Will Petrofac Limited’s Share Price Rise Faster Than BP plc, Tullow Oil plc, BHP Billiton plc And Royal Dutch Shell Plc After Full-Year Results?

Does Petrofac Limited (LON:PFC) (LSE:PFC.L) have more share price growth potential than BP plc (LON:BP) (LSE:BP.L), Tullow Oil plc (LON:TLW) (LSE:TLW.L), BHP Billiton plc (LON:BLT) (LSE:BLT.L) and Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L)?

Petrofac Limited
Petrofac Limited

Petrofac Limited’s (LON:PFC) (LSE:PFC.L) share price is 3% higher today as investors digest its full-year results. It has reported good operational performance across its businesses. Underlying net profit has come in at $421 million, with a new order intake of $1.9 billion and a backlog of $14.3 billion. This gives the company good visibility for the current year and could help investors to push its share price higher.

Petrofac has exited Ticleni PEC and Berantai RSC, which has released $300 million in proceeds. Encouragingly for its investors, net debt has fallen 10% to $617 million and this is reflective of the company’s improving cash flow and capex rephrasing. Its share price rise today is also likely to be due to a full-year dividend which has been maintained at $0.658 per share.

In recent months, Petrofac notes bidding activity has increased. Although the market remains competitive, I feel the investment made in right-sizing its business should provide it with growth opportunities in 2017. A further reduction in capital intensity and a focus on maintaining a strong balance sheet should also improve its share price prospects in my view.

In the last 3 months, Petrofac’s share price has risen 12%. That’s ahead of the share price performance of Oil & Gas peers BP plc (LON:BP) (LSE:BP.L), Tullow Oil plc (LON:TLW) (LSE:TLW.L), BHP Billiton plc (LON:BLT) (LSE:BLT.L) and Royal Dutch Shell Plc (LON:RDSB) (LSE:RDSB.L). Tullow Oil is flat, Shell’s shares are 3% higher, BP has fallen 1.5% and BHP Billiton’s share price is 3% higher.

In my view, Petrofac could register strong share price gains in the long run. I feel it has a good strategy through which to navigate what may be a competitive trading environment. Its financial strength is improving and I think there is more to come from this and from reduced capital intensity. Therefore, while I’m bullish on Shell, Tullow Oil, BP and BHP Billiton, I think Petrofac has investment appeal on a relative basis.







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