(Reuters) - British oilfield services company Petrofac (PFC.L) reported a 10.7 percent fall in core earnings for the first-half on Wednesday as subdued oil prices forced exploration and drilling companies to defer or cancel service contracts.
The company also cut its dividend by about 42 percent to 12.7 cents per share for the half year.
However, the company’s shares rose 2 percent as adjusted net profit for the first half of $158 million beat analysts’ consensus of $142 million, investment bank Jefferies said in a note.
“The decline in, and weaker outlook for, commodity prices has had a significant impact on capital investment in the industry, impacting our cash flow,” Petrofac said in a statement.
Petrofac cut its full-year capital expenditure guidance to $200-$250 million from $300-$350 million, in an effort to reduce its debt, which rose to $1 billion at the end of June, up from $600 million in December.
Petrofac is among the London-listed oil services companies under investigation by the UK’s Serious Fraud Office for its dealings with Monaco-based Unaoil.
In May, Petrofac suspended its chief operating officer in response to the investigation, sending its shares plunging as investors feared that the probe and the suspension could hurt the company’s ability to win work.
Petrofac said last week that Italy’s markets watchdog had imposed sanctions on its CEO, Ayman Asfari, including a 300,000 euro (277,367.69 pounds) fine, in relation to dealing in shares of an Italian company. Asfari denies the allegations and has pledged to contest the decision.
The company’s shares initially rose by as much as 6.7 percent after the results, but fell back to trade up 2 percent at 432.2 pence at 0900 GMT on the London Stock Exchange.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $323 million for the first half ended June 30. Revenue for the half year fell about 20 percent to $3.13 billion.
Order backlog stood at $12.5 billion as of June 30, said the company, which designs, builds, operates and maintains oil and gas facilities.
The company sees a second-half backlog of $3.3 billion, which implies revenue of about $6.4 billion for the year when combined with the revenue for the first half, Chief Financial Officer Alastair Cochran said in a call.
Petrofac was also looking to expand its business in the downstream industry, including petrochemicals in its core and adjacent markets, Cochran added.
Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Sunil Nair and Adrian Croft