Whilst projects are still progressing, material delays in construction activity have occurred, which will not be recovered in 2020. Operations and maintenance activity in the Engineering & Production Services (EPS) business continues in all regions, albeit travel and social distancing restrictions are having a modest impact on activity levels and training centres have been temporarily closed.
In addition, the collapse in oil prices has been the catalyst for clients to review their future investment plans, such as the recent termination of the US$1.5 billion Dalma contract. The company is anticipating that the majority of 2020 tenders will be delayed until 2021. Contract extensions in EPS, on the other hand, have remained strong with US$500 million of new orders secured year to date.
In order to mitigate the impact of the Covid-19 pandemic and lower oil prices on financial performance and order intake, the company is targeting additional savings to those announced on 6 April, and now expects to reduce overhead and project support costs by at least US$125 million in 2020 and by up to US$200 million in 2021. In addition, suspension of the final 2019 dividend payment and a 40% reduction in capital investment has conserved an incremental US$145 million of cash flow.
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/15052020/petrofac-anticipates-2020-tenders-being-delayed-until-2021/