May 15, 2020 / 6:55 AM / 18 days ago

Petrofac warns of project delays on COVID-19, lower oil prices

(Reuters) - Petrofac Ltd (PFC.L) on Friday warned of delays in new projects until 2021 due to coronavirus-induced supply chain disruptions and travel restrictions as well as lower oil prices and said it was taking steps to conserve cash.

The crash in oil prices has pushed producers across the globe to review spending and cut costs, as the outlook for oil and gas demand and supply remains uncertain.

Last month, Abu Dhabi National Oil Company (ADNOC) ADNOC.UL terminated $1.65-billion worth of contracts awarded to Petrofac’s Emirati unit for the Dalma gas development project.

Government-enforced lockdowns have caused material delays in construction activity, which will not recover in 2020, but clients have been extending contracts, with $500 million of new orders secured year to date, the company said.

Petrofac said it expected to reduce overhead and project support costs by at least $125 million in 2020 and by up to $200 million in 2021 to mitigate the impact of the COVID-19 pandemic and lower oil prices.

The company also added that the suspension of final 2019 dividend payout and a reduction in capital investment has conserved about $145 million of its cash flow.

The oilfield services provider is cutting jobs by 20% as it seeks to cope with plunging oil prices, Reuters reported in April.

Reporting by Shanima A in Bengaluru; Editing by Rashmi Aich and Anil D'Silva

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