Petrofac Appoints New Administrators for North Sea Oilfield Services

Petrofac, a prominent oil and energy services group, is poised for an administration process that could jeopardize over 2,000 jobs in Scotland. The potential insolvency comes as the company struggles with significant financial challenges. Administrative preparations are expected to be confirmed early next week.

Impending Administration Process

The directors of Petrofac have engaged Teneo to manage the administration process. Emergency discussions are ongoing among the board, which is chaired by former Anglo American finance director Rene Medori. An industry insider suggests that a decision to file for administration could be made before the stock market opens on Monday.

Government Involvement and Job Security

Ed Miliband, the UK’s energy secretary, along with other ministers, have been briefed on the situation. The looming administration could impact more than 2,000 jobs in Scotland. The Department for Energy Security and Net Zero has assigned Kroll, an advisory firm, to assist in addressing the crisis.

Current Company Situation

Despite the current challenges, a source close to Petrofac maintains that the company’s UK operations are “growing.” The firm employs approximately 7,300 people globally and specializes in designing and operating offshore equipment for energy companies. However, Petrofac’s market capitalization has plummeted to around £20 million, down from over £6 billion at its peak.

This decline has been compounded by a series of difficulties, including a Serious Fraud Office investigation that led to a conviction for failing to prevent bribery. Recently, a key contract cancellation from TenneT, a major customer, prompted the company to abandon its plans for solvent restructuring.

Future Prospects

• The company has been seeking financial restructuring for over a year.
• A High Court-sanctioned restructuring plan was overturned, leading to negotiations with creditors.
• If administration occurs, the company may be fragmented, with assets sold to other industry players.

In summary, the future of Petrofac hangs in the balance as it navigates a critical period that may lead to administration impactful on its workforce and operations. Further developments are expected in the coming days as stakeholders monitor the situation closely.