Petrofac shares surge after contract deal with TenneT

(Sharecast News) - Shares in Petrofac surged on Wednesday after the oilfield services company said it had secured performance guarantee for the first contract awarded under its agreement with Dutch electricity company TenneT. Petrofac's will get a $1.4bn share of the $14bn multi-year contract. Share in the firm rocketed by 42% in London trade.

In a trading update, the company also forecast a smaller annual loss of $180m for the group, compared with a loss of $205m last year, and forecast annual revenue of $2.5bn, compared with the $2.67 billion that analysts expect, according to a company-compiled consensus.

Net debt is expected to be higher at the year-end, due to a delay in securing advance payments on contracts and a subsequent increase of more than $100m in collateral for the guarantees, it added.

Petrofac, which has been struggling with payment delays and cost overruns at its engineering and construction unit earlier this month warned it would no longer be able to meet its annual forecast of "broadly neutral free cash flow".

Reporting by Frank Prenesti for Sharecast.com