Petrofac,the oil and gas giant that is a major employer in Aberdeen, is eyeingNorth Sea bid targets as a sharp fall in oil prices since last year andturmoil in the banking sector cause problems for its rivals.
Ayman Asfari, chief executive of the oil services to productionfirm, said Petrofac was looking at a number of deals in the North Sea.With the company on track to start production on budget from the Donfields in the North Sea in coming weeks, Asfari said Petrofac would bekeen to buy similar development assets if they became available.
"We are looking at deals in the North Sea and internationally, andif we see another opportunity like Don we will not refrain frominvesting," he told The Herald.
While the plunge in oil prices from $147 per barrel in July toaround $40 has worried many sector watchers, Petrofac expects itsservices business to maintain strong activity levels in the North Sea.The company enjoyed a record year in 2008 when there was strong demandfor Petrofac's expertise in boosting production from existing assets.This kind of work is likely to be maintained.
However, some firms are likely to shelve plans to develop new fieldsthat require hefty capital investment. Many assets are held by firmswhose plans were reliant on bank funding. This may be hard to get inthe current environment and some companies may have little choice butto sell the assets concerned.
In January, the North Sea unit of Canada's Oilexco went into administration.
"We are seeing a lot more deal flow with a number of companies thathave development assets that are short of funding," said Asfari.
As Petrofac has a strong balance sheet and is generating plenty ofcash, it may be well placed to take advantage of opportunities to buyassets at much lower prices than they would have fetched during theboom.
Announcing that net profits surged 40% to a record $265m (£192m) in2008, directors signalled their confidence in Petrofac's prospects byincreasing the full-year dividend by 55% to 25.4 cents per share.
"The environment in our industry has, so far, remained broadly positive," said chairman Rodney Chase.
"Despite extreme volatility in the price of oil, continuing suppliesof reasonably-priced energy will remain fundamental to world economicgrowth for many years to come."
The company enjoyed a bumper year in 2008. when revenues increased by 36% to $3.3bn.
The North Sea services business did well, winning an extension oftwo important contracts to operate assets for other firms and a newdeal to work on the Don assets, worth $30m annually.
Asfari said the plan to start production from the west Don and DonSouthwest fields in the first half was "robust" at current prices.
Some consultancy operations have experienced a "bit of a slowdown"caused by clients deferring discretionary spending. However, Petrofacexpects to continue employing around 4000 people in Aberdeen andoffshore in the North Sea this year.
Other areas of the business, which also works on large engineering and construction projects, have done well.
Keith Roberts, chief financial officer, said activity levels wereholding up in areas like the Middle East, where operating costs arerelatively low, and in which the company has a strong presence,Petrofac recently won orders worth $2.8bn for projects in the MiddleEast, to add to an order backlog of $4bn at the year end.
Shares in Petrofac closed up 5%, or 22p, at 467p.
Separately, shares in Wood Group, the Aberdeen-based oil servicesfirm, rose 4%, or 8.75p, to 213p after analysts at Deutsche Bankupgraded the stock to "hold" from "sell". Last week the companyreported record results for 2008, helped by a good showing by its NorthSea business.