Petrofac Issues Business Update; Announces Extension Of Lock-Up Agreement

Petrofac anticipates first-half 2025 Business Performance revenue and EBIT to be significantly ahead of the prior year, despite ongoing financial constraints, with its backlog broadly stable at $6.7 billion. Bondholders, investors, and creditors have extended the Group's Lock-Up Agreement until November 30, 2025, reinforcing support for its restructuring plan. Concurrently, Petrofac will seek leave to appeal a recent Court of Appeal judgment to the Supreme Court, indicating continued legal challenges alongside its financial recovery efforts.

Analysis

Petrofac anticipates a significant year-over-year improvement in its first-half 2025 Business Performance revenue and EBIT, demonstrating operational execution despite persistent financial constraints that are adversely impacting project costs and schedules. The Group's backlog remains stable at $6.7 billion as of June 30, broadly consistent with year-end 2024 levels, which provides a degree of revenue visibility. A crucial development is the extension of the Lock-Up Agreement to November 30, 2025, signaling reinforced support from bondholders and other key creditors for the company's restructuring plan and providing a longer runway for its implementation. However, this progress is set against a backdrop of legal uncertainty, as the company is now seeking leave to appeal an unfavorable judgment to the Supreme Court, introducing a material risk that could affect its recovery.

Key Decisions for Investors

• Investors should weigh the positive H1 2025 earnings guidance against the significant risks posed by ongoing financial constraints and the unresolved Supreme Court appeal.
• The extension of the Lock-Up Agreement provides a window of stability, making progress on the restructuring plan the key catalyst to monitor through November 2025.
• Given the stable $6.7 billion backlog, any significant deviation from this figure in future reports could signal a change in the company's fundamental outlook.