Petrofac has experienced “significant disruption” to its engineering and construction (E&C) business because of the impact of the Covid-19 pandemic.
The company said the disruption is due to “stringent health protocols, supply chain disruption, travel restrictions and government-enforced lockdowns”.
Projects are still progressing, but there are material delays in construction activity that will not be recovered in 2020, Petrofac added.
It said operations and maintenance activity in the engineering production services (EPS) business continues in all regions, with travel and social distancing restrictions having a modest impact on activity levels.
Training centres have been temporarily closed.
The company is active in offshore wind, including as substation supplier for the 1075MW Seagreen offshore wind farm off Scotland, but said the remarks are a broad sector outlook and not project specific.
The company added that the collapse in oil prices has been the catalyst for clients to review their future investment plans, which has resulted in delays to current tenders in E&C, as well as the recent termination of the $1.5bn Dalma contract.
Petrofac said its bidding pipeline “remains healthy” and the company is “well positioned on several opportunities this year”.
However, it is “prudently anticipating that the majority of 2020 tenders will be delayed until 2021”.
Contract extensions in EPS, on the other hand, have remained strong with $500m of new orders secured this year to date.
Petrofac said that in response to Covid-19 and low oil prices it is targeting additional savings to those announced on 6 April, and now expects to reduce overhead and project support costs by at least $125m in 2020 and by up to $200m in 2021.
On 6 April, it had said overhead and project support costs would be reduced by $100m in 2020.
In addition, suspension of the final 2019 dividend payment and a 40% reduction in capital investment has conserved an incremental $145m of cash flow.
Petrofac chief executive Ayman Asfari said: “In this unprecedented period, we are working tirelessly to safeguard the interests of all our stakeholders.
“We have implemented stringent health measures to protect our people, clients and suppliers.
“We are working hard to mitigate the disruption caused by Covid-19 on project progress and lower oil prices on our bidding pipeline.
“And we have taken swift and decisive action to significantly reduce costs, retain our competitiveness and preserve the strength of our balance sheet.”
The company is holding its AGM today.
Petrofac will deliver its next market update on 25 June.