WTI (May) $81.53 +$1.79, Brent (June) $85.61 +$1.43, Diff -$4.08 -36c. 

USNG (May) $2.19 +2c, UKNG (May) 104.0p +5.0p, TTF (May) €43.375 €-0.05.

Oil price

Oil rose again, data from the east was positive, China backed up good economic news and India said that fuel demand was up another 5% at 4.83m b/d, growing sharply. API inventories were mixed with a modest build in crude and gasoline but a big fall in distillates.

Today is inflation data day in the US, the whisper is that CPI will be 5.2% for March with a y/y number of 5.6%. At the moment the Fed is still being hawkish but whilst +0.25 bp’s is expected in May I’m hearing more and more calls to hold off…


Petrofac issues the following trading update ahead of the announcement of its full year results for the year ending 31 December 2022.

During the extended post-balance sheet period for the Group’s full year 2022 consolidated financial statements, management has conducted a thorough review of the portfolio of contracts, associated outstanding contractual and commercial issues and opportunities to improve liquidity by accelerating working capital inflows.

As a result of the portfolio review, the Group is recognising an additional EBIT reduction of US$140 million to US$160 million in the full year financial statements for 2022. This comprises both incremental project costs and a cautious view of the quantum and timing of recognition of certain revenue claims that would have partly offset those costs.

As a consequence, Petrofac now expects to report a full year Group EBIT loss of approximately US$150 million to US$170 million for 2022, including an EBIT loss of approximately US$240 million to US$260 million in Engineering & Construction (E&C) (1).

Approximately 50% of these additional costs are expected to be paid over the remainder of 2023, with the balance spread over 2024 and 2025. Any future recoveries from clients would mitigate this outflow.

Additional costs

Thai Oil Clean Fuels: following the December 2022 Trading Update, the execution strategy for this uniquely complex project has been subject to further review during Q1 2023, in consultation and cooperation with our client and joint venture partners. In order to de-risk delivery, operational changes have been made, including changes to subcontractors. A significant proportion of the resulting costs are expected to be recovered but discussions have not yet reached a sufficient level of maturity to recognise this incremental revenue.

Legacy contracts: additional costs relate to final completion activities on our legacy portfolio, primarily on projects that are now substantially completed (2). The figures announced today also include an allowance for adverse settlements as part of our efforts to accelerate the release of working capital balances.


Net debt at 31 December 2022 was US$349 million (3), with liquidity of US$506 million (4).

Petrofac remains focused on ensuring the Group has sufficient liquidity to support its strategy, including unlocking the significant working capital balances built up over the period of the pandemic, as well as collecting cash advances on new awards.

The Group has made significant progress in extending its borrowing facilities, having reached agreement in principle with its lenders to extend all three facilities by 12 months to October 2024. We will update the market following the signing of the extension agreements.

Tareq Kawash, Petrofac’s Group Chief Executive as of 1 April 2023, commented:

“Petrofac’s focus is on completing legacy contracts as quickly, efficiently and safely as possible. We are taking steps to ensure the financial strength of the business by unlocking working capital and, where appropriate, balancing long-term value against near-term liquidity.

“Although we are disappointed to announce additional costs on these legacy contracts, in particular the Thai Oil Clean Fuels project, ongoing collaboration with clients and partners will de-risk future delivery.

“I joined Petrofac because the business has a significant opportunity to deploy its leading capabilities to help clients deliver much needed energy infrastructure. This was demonstrated in the recent significant award of a long-term agreement to support critical European offshore wind infrastructure. Alongside converting a healthy pipeline of future opportunities – with a number of awards at preferred bidder stage – we are working to draw a line under the projects of the past, putting Petrofac in a strong position to deliver future growth.”

Sometimes I wonder if I really do know PFC as well as I used to, indeed with every new CEO comes a big broom which sweeps out the stables, in this case a profit warning that removes $140-160m of EBIT and thus guidance for 2022 is now for a loss of $150-170m. 

In addition the company is refinancing its debt and hoping to extend the facilities by 12 months to October 2024, it also includes a quite frankly peculiar suggestion that working capital balances were built up during the pandemic as well as ‘collecting cash advances on new awards’. 

If this latter point is correct and that the company has not been collecting cash advances then there has been something horribly wrong in the treasury and cash collection department, this is where I am confused, I really thought that the previous CFO was, if nothing else, a hard taskmaster in reducing costs and raking in the deposits, how wrong it appears I was, or was I?

So, I remarked when the recent wind farm order was announced that whilst I had gone too early with my buy call last autumn, based as it was on what I thought would be significant growth in the order book, but that the tide had turned for PFC. As it is the new CEO has arrived and hit the panic button, this is not the Petrofac I have grown up with.

I would normally say that the market is set to be one in which PFC would historically start to pick up contracts in its core areas as well as adding new ones such as the wind farm business, indeed it would redouble its efforts in its core areas where geographically and politically it has a significant built-in advantage created by years of impeccable in-country relationships. After all Opec, normally a big market for the company are backing the price.

I guess we now wait for the results and then try and make some sort of sense of what has been going on in Jermyn Street. I know that the company has had more than its fair share of problems in the last five years which don’t need to be re-aired here, I just really thought that all those problems were behind it and that going forward 2023 would see more of the PFC that we used to respect so much. 

The new CEO has much to do, he clearly feels that this act of clearing the decks will  be enough to satisfy the markets and buyers will return, down 15% today that is starting to look like a somewhat optimistic clutch at a straw, I’ll keep the buy recommendation as PFC should be making out like the proverbial in these markets…


  1. In the December 2022 Trading Update, the Group EBIT loss was forecast to be US$100 million and the E&C EBIT loss was forecast to be US$190 million. The Group has further analysed the appropriate timing of the recognition of the incremental costs on the Thai Oil Clean Fuels project identified in 2022 and concluded that a post-balance sheet adjustment should have been made in the income statement of the E&C division for 2021. As a result, we will be making a prior year adjustment of approximately US$90 million to the 2021 comparator in the full year 2022 consolidated financial statements. This is a reallocation of costs from 2022 to 2021 and has no impact on the Group’s financial position at the end of 2022. This adjustment has been included in the 2022 EBIT loss figures disclosed in the main body of this trading update.
  2. Substantially completed contracts are contracts where a Provisional Acceptance Certificate or the transfer of care and custody to the client are imminent and no substantive work remains to be performed by Petrofac.
  3. Net debt comprises interest-bearing loans and borrowings less cash and short-term deposits (i.e. excludes IFRS 16 lease liabilities).
  4. Liquidity consists of gross cash and undrawn committed facilities. Gross cash includes balances held in certain countries whose exchange controls significantly restrict or delay the remittance of these amounts to foreign jurisdictions. It also includes balances in joint operation bank accounts which are generally available to meet the working capital requirements of those joint operations, but which can only be made available to the Group for its general corporate use with the agreement of the joint operation partners.


i3 Energy

i3 Energy has announced the following update.

Monthly Dividend

i3 announces its monthly dividend totalling £2.040 million and confirms the following:

Dividend:                             0.171 pence/share

Ex-Dividend Date:             20 Apr 2023

Record Date:                      21 Apr 2023

Payment date:                  12 May 2023

Payment to shareholders holding their shares on the TSX will be made in Canadian dollars using the exchange rate from the Bank of England at close on the Dividend announcement date, 12 April 2023.

Trinity Exploration & Production

Trinity Exploration & Production plc (AIM: TRIN), the independent E&P company focused on Trinidad and Tobago, can confirm that at approximately 21:15 local time on Monday 10 April a generator-related fire occurred on Trinity’s Bravo Platform in the Trintes Field, offshore east coast Trinidad.

Production from the Bravo platform was halted, the fire was then successfully and quickly extinguished and the platform subsequently evacuated.  As a precautionary measure, production from the other Trintes platforms, Delta and Alpha, was also shut down.

Four operators were onboard Trintes Bravo at the time of the incident with two sustaining minor burns and all four impacted due to smoke inhalation.  All four operators received medical treatment for minor injuries and continue to be monitored.

No hydrocarbons were released into the environment as a result of this incident.

On Tuesday, 11 April, a multi-disciplinary team was mobilised to the Bravo platform to comprehensively assess the exact cause and extent of damage arising from the incident and the remediation required to return the facility to service.  The damage is limited to a generator with the platform structure and other platform electricals and equipment in good order.  The Company estimates replacement of the generator and associated repairs on the Bravo platform will be completed within three to four days and will initiate production restart in a phased manner once approval is received from the Ministry of Energy and Energy Industries.

Alpha and Delta crews also conducted precautionary checks ahead of restarting oil production which commenced late evening on Tuesday 11 April 2023, with all previously producing wells coming back online overnight.  As is normally the case with any shut down and restart, well flow rates will be optimised over the coming days to attain pre-shut-in production levels.

We would like to take this opportunity to thank the Team working on this incident for their diligence, which facilitated a quick and resilient response.

Oil production from the Bravo platform accounts for approximately 350 bopd.  Total Trintes field production is approximately 1,010 bopd.

Further updates will be provided when appropriate.

Whilst this is an unfortunate incident it seems that Trinity and its teams working on the platform have worked swiftly and efficiently to combat this fire and that whilst some production has been lost it might have been worse and it is good news that there were no serious injuries.

And finally…

The Noisy Neighbours beat Bayern Munich 3-0 last night in the Champions League, tonight Frank Lampard’s Chelsea are at Real Madrid.