Oilfield services provider Petrofac Ltd on Tuesday forecast an annual operating loss of about $100 million due to challenges in recovering costs in its engineering and construction (E&C) division.
The group expects E&C, its largest division, to record an annual operating loss of about $190 million as the division's performance was dented by higher costs due to contracts that were extended during the COVID-19 lockdowns.
"The additional costs incurred on the contracts due to extended schedules have not been fully recovered from our customers, resulting in net cost overruns," Petrofac said in a statement.
Revenue from the E&C division had slumped 40% in the first half.
The division had posted an operating loss of $14 million in 2021. Petrofac said it is also working with partners to recover costs at its $4-billion joint venture Thai Oil clean fuel contract.
Petrofac Chief Executive Officer Sami Iskander is set to step down at the end of March 2023 and be replaced by Tareq Kawash, a senior executive at energy firm McDermott.
(Reporting by Muhammed Husain in Bengaluru; Editing by Dhanya Ann Thoppil and Sherry Jacob-Phillips)