrofac confirmed that it had secured a joint production enhancement contract (with Schlumberger) for the Pánuco Contract Area in Mexico. This will add US$0.4 billion to the firm's backlog after its formal signing in August 2012.
"We believe that the current market consensus opinion of a buy will remain in place for the time being."
However Hunter also said that Petrofac, with considerable business in North Africa and the Middle East could suffer a hit on its profits as a result of "political upheaval" and could also be vulnerable to a drop in demand and prices for oil and gas.
Petrofac is due to announce its interim results on 13 August 2012.
By 14:10 shares in Petrofac were down 0.81 per cent on the FTSE 100 to 1,346.00 pence per share.