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Oilfield Services Firm Petrofac Looks To Exit Upstream Oil Business

Oilfield services provider Petrofac has hired banks to help it sell its oil assets in Mexico and is looking to scale back its upstream oil and gas business, Reuters reported on Friday, quoting several banking sources.

London-listed Petrofac has hired investment banks HSBC and Barclays to help it with the sale of the oil fields it has in Mexico, as the oilfield services provider is now looking to refocus on its core business—onshore engineering and construction.

Petrofac became the first foreign firm to operate state oil fields in Mexico in more than 70 years, when in 2012 Mexican state-run company Petróleos Mexicanos (Pemex) awarded it two integrated services contracts.

Apart from the Mexican fields, Petrofac may also consider divesting its assets in the Greater Stella Area in the UK’s North Sea, according to Reuters’ sources.

Ithaca Energy, owned by Israel’s Delek Group, could make an offer for Petrofac’s Greater Stella assets, one of the sources told Reuters.

Ithaca Energy holds a 54.66-percent working interest in Greater Stella, while Petrofac is one of the other two shareholders with a 20-percent stake.

Petrofac—which designs, builds, operates, and maintains oil and gas facilities—ventured into oil and gas production projects in the early 2000s before the oil price crash of 2014.

Related: How Much Iranian Oil Can Trump Disrupt?

But the lower oil prices have hit Petrofac’s Integrated Energy Services (IES) division, for which the company reported in its 2017 results lower cost recovery in Mexico, reflecting lower capital investment.

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Petrofac is under investigation by the UK Serious Fraud Office (SFO) in connection with an investigation into the activities of Unaoil. The investigation is wide ranging in time and scope, and relates to the activities of Petrofac, its subsidiaries, and their officers, employees, and agents for suspected bribery, corruption, and/or money laundering, Petrofac said in February an update on the investigation that the SFO announced in May 2017.

By Tsvetana Paraskova for Oilprice.com

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