Insiders said the leadership team was still trying to save the company, but analysts said a breakup was increasingly likely.
The UK business is vital to the UK’s North Sea operations, but has been dragged down by financial disasters at operations in Abu Dhabi.
Last week, a potential restructuring deal, worked on for a year, collapsed in disarray after Petrofac’s biggest client cancelled a multibillion-pound contract.
TenneT, the power grid operator for the Netherlands and much of Germany, terminated its multi-year contract to build offshore platforms and onshore converter stations for six wind farms. The contract was a joint venture with Hitachi and was said to be worth €13bn (£11bn).
Mr Kelty said: “It looks like Petrofac is on the brink. The Gulf-based engineering division has been a mess for years. It should have been restructured and taken a hit on bad contracts in the past, rather than trying to carry on. Its collapse may help to focus Labour ministers’ minds on helping UK industry.”
Alex Paterson, an analyst at Peel Hunt, said: “It’s going to be very hard to attract new capital now. The equity is worth nothing, and the various forms of debt are going to get written down to a very, very low level. The outcome is some break-up of the group where parts will be sold off.”
Petrofac designs, constructs and operates equipment for offshore energy firms. It was listed on the London Stock Exchange in 2005.
Impact of separate disasters
Three separate disasters have hit the company. They include a clean fuels project at a Thai oil refinery where Petrofac was supposed to increase daily crude throughput from 275,000 barrels to 400,000 barrels from 2018, but which never worked out.
It was also hit by the Covid pandemic, which caused construction delays, disrupted cash flow and forced Petrofac to halt debt repayments.
The company has also been entangled in a corruption scandal in the Middle East. The company was fined £77m in 2021 following a Serious Fraud Office (SFO) investigation.
In May, the UK’s High Court approved plans for Petrofac to raise $355m (£280m) in rescue funding. Counterparties Samsung and Saipem successfully challenged the restructure in the Court of Appeal, forcing Petrofac to extend its debt standstill further.
Daniel Slater, an energy analyst at Zeus Capital, said: “Clearly, it would be good for Aberdeen, jobs and national capabilities if the UK element of Petrofac, in particular, can be preserved, and this may form part of ongoing restructuring negotiations.”
A spokesman for Petrofac confirmed that talks were under way and would continue through the weekend in the hope of saving the company as a going concern.
