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Petrofac Expects to Meet 2015 Profit Target on Contract Wins

Aug. 27 (Bloomberg) -- Petrofac Ltd., a U.K. oil and gas engineer focused on the Middle East, said it will meet a target to double profit by 2015 as new contracts boost revenue.

“We have a strong bidding pipeline and expect more awards by the year-end,” Chief Executive Officer Ayman Asfari said today in a Bloomberg Television interview with Francine Lacqua. “The additional orders will underpin” earnings expectations.

Oil above $100 a barrel and dwindling output from aging fields have spurred global exploration, increasing demand for engineering services. Petrofac, which has won orders in Abu Dhabi, Oman and Algeria and today announced a contract in Iraq, is counting on the backlog to raise post-tax income to more than $862 million by 2015, more than doubling 2010 recurring profit.

Petrofac rose 8.5 percent to 1,373 pence at the close in London trading, the biggest gain in four years, after reporting a record 21 percent increase in its order backlog. That values the company at 4.8 billion pounds ($7.5 billion). Goldman Sachs Group Inc. raised its price target by 1.1 percent to 1,512 pence a share.

The growth in orders “provides strong revenue visibility” for the rest of the year and 2014, Asad Farid, an analyst at Berenberg Bank, said in a note.

Net income fell to $243 million in the first half from $325 million a year earlier, London-based Petrofac said today in a statement. That beat the $224 million average estimate of five analysts surveyed by Bloomberg. The order backlog expanded to $14.3 billion in June from $11.8 billion at the end of 2012.

“Our project portfolio is in excellent shape,” Chief Financial Officer Tim Weller said on a conference call. The company remains on schedule to achieve “modest” earnings growth this year, it said.

Outside the Middle East and North Africa, Petrofac has added contracts in Mexico, where the government is opening up oilfields to foreign developers. The company hopes to benefit from the liberalization, it said.

To contact the reporters on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net; Francine Lacqua in London at flacqua@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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