Petrofac falls again after RBC downgrades on contract implications from SFO probe
Petrofac shares lost further ground on Friday after RBC Capital Markets downgraded its recommendation and hacked its target price down due to the implications of a criminal investigation by the Serious Fraud Office.
FTSE 250
19,450.67
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
Oil Equipment, Services & Distribution
4,928.34
16:30 11/04/24
Petrofac Ltd.
23.22p
16:40 18/04/24
On the previous day, shares in the FTSE 250 oilfield services company plunged their lowest since 2009 after it suspended its COO Marwin Chedid as part of several steps to the maintain day-to-day operations as it cooperates with the SFO.
The SFO is probing Petrofac's business conducted with Unaoil, a Monaco-based consultancy company currently under investigation by the SFO and several other agencies in connection with suspected bribery, corruption and money laundering.
Chedid and chief executive Ayman Asfari were both arrested, questioned under caution, and released without charge.
RBC, which cut its rating to 'underperform from 'sector perform' and its target price to 400p from 1000p, said in the current challenging oil price environment, with fewer available contracts, it thought the SFO investigation "further impedes Petrofac's ability to win contracts".
Analysts reduced their estimates to reflect fewer contract wins in 2017, as the company expects to devote significant resources to the investigation.
"We also do not think a resolution is likely to be reached quickly given the SFO has informed Petrofac " it does not consider the company to have cooperated with it".
The SFO also "does not accept the company's findings" from an internal investigation, completed in 2016 by lawyers Freshfields and forensic accountant from KPMG.