Shetland project prompts Petrofac profit warning

Shares in the FTSE 100 oil services group Petrofac crashed 26 per cent to a near-five-year low yesterday after it said it would lose money on a massive gas terminal it is building in Shetland.

It was Petrofac’s second profits warning this year.

Petrofac said it would book a loss this year and make no money next year on the £800m project, which will handle gas from the new Laggan and Tormore deep sea oil and gas fields.

It chief executive, Ayman Asfari, said the project, which at its peak was employing 2,400 people a day, had been particularly difficult given the environmental considerations of building on Shetland and had been hit by extremely severe weather conditions which had stopped work on many days.

Petrofac also blamed falling oil prices for the fact that profits this year would be at the bottom end of expectations at some $580m (£362m) and even lower in 2015 at around $500m. Analysts’ average forecast for next year’s profit had been $697m.

Petrofac said its previous forecasts had been based on an oil price of $100 a barrel against today’s $80 for Brent crude. It added that each $1 fall in the oil price would hit its 2015 profits by $2m.

Petrofac shares slumped 315.5p to 877.5p.