(Reuters) - British oilfield services company Petrofac Ltd (PFC.L) said deferral and cancellation of projects hurt order intake at its biggest unit this year, but the recovery in oil prices has helped improve bidding activity for services contracts in the final quarter.
The company’s stock was down about 4.4 percent at 870 pence at 0900 GMT on Thursday on the London Stock Exchange.
Petrofac’s engineering and production services unit was performing in-line with expectations and is on track to make up in part for project deferral and cancellations at the biggest unit, engineering and construction, the company said in a statement on Thursday.
Oil producers have cut billions of dollars in exploration and production spending to weather a prolonged slump in oil prices that has hurt demand for oilfield services companies.
However, crude prices have modestly recovered from 13-year lows to more than $50 a barrel.
Petrofac’s peer John Wood Group Plc’s (WG.L) chief financial officer, David Kemp, said on Wednesday that the company showed modest recovery in some of its oil and gas markets, including U.S. shale and offshore oil exploration and drilling businesses.
Petrofac has high exposure to the Middle East oil markets that resulted in good backlog coverage for 2017 as record production in the region drove up contract awards.
“Bidding activity has increased during the last quarter of the year... we are well placed for recovery in our core markets,” Group CFO Alastair Cochran said in a call with reporters.
Petrofac said its order book backlog stood at $14.5 billion as of Nov. 30. It had recorded an order book value of $20.7 billion in 2015 due to higher orders from its core Middle Eastern markets.
The company said its full-year net profit is expected to come in above forecast as record revenues and cost-cutting measures have paid off.
Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Sunil Nair and Amrutha Gayathri