One of Britain’s leading energy services firms with a big presence in the North Sea, Petrofac, has reported that a serious fraud investigation is causing it “real and material” harm.
It reported a pre-tax loss of $180m during 2020, as revenue dropped from $5.5bn to $4.1bn and contracts shrunk.
Chief executive Sami Iskander announced a new strategy to turn the company around following a series of setbacks.
These included the ongoing Serious Fraud Office (SFO) inquiry.
Former global head of sales David Lufkin pleaded guilty in a London court in January to three charges of bribery and corruption relating to $30m of payments made to agents to influence the awarding of $3.3bn-worth of contracts in the United Arab Emirates.
Two years ago, he pleaded guilty to 11 charges brought by the SFO. Other individuals who worked for Petrofac have also been the focus of the investigation.
Oil price collapse
A major client based in the UAE has since broken its ties with Petrofac.
The collapse in the oil price a year ago also hit the company’s results, and it has since cut $140m from its cost base.
The new strategy aims to win more business in the Middle East and North Africa, where prospects are better for lower-cost oil and gas production.
Petrofac also wants to expand into a broader range of energy sectors, including carbon capture and storage, hydrogen and waste-to-fuels. One of its largest recent contract wins was engineering support for the Seagreen wind array off the coast of north-east Scotland.
Having joined the company in November, Sami Iskander said of the results: “We need to do better to restore confidence and set the business on a course to grow with existing and new clients.
“This period has also been challenging following the SFO’s announcement in early January. However, I am reassured by our uncompromising approach to compliance and ethics that is consistent with international best practice, independently audited, and critical to our future success.”
In response to the SFO investigation and guilty plea by its former senior executive, Petrofac has emphasised that neither the company itself or any current members of its board were facing charges.
Petrofac has suspended its shareholder dividend for a second consecutive year.