Petrofac said its loss on the Laggan-Tormore project in the Shetland Islands would now be larger than it expected, highlighting the hostile operating conditions and high costs faced by oil and gas developers in the North Sea.
The oilfield services provider’s shares fell as much as 14 per cent yesterday on the London Stock Exchange.
The slump in global oil prices over the last 10 months has compounded the impact of high investment costs and the harsh climate in the North Sea region, prompting oil and gas companies to put billions of dollars of assets up for sale.
“Economic conditions are bad enough for North Sea oil and gas explorers and service providers, but the notorious stormy weather has made it worse for Petrofac...,” London Capital trader Lewis Sturdy said.
Petrofac, which has also faced delays at the Ithaca Energy-owned Greater Stella Area project in central North Sea, said it still expected to complete Laggan-Tormore in the third quarter, but would need to “expend significantly more man-hours”.
“I have never faced a more difficult and challenging work environment,” chief executive Ayman Asfari said.
Petrofac has been investing heavily in its offshore engineering and construction business, but has had to take losses on two key projects in the North Sea.