Petrofac Share Price Forecast November 2021 – Time to Buy PFC?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Shares of British provider of oilfield services Petrofac (LSE: PFC) are in the green today, trading at around £129.5 at the time of writing (NOV 1, 09:36 GMT). The shares have experienced some ups and downs in recent weeks, at one point jumping 50% in two days before crashing 15% recently.
Petrofac – Technical Analysis
According to Petrofac’s financial statement, the company’s current market cap is at £545.858 million with total assets worth £3.073 billion. Revenue for 2020 was at £3.18 billion with a profit margin of -4.41% compared to £4.33 billion in 2019.
Moving averages such as Exponential Moving Average (10)(139.8), Simple Moving Average (10)(141.8), Exponential Moving Average (20)(143.5), Simple Moving Average (20)(153.3) and Exponential Moving Average (30)(141.2) are indicating a sell action. Oscillators such as Williams Percent Range (14)(−74.9), Bull Bear Power(−22.2) and Ultimate Oscillator (7, 14, 28)(48.7) are neutral.
68% of all retail investor accounts lose money when trading CFDs with this provider.
Recent Developments
Founded in 1981, Oil and gas facilities services provider Petrofac has grown to be an international provider of infrastructure solutions to the oil & gas production and processing sector. Petrofac has been under the scanner recently after it announced that it was being investigated by the Serious Fraud Office. It charged senior Petrofac executive David Lufkin with 14 bribery charges, all of which he pleaded guilty to. It has also lost money prior to the investigation, such as a loss of £284 million on the construction of a gas plant in Sullom Voe, Shetland, due to poor planning and bad weather.
Since then, the SFO has concluded that the case, which saw some positive movement for the shares. The company released its first-half results recently as well as details of a new equity issue. It proposes to issue new shares worth approximately $275m (£200m) with the help of a combination of placings and an open offer.
The company has priced the new shares at 115p apiece, for a discount of 27.2% on the closing price on 25 October, which prompted the fall in share price. From the perspective of raising much cash for as little equity as possible, the company has timed and priced the shares well. If it had done so when the bribery case was pending, it could have dissuaded many investors. Some of the cash will be used to pay the SFO’s £77 million penalty, while the rest will be used to pay down debt as a part of its refinancing initiatives.
Should You Buy PFC Shares?
Investors interested in PFC should look at the company’s H1 results. It revealed a reported net loss of $86 million, largely reflected in the court penalty. The balance sheet indicated a net debt of $188 million with liquidity put at $1 billion on 30th June. The company has framed several plans aimed at refinancing to create a long-term, sustainable capital structure, which includes a $180 million revolving credit facility, $550 million in new debt facilities, and the new equity issue.
While the oil and gas industry is starting to recover after the pandemic, Petrofac is still open to future shocks. This could materialize if there is a decrease in demand for oil and a fresh price crunch. There is also the fear of the sluggish economic growth of China recently, which might spread. Additionally, the company also has to win back a lot of confidence from its investors, after languishing through courts and penalties over the last few months. All of these can be potential risks for PFC at the moment. Considering all of this, now is not the time to buy PFC shares.
Buy PFC at eToro with 0% Commission Now!
