In a dramatic development shaking Britain's energy sector, Petrofac Ltd is reportedly preparing to appoint administrators for significant portions of its business, according to exclusive reports from Sky News.
The London-listed oilfield services provider, which employs thousands across its UK operations, has entered critical negotiations with restructuring specialists Alaco and Teneo. This emergency move comes as the company battles to salvage its future amid mounting financial pressures.
Restructuring Talks Intensify
City sources indicate that Petrofac has been locked in intensive discussions about implementing a Company Voluntary Arrangement (CVA) – a formal mechanism allowing struggling businesses to restructure their debts while continuing trading.
The potential administration filing would primarily affect Petrofac's engineering and construction division, representing a strategic attempt to protect the more viable elements of the business from collapse.
Market Reaction and Share Plunge
News of the potential administration sent shockwaves through financial markets, with Petrofac's share price plummeting dramatically on Friday. The stock closed down nearly 30%, wiping millions from the company's market valuation and reflecting investor panic about the company's survival prospects.
This catastrophic decline continues a longer-term trend for Petrofac, whose shares have lost over 90% of their value during the past year as operational challenges and financial constraints mounted.
Background: From FTSE 100 to Financial Precipice
Petrofac's potential fall represents a stunning reversal for a company that once ranked among Britain's corporate elite. The energy services provider enjoyed FTSE 100 status less than a decade ago, symbolising its former position as a cornerstone of the UK's industrial landscape.
The company's decline accelerated following a Serious Fraud Office investigation that concluded in 2021 with a guilty plea and substantial financial penalties, creating lasting reputational and financial damage.
Industry Implications and Workforce Concerns
A Petrofac collapse would send ripples across the North Sea energy sector, where the company remains a significant contractor and service provider. Industry analysts warn that the administration could disrupt oil and gas production operations and supply chains throughout the UK continental shelf.
Most concerning is the potential impact on Petrofac's global workforce of approximately 8,000 employees, with substantial numbers based in Aberdeen and other UK energy hubs facing uncertain futures.
The company and its advisers have maintained silence regarding the restructuring talks, declining to comment on what they term "market speculation" as they race against time to secure the company's survival.
