Shares in Petrofac traded higher this morning despite the company slashing its dividend and reporting a fall in earnings.
The oil and gas services company has been hit by a reduction in demand from its exploration and drilling customers on the back of lower oil prices.
However, shares were up by around 2.4% this morning as its order book appeared more resilient than expected.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 10.8% to $323m for the first half of the year. Revenues sank by around 20% to around $3.1bn.
Petrofac said it was cutting the dividend by 42% to 12.7 cents per share as part of measures to deliver a “sustainable reduction in net debt.”
“We are committed to maintaining a strong balance sheet and credit rating to ensure that the group remains competitive in current markets,” said the company in a statement.
Petrofac blamed weaker commodity prices for a squeeze on capital spending that was in turn hurting its own cash flows.
However, the market was cheered by Petrofac´s order intake and backlog of orders.
Earlier this month, Petrofac secured a major $2bn contract for work on Oman´s Duqm Refinery. In today´s interim results, the company revealed it had won a total of $2.7bn in new orders year-to-date.
Petrofac said group backlog stood at US$12.5 billion as at 30 June 2017. This excludes the framework agreement signed with Petroleum Development Oman in June, which will add to backlog as projects are sanctioned.
“Tendering activity remains high, we are well placed on a number of bids and have a healthy order backlog. This positions us well for the second half of 2017,” said chief executive Ayman Asfari.
Petrofac faces a continuing investigation from the Serious Fraud Office (SFO) over allegations of bribery, corruption and money laundering, an enquiry that became public knowledge in May.
Separately, Ayman Asfari was sanctioned by Italian authorities last week over insider dealing.
Lower oil prices and the SFO investigation have seen Petrofac shares slump by around 50% year-to-date.