annual report and accounts 2010
we’ve come  
a long way
petrofac annual report and accounts 2010
petrofac services limited
117 jermyn street
london sw1y 6hh
united kingdom
t 44 20 7811 4900 
f 44 20 7811 4901
wwwpetrofaccom designed and produced by
conran design group 44 020 7284 5200
photography by sam robinson 
this report is printed on revive 100 pure white silk paper and revive pure  
white uncoated paper and has been independently certified on behalf of the  
forest stewardship council fsc the inks used are all vegetable oil based
printed at st ives westerham press ltd iso14001 fsc certified and carbonneutral
®
but the journey 
is just beginning in 2011 petrofac turns 30 in three decades  
we have grown from a texasbased producer  
of modular plant to a leading ftse 100 company 
with 13900 people in 26 countries providing 
integrated facilities solutions across the life cycle  
of oil  gas assets
we are planning to make the coming decades 
even better by continuing to learn evolve and 
innovate and by staying focused on execution 
and delivery we will go on developing our 
capabilities and service offering – for the  
benefit of all our stakeholders
1    petrofac annual report and accounts 2010 2    petrofac annual report and accounts 2010
five year summary
1
information not subject to audit
2010 2009
restated
2008 2007 2006
revenues
2
43542 36554 33295 24403 18639
ebitda
2
7594 5497 4190 3013 1983
profit for the year
23
5578 3536 2650 1887 1203
diluted earnings per share cents
2
16246 10319 77 11 5461 3487
total assets 36013 36006 22698 17480 14018
total equity 7791 8975 5590 5230 3249
number of employees at year end
2
13900 11 700 11  100 9800 8100
backlog 11699 8071 3997 4441 41 73
1 in us millions unless otherwise stated 2 on continuing operations 3 attributable to petrofac limited shareholders
financial highlights
revenue 
us4354m 2009 us3655m
 19
backlog
us11699m 2009 us8071m
45
earnings per share diluted
16246 cents per share  
2009 10319 cents per share
57 
ebitda 
us7594m 2009 us5497m
38
net profit
3
 
us5578m 2009 us3536m
58
return on capital employed
2009 469
652
eps diluted
cents per share 
16246
3487
06 07 08 09 10
5461
7711
10319
16246
backlog
us millions 
11699
4173
06 07 08 09 10
4441
3997
8071
11699
revenue
us millions 
4354
1864
06 07 08 09 10
2440
3330
3665
4354
ebitda
us millions 
759
198
06 07 08 09 10
301
419
550
759
net profit
us millions
558
120
06 07 08 09 10
189
265
354
558 3    petrofac annual report and accounts 2010
petrofac delivered another outstanding 
performance in 2010 the group achieved  
growth of 58 in net profit
1
 26 on a  
likeforlike basis
2
 and revenue increased  
by 19 to us44 billion
we won significant new contracts across many 
countries during the year our order intake has 
resulted in achieving a record yearend backlog  
of us1 17 billion providing outstanding visibility  
of revenue for well beyond the coming year
petrofac’s success – and our strategic goal  
of becoming the leading provider of facilities 
solutions to the oil  gas industry – is built on  
the following priorities
recordbreaking results
contents
maintaining and improving our  ■ ■
high safety and integrity standards 
wherever we work
providing a range of services across ■ ■
the life cycle of the energy asset
expanding our offering into new ■ ■
regions prioritising areas with major 
hydrocarbon reserves and significant 
capital and operational expenditures
providing fully integrated services  ■ ■
for resource holders under flexible 
tailored commercial models which 
leverage our service capability and 
may include the provision of capital
training and hiring local resources ■ ■
where we operate to help develop 
national workforces
attracting and retaining recognised ■ ■
specialists and key personnel
identifying acquiring and growing ■ ■
complementary businesses where 
they expand our skill set and support 
our strategic goals 
 
 
 
 
notes
1  net profit for the year attributable to petrofac limited shareholders
2  likeforlike net profit growth excludes the gain of us1249 million on the enquest demerger  
and the trading net profit from energy developments’ demerged assets of us127 million for  
the year ended 31 december 2009 and us21 million for the year ending 31 december 2010
 4  at a glance
 6  our services
 8  expansion into new regions
 10  building longterm relationships
 12  sustained investment
 14  we seek the best and brightest people
 16   chairman’s statement
 18  interview with the group chief executive
 22 operating review
 50 senior management team
 52 financial review
 68 directors’ information 
 71 corporate governance report
  79  nominations committee report
  80   audit committee report
  82  risk committee report
 84 directors’ remuneration report
 96 directors’ statements
 97 independent auditors’ report
 99 consolidated income statement
 100  consolidated statement of
  comprehensive income
 101  consolidated statement of
  financial position
 102 consolidated statement of cash flows
 103  consolidated statement of changes
  in equity
 104  notes to the consolidated financial
  statements
 145  independent auditors’ report 
petrofac limited
 146  company financial statements 
petrofac limited
 159  oil  gas reserves unaudited
 160 shareholder information
 56 our csr strategy
 58 marketplace
 60  health safety security and 
  integrity assurance
 62 environment
 64 our people
 66 community
business review group financial statements company financial statements corporate social responsibility governance overview 4    petrofac annual report and accounts 2010
engineering  construction
highlights
order intake of us60 billion including
  petrofac’s largest ever award of 
us34 billion for the epc phase of 
our contract with turkmengas on the 
south yoloten project in turkmenistan
  a contract for more than us600 
million for gas sweetening facilities  
for qatar petroleum
  two awards for kuwait oil company 
koc a us400 million contract  
for the installation of gas and oil 
pipelines and a us430 million  
award for effluent water and  
sea water injection facilities 
  a us280 million award for the  
sepat offshore early production 
system for petronas in malaysia
key capabilities
– design and engineering
–  procurement including inspection  
and logistics of project materials  
and equipment
–  prefabrication and onsite 
construction
–  health safety security and 
environmental management in  
line with national and international 
regulations
–  quality and integrity assurance  
and control
– project management
–  commissioning and initial  
operations
5400
  engineering  
construction
  engineering  
construction ventures
employees
 of group
 of group
 of group
 of group
locations
offshore engineering  operations
highlights
order intake was us16 billion including
  a us250 million duty holder contract 
with the government of sharjah to 
provide facilities management services 
for the sajaa gas plant
  a £500 million award with total for the 
development of a gas processing plant 
on the shetland islands in our first 
predominantly lumpsum contract  
in the uk supported by engineering  
construction
  a £40 million contract for the provision 
of engineering services to the uk 
continental shelf ukcs assets of 
maersk oil 
  extensions of existing contracts 
including a fiveyear agreement with 
bhp billiton in the irish sea and a 
fiveyear extension to a contract with 
cnr international in the north sea 
  two capacitybroadening acquisitions 
oilfield pressure control equipment 
service and repair company scotvalve 
services and metering systems business 
stephen gillespie consultants
 
key capabilities
–  on and offshore facilities  
management including the  
duty holder service offering
–   offshore engineering and  
construction
–  project management
–   maintenance management  
and support services
–   mechanical services and metering
–   supply of highly competent  
and experienced personnel

41
net profit us3730m
2009 us2651m

30
revenue us3254m
2009 us2509m

34
net profit us172m
2009 us128m

15
revenue us722m
2009 us627m
4400
employees
locations
growth was a key feature of our business in 2010 
we grew our revenue and profits extended  
our integrated service offering moved into  
new countries and expanded our workforce  
we now have 13900 employees and six strategically 
located operational centres in aberdeen abu dhabi 
chennai mumbai sharjah and woking and a 
further 20 offices worldwide
2010 performance  
at a glance 5    petrofac annual report and accounts 2010
engineering training services and production solutions
energy developments
highlights
  the successful demerger of petrofac’s 
ukcs assets to create enquest plc 
in the first demonstration of our  
‘build and harvest’ strategy
  good progress on operational  
assets – cendor in malaysia ohanet  
in algeria chergui in tunisia and the 
kyrgyz petroleum company refinery  
in kyrgyzstan
  a 20 interest acquired in gateway 
storage company to develop the 
gateway gas storage project in the 
east irish sea
  acquisition of ukbased co2deepstore 
provides investment and services 
capability for co2 storage projects
  in early 2011 a risk service contract to 
lead the development of the berantai 
field signed with petronas  
in malaysia
key capabilities
–  in conjunction with production 
solutions energy developments 
provides integrated services for 
resource holders through technical 
operational commercial and asset 
management skills
–  projects cover upstream 
developments both greenfield  
and brownfield and related energy 
infrastructure projects and this  
can include the provision of capital

2
revenue us355m
2009 us350m
15
net profit us276m
2009 us324m
24
revenue us188m
2009 us249m

238
net profit us1564m
2009 us462m
3400
employees
locations
600
employees
locations
petrofac delivers its services through seven business 
units that make up our four reporting segments  
in their individual development they are enabling  
us to become active across the entire value chain 
of the oil  gas industry to the benefit of our 
customers our shareholders and our people
highlights
engineering services
  utilisation rates rose across all three 
offices – mumbai chennai and woking
  the acquisition of renewable energy 
specialist tnei marked our entry into 
the new energy sector
training services
  refurbished and equipped a worldclass 
syrian training centre which we have 
donated to the syrian government
  strong growth from international 
markets including our facilities  
in russia and azerbaijan
production solutions
  awarded our first ‘production 
enhancement’ contract by petrom  
of romania for the ticleni oilfield
  entry into nigeria with a strategic 
alliance with and investment in  
seven energy
key capabilities
engineering services 
– field development planning 
–  conceptual engineering and  
front end engineering design
–  engineering and procurement  
services
training services 
–  competenceled training in  
safety and technical disciplines 
consultancy and tailored  
management solutions
production solutions
–  production enhancement with  
flexible remuneration options 
–  drilling and well engineering
–  reservoir management and field  
redevelopment planning
–  development and delivery of pumping 
and separation technologies 
2010 performance at a glance
  engineering services
 training services
 production solutions
 of group
 of group
 of group
 of group
overview 6    petrofac annual report and accounts 2010
our services
petrofac’s range of services meets our customers’ 
needs across the full life cycle of assets we design 
and build oil  gas facilities operate maintain and 
manage facilities and train personnel enhance 
production and where we can leverage our service 
capability develop and coinvest in upstream 
and infrastructure projects 
maintain
 our people understand the critical issues 
associated with oil  gas infrastructure  
we provide engineering and construction 
solutions for planned facility modifications 
and upgrades as well as ongoing 
operations and maintenance support 
including project management
manage
petrofac has an intimate understanding  
of operations management having 
pioneered the duty holder concept in the 
uk north sea we can provide a complete 
managed service covering production  
and maintenance work both offshore and 
onshore to reduce the costs of operating 
and extend the life of the facilities
build
based on our customers’ requirements  
we can deliver our integrated engineering 
procurement and construction services 
through a variety of contracting models 
ranging from costreimbursable contracts  
to billion dollar lumpsum turnkey projects
design
petrofac’s design capabilities are founded  
on the combination of our extensive 
practical experience with our knowledge  
of the latest technical developments our 
skills in project management conceptual 
engineering and frontend engineering  
and design and our indepth knowledge  
of construction and production operations 
enable us to optimise development plans  
to better meet our customers’ needs
build
manage
maintain
operate
train
enhance production
develop and coinvest
design
drilling 
management
d
m
co2 
sequestration
capture
oil  gas 
processing 
facilities
wind farm
pipelines
storage
tanks
gas 
transmission 
network
onshore 
compression 
facility
underground 
reservoir
offshore 
substation
off
floating 
production
lng liquefaction
lng regas facilities
reﬁnery
offshore 
production
facilities
ge ge
reﬁnery
onshore 
substation
storage of natural 
gas and co2 7    petrofac annual report and accounts 2010
overview overview
operate
petrofac’s breadth of skills and experience in 
production engineering drilling management 
and operations are combined with our 
commercial flexibility to enable us to provide 
integrated services for oil  gas assets 
under a variety of commercial frameworks
train
our global training operations which  
include 15 facilities in six countries  
train around 50000 delegates annually  
our integrated approach enables our  
customers to build more competent safe 
and efficient workforces to support their 
operations wherever they are in the world
enhance production
petrofac aims to align itself with the interests 
of resource holders we can do this through 
the creation of commercial structures where 
our remuneration is dependent upon our 
ability to improve production and reservoir 
recovery this is achieved through the 
deployment of our extensive service 
capabilities and project management skills
develop and coinvest
we draw on the extensive capabilities of  
our wider group to provide a fully integrated 
service for resource holders our offering 
includes flexible commercial models that are 
aligned to specific customer requirements 
and can include the provision of capital
our services
build
manage
maintain
operate
train
enhance production
develop and coinvest
design
drilling 
management
d
m
co2 
sequestration
capture
oil  gas 
processing 
facilities
wind farm
pipelines
storage
tanks
gas 
transmission 
network
onshore 
compression 
facility
underground 
reservoir
offshore 
substation
off
floating 
production
lng liquefaction
lng regas facilities
reﬁnery
offshore 
production
facilities
ge ge
reﬁnery
onshore 
substation
storage of natural 
gas and co2 8    petrofac annual report and accounts 2010
expansion into 
new regions
developing our marketplace
international expansion is core to petrofac’s 
growth strategy moving into new countries 
does much more than boost our shortterm 
income new territories offer the opportunity 
to build new relationships develop additional 
capabilities and establish new teams all of 
which help to generate future growth
in our geographical expansion as in other 
areas of development we are advancing in  
a measured and wellplanned way we are 
remaining focused on our core markets of  
the uk continental shelf the middle east and 
africa the commonwealth of independent 
states and the asia pacific region and above 
all quality of execution remains our key priority 9    petrofac annual report and accounts 2010
…opens up  
opportunities for  
future growth
turkmenistan 
in december we began the 
us34 billion epc phase of  
the south yoloten gas field 
development for turkmengas 
in turkmenistan
nigeria 
in november we achieved  
a local presence in nigeria  
by acquiring a 15 interest  
in seven energy a nigerian 
production and development 
company whose production 
processing and transportation 
assets we will help develop
iraq 
we established operations  
in iraq in mid2010 and began 
working for an international  
oil company to undertake the 
engineering procurement 
fabrication and construction 
management services for an 
early production system which 
we hope will lead to a larger 
contract in the future
romania 
in july we secured our first 
production enhancement 
contract for the petromowned 
ticleni oilfield in romania  
our offering includes drilling 
management production 
engineering facilities upgrade 
and training and we are paid a 
tariff per barrel of oil produced 
including an enhanced tariff  
for incremental production
overview 10    petrofac annual report and accounts 2010
building longterm  
relationships
generating value for all our stakeholders
our broad range of competencies allow  
us to offer an integrated range of services 
across the entire life cycle of oil  gas assets 
providing customers with the reassurance 
and consistency of having one trusted  
partner for many of their needs we aim  
to demonstrate how the integrated delivery 
of our services can add significant value  
for resource holders where they retain full 
ownership of their resources and our returns 
are linked to project delivery to create perfect 
alignment with their objectives
the value of our creative approach – to both 
customers and our shareholders – has been 
demonstrated in malaysia where we are 
working on a number of important projects 
with petronas the national oil company 11    petrofac annual report and accounts 2010
by delivering  
creative solutions  
to customers  
and partners
creative relationships  
at cendor
during 2010 we secured  
approval for our field development 
programme for the second phase 
of the development of the cendor 
block offshore peninsular 
malaysia since 2004 petrofac 
has been a partner holding  
a 30 interest within a production 
sharing contract with petronas 
kuwait foreign petroleum 
exploration company kufpec 
and petrovietnam
in early 2011 we won a risk 
service contract to lead the 
development and operation  
of the berantai field offshore 
peninsular malaysia  
our payment is linked to 
performance against such 
measures as costs timing  
to first gas and sustained  
gas delivery
as a result petrofac is now 
responsible for more than  
us2 billion of offshore 
projects in malaysia
in december petronas 
awarded us a contract for the 
development of the sepat 
offshore early production 
system on the east coast of 
peninsular malaysia the award 
marks our first major offshore 
engineering procurement 
construction installation and 
commissioning contract
overview 12    petrofac annual report and accounts 2010
sustained  
investment 13    petrofac annual report and accounts 2010
building strong foundations for growth
petrofac is a progressive business focused  
on longterm sustainability to ensure we  
have a robust foundation and consistent 
approach we are making significant structural 
investments across the organisation in 2010 
we began the phased roll out of our new 
oracle enterprise resource planning  
erp system tempo technology to 
empower the petrofac organisation 
launched a groupwide customer relationship 
management tool and in saudi arabia  
investing in advanced 
technology for  
integrating systems
in november 2010 petrofac 
began its phased roll out  
of project tempo our new  
erp system and our indian  
and malaysian offices were  
the first to ‘go live’
the next stage will be  
the implementation in  
our uk businesses
the new resource allows us  
to consolidate core business 
data and replaces more than  
20 existing legacy systems  
by standardising many 
practices it will make us  
more productive efficient  
and responsive to customers 
the system which was  
in planning for 18 months  
has the scalability and 
robustness to support 
petrofac’s future needs
ensures our future  
systems are integrated 
and streamlined
and abu dhabi introduced intranetsupported 
quality management systems 
groupwide systems enable us to implement 
unified processes across the company 
– such as our new global performance 
management capability which includes a 
common behavioural competence framework 
and clearer visibility of development needs 
such consistency helps bind our growing 
international business together and improves 
our customers’ service levels
overview 14    petrofac annual report and accounts 2010
we seek the best  
and brightest people
our differentiating culture
petrofac’s people are the key to 
our success 
our employees believe in and live our 
company values petrofac people are  
safe ethical innovative costconscious 
responsive to customers and focus 
relentlessly on delivering results this is not 
just our view our most recent employee 
survey 2009 showed 91 of participants 
support petrofac’s values this strong 
support reflects the high level of employee 
equity with almost one third being members 
of our share incentive schemes 
our common values and purpose do not 
mean we are all the same we embrace 
diversity reflecting the international nature  
of our operations and customer base  
our employees are drawn from more than  
70 nationalities
as we grow maintaining the unique 
‘dna’ of our business and the strength 
of our people’s commitment will be  
central to our continuing success 15    petrofac annual report and accounts 2010
people in petrofac
developing our people is  
a business priority it helps 
retain the best employees  
and ensures we have  
the right technical and 
managerial skills to deliver 
our projects and grow our 
company in 2010 our talent 
management programme 
supported every level of 
employee we introduced 
systems to improve individual 
development plans for all  
staff designed challenging 
programmes for recent 
graduate recruits created  
a leadership development 
programme with the london 
business school and held  
a leadership conference for 
around 70 senior managers
and invest  
in their future 
with us
overview 16    petrofac annual report and accounts 2010
chairman’s statement
2010 has been another very successful year for petrofac our track 
record for delivery our strategic focus on areas of sustained demand 
our increasing capabilities and scale and our strong relationships have 
again contributed to record results revenue increased by 19 to 
us4354 million and net profits rose by 58 to us557 8 million 17    petrofac annual report and accounts 2010
the global marketplace
these results were achieved despite 
continuing worldwide economic uncertainty 
our performance was assisted by a healthy 
demand for energy during the year from both 
established and developing economies the fact 
that many of our customers are national oil 
companies which have continued to press on 
with capital investment was also beneficial in 
2010 notwithstanding it is important to remain 
very aware of the continuing weakness in the 
world economy the threat of tightening trade 
barriers and of escalating tensions in volatile 
regions are potential risks to economic growth
the tragic explosion on the deepwater horizon 
drilling rig in the gulf of mexico last april 
underlined the risks in our industry the 
resulting spill from the macondo well and its 
environmental commercial and political impacts 
are a reminder of the challenges we face every 
day – and the constant need for vigilance this 
event has changed perceptions of our industry 
and the way it operates highlighting the 
importance of the relationship between oil 
companies and the contracting industry 
our progress in 2010
key milestones demonstrated the value of our 
clear and consistent strategy during the year 
major new business awards – including a 
us600 million gas sweetening facilities 
contract for qatar petroleum and two projects 
for the kuwait oil company worth a total  
of us830 million – indicated the strength  
of our service offering
other contracts fulfilled longheld strategic 
ambitions our contract with petrom in romania 
covering the ticleni oilfield and its satellite 
fields for example marked the first production 
enhancement services contract for our 
production solutions business which has been 
assessing such opportunities for some time 
during the year we made important stepouts 
into new markets we began working on 
a new contract marking our entry into iraq  
and completed the conversion of the second 
phase of the us34 billion contract for  
the south yoloten field in turkmenistan 
new investments supported our strategic 
ambitions our alliance with seven energy  
a leading nigerian production and development 
company gives us the opportunity to develop 
a local presence in nigeria our commitment 
to extending our service offering saw us buy 
two uk businesses in renewable energy 
alongside two other complementary 
acquisitions in the year 
the successful demerging of our uk 
continental shelf assets to a new company 
enquest plc emphasised the validity of our 
energy developments business’ ‘build and 
harvest’ strategy the demerger was of 
significant commercial benefit to petrofac 
shareholders who at the time of demerger 
received one enquest share for every  
petrofac share owned representing 45 
ownership of enquest plc at the time of  
its initial public offering
supporting our customers
we have continued our policy of maintaining  
a conservative balance sheet with strong 
cash reserves and minimal debt we believe 
that such financial strength acts to reassure 
customers that we are here for the longterm
our longterm contribution to customers is 
also apparent in our fundamental commitment 
to employing as many local people on our 
projects as we can in addition our ability  
to provide training programmes and facilities  
help our customers to create national 
workforces with indigenous workers  
being equipped for a lifetime’s employment 
providing economic benefit to individuals  
and their wider communities 
building a sustainable business
when a company grows as fast as petrofac 
has it is vital that internal processes and 
systems develop accordingly in 2010 we  
took further steps to ensure that our business 
maintains the efficiency of its core systems
to enable petrofac to continue to be led and 
staffed by able and experienced men and 
women we strengthened our recruitment 
development and succession planning 
processes across the business
working in an exacting industry in challenging 
conditions and geographies on increasingly 
complex projects taking risk is an integral  
part of what we do to manage such risk 
effectively in 2010 petrofac’s board risk 
committee again deepened its oversight role 
while the wider business further embedded  
its risk management procedures and systems
dividends
the company proposes a final dividend of 
3000 cents per ordinary share for the year 
ended 31 december 2010 2009 2510 cents 
which if approved will be paid on 20 may 
2011 to eligible shareholders on the register  
at 26 april 2011 shareholders who have not 
elected before 4 march 2011 to receive 
dividends in us dollars will receive a sterling 
equivalent of 1842 pence per ordinary share 
together with the interim dividend of 1380 
cents 2009 1070 cents equivalent to 891 
pence this gives a total dividend for the year  
of 4380 cents per ordinary share 2009 3580 
cents an increase of 223
our board
our customers and employees come from 
numerous geographies and cultures it is 
essential that our board reflects that diversity 
in 2010 two new nonexecutive directors 
thomas thune andersen and stefano cao 
brought valuable fresh experience and ideas to 
our board having directors with a broad range 
of experiences and perspectives enables us to 
learn from each other and grow this year we 
complemented that learning with an external 
board evaluation one of the outcomes of this 
useful exercise was a commitment to a greater 
focus on strategy consequently the time 
devoted to strategic discussion has doubled
the necessary reinvigoration of the board has 
continued in 2011 with the addition of andy 
inglis recently appointed chief executive of 
energy developments and production 
solutions and a former bp board director 
roxanne decyk whose long executive career 
included 11 years with the royal dutch shell 
group has recently joined the board as  
a nonexecutive director norman murray 
chairman of cairn energy plc and cofounder 
and former chairman of morgan grenfell 
private equity limited has also joined our 
board and subject to shareholder approval 
will succeed me as chairman following the 
conclusion of the agm on 13 may in line  
with petrofac’s rotation policy i am stepping 
down after six fascinating and highly enjoyable  
years i have no doubt that andy norman and 
roxanne will each make a significant individual 
contribution to the board and i wish them well
in another change kjell almskog will also retire 
from the petrofac board this year i would like 
to thank kjell for his significant contribution 
during his six years on our board most 
recently as senior independent director
our people
in my time with petrofac the business has 
changed and grown enormously what has not 
changed has been the commitment diligence 
and ownership displayed by our men and 
women such attributes may be due to the fact 
that with more than 30 of employees being 
shareholders or participants in share schemes 
many do literally ‘own’ the business i would 
like to pay heartfelt tribute to our people and to 
the professional way they deliver high quality 
solutions to our customers in some of the most 
challenging locations in the world they have 
created an absolutely exceptional firm
outlook
2010 has been an exceptional year for us  
with a record intake of new orders which gives 
us outstanding revenue visibility and brings 
exciting opportunities for us to develop our 
capability and to deliver it into new markets
with this strong financial underpinning our 
differentiated and competitive offering and  
our proven excellence in project execution  
we are confident that we will continue to  
deliver superior value for our customers and 
sectorleading returns for our shareholders
i thank our shareholders customers and 
suppliers for their support in 2010 and for my 
entire time as chairman i am confident that 
petrofac will continue to deliver outstanding 
performance in the years ahead
rodney chase
chairman
chairman’s statement
business review 18    petrofac annual report and accounts 2010
petrofac’s group chief executive ayman asfari  
comments on the progress made by the company  
during 2010 and its plans for the future
interview with the group chief executive 19    petrofac annual report and accounts 2010
petrofac has delivered another 
exceptional set of results  
why was 2010 such a good year
many factors played a part significant 
contract wins moves into new geographies 
and the successful completion of a number  
of projects fundamentally however we 
delivered record results once again because 
we remained focused on our customers  
on attention to detail and on excellence in 
delivery and execution
what were the highlights
the year’s highlights and they occurred  
right across the petrofac group were all 
characterised by us breaking new ground
we reaped the first rewards of our ‘build  
and harvest’ strategy with the demerging  
of our uk continental shelf ukcs assets  
to enquest plc where they were combined 
with the ukcs assets of lundin petroleum 
ab in a separate listed entity this crystallised 
a significant gain for petrofac demonstrated 
the value of our investment model and also 
enabled petrofac shareholders to participate 
as shareholders in a production and 
development company which has since  
gone on to create even more value as a  
public company
commencing work on the second phase  
of the south yoloten gas processing plant 
construction project in turkmenistan  
a new and important market for petrofac  
was another milestone the us34 billion 
engineering procurement and commissioning 
project is the largest lumpsum turnkey 
contract that we have ever signed we are 
very pleased to be working with turkmengas 
the stateowned national gas company on 
this project and our initial planning and setup 
studies have given us confidence that we can 
maintain our high standards and first class 
project delivery for this worldscale project 
which is due to be completed in 2013 
our production enhancement services 
contract for the ticleni oilfield in romania 
was another breakthrough the 15year 
contract which we estimate will be worth 
us270 million in the first five years involves 
us taking full operational responsibility  
for this mature field on behalf of petrom 
romania’s largest oil  gas group it marks 
both our first production enhancement 
services contract something we had been 
targeting for some time and our first project 
in romania
another advance came with our 
appointment by total to develop the  
laggan tormore gas processing plant  
on the shetland islands the £500 million  
award is our first predominantly lumpsum 
engineering procurement and construction 
contract in the uk and is a significant award 
for our offshore engineering  operations 
business which will also draw on the  
support of our established engineering  
construction business to deliver the project
another great moment was the inauguration 
of syria’s national training centre the 
country’s first ever oil  gas training facility 
which we designed refurbished and 
equipped the inauguration event coincided 
with our annual investor trip and around  
50 investors and financial analysts were 
present when the syrian prime minister  
his excellency mohammad naji ottri 
inaugurated the facility our gift of the centre 
to the syrian government in support of  
its drive to develop more skilled oil  gas 
personnel was the most significant donation 
we have ever made and emphasised our 
commitment to the communities in which  
we work
as well as these exciting new projects and 
awards we kept our focus on execution  
we successfully completed the ebla gas 
plant in syria for petrocanada two months 
ahead of schedule and have substantially 
completed the jihar gas plant in syria  
for the hayan petroleum company the 
harweel cluster development for petroleum 
development oman the mina alahmadi 
refinery pipelines project for kuwait oil 
company and the in salah gas compression 
project for sonatrach bp and statoil in algeria
petrofac is changing as it grows  
in 2010 for example you extended 
your service offering and moved into 
new countries what is your growth 
strategy
petrofac is still a focused oil  gas business 
operating mainly in the upstream sector  
we are changing but in an evolutionary way 
our growth strategy has two main elements 
first it will be built on deepening our 
competencies in order to become more 
active across the entire value chain we will 
also continue to pursue opportunities in new 
countries where we see potential for growth 
and development 
how do you intend to operate across 
the ‘entire value chain’
we want to deepen and extend our capability 
so that we can operate much more widely 
across the life cycle of an asset from concept 
definition and drilling management to 
delivering a turnkey development 
that process has been under way for some 
time our engineering and construction roots 
are now complemented by other strengths 
such as our strong operations management 
training and consulting businesses in 2010 
our appointment by the malaysian national oil 
company petronas to develop the sepat 
offshore early production system and our 
move into the field development programme 
for the second phase of the cendor project 
also in malaysia significantly expanded our 
offshore engineering activity 
interview with the group chief executive
business review 20    petrofac annual report and accounts 2010
we believe we can create additional  
value for our customers by integrating 
services and delivering them through a 
different serviceled approach this will  
give customers the full capability they need  
while enabling them to retain full ownership  
of their resources 
our contract to lead the development of the 
berantai field which we signed just after the 
yearend shows the potential for this type  
of integrated service contract and how it can 
generate additional value for both customers 
and for us we will develop and operate the 
berantai field offshore malaysia again for 
petronas for seven years after the first 
production of gas alongside two local 
partners we will be responsible for providing 
and integrating a full range of services –  
from design and construction to subsurface 
technical services and operations
the innovative commercial framework 
whereby petronas retains full ownership 
of its resources while our returns are linked  
to the delivery of the project illustrates our 
commercial flexibility and commitment to 
creating true alignment with the objectives  
of resource holders
interview with the group chief executive 
continued
how swiftly do you intend to expand 
geographically
building foundations in new markets as we 
did in turkmenistan nigeria and iraq in 2010 
is a major focus to ensure that we get  
it absolutely right for our customers and 
shareholders we are expanding in a very 
measured way geographically aiming to  
add a selected number of markets each year 
in 2010 you made a number  
of relatively small acquisitions  
are you actively looking for further 
acquisitions
we are interested in making acquisitions  
but only those that fulfil a strong strategic 
rationale or offer real synergies as we grow 
our new energy businesses co2deepstore 
limited a leading developer of co2 storage 
projects and tnei services limited a 
renewable energy specialist for instance 
offer a platform for potential future growth  
in the emerging low carbon world
as you evolve how will you maintain 
the core qualities that have made 
petrofac successful
in the coming years we expect to recruit many 
thousands more staff as our organisation 
expands retaining our unique culture and 
being true to our values will be essential
this culture or ‘dna’ encompasses important 
things like taking ownership of problems 
keeping a relentless focus on project  21    petrofac annual report and accounts 2010
“ there is no doubt that in the last 30 years  
petrofac has achieved a great deal but if we stay 
focused on execution and delivery as i am sure  
we will we have a fantastic journey ahead”
execution being safe and responsive to  
our customers and maintaining a focus on 
close management of costs if we get these 
fundamental aspects of our business right 
then we have a strong foundation from which 
to grow
while we are developing new capabilities  
and executing our differentiated business 
model particularly in the areas of offshore 
engineering and providing integrated services 
for resource holders we remain as committed 
to the core activities that have made us 
successful so far we will go on growing  
our lumpsum turnkey and operations 
management activities in both existing  
and new markets
you have invested in strengthening 
your internal systems this year with 
for example the first rollout of 
petrofac’s groupwide enterprise 
resource planning erp system  
and new hr processes why was 
this necessary
petrofac has grown very fast within six years 
of our initial public offering we have achieved 
more than a sevenfold increase in market 
capitalisation and have more than doubled 
our employee headcount 
so our systems must be robust they must 
allow petrofac to be consistent and scalable 
support strong governance and effective risk 
management and help us to ensure we have 
the right people with the right skills both now 
and in the future 
the strengthening of our corporate functions 
and systems so they serve as a stronger 
resource for the business has been a 
continuing priority for a number of years 
throughout this process we have identified 
what is already working well and have acted 
to enhance it and spread best practice 
throughout the organisation central to this 
development is the implementation of our 
new erp system ‘tempo’ technology to 
empower the petrofac organisation but  
this was not simply imposed on the business 
instead we chose the very best processes 
from those already operating in the business 
and tailored the system around them we  
are determined that our corporate functions 
should support our entrepreneurial business 
style not just be a bureaucratic overlay to it
petrofac attracted major oil  gas 
executives to its board this year  
in both executive and nonexecutive 
roles see page 70 for details 
what do they bring to the company
they bring many things not least a deep 
knowledge of the industry and a thorough 
understanding of customer needs having 
come from international oil companies 
more importantly they bring experience of 
how some of the world’s most successful 
companies think and work i am sure that 
they will provide invaluable insights that will 
help us as we continue to develop our own 
organisation
our new directors are building on strong 
foundations i would like to thank our 
outgoing chairman rodney chase who  
has led our board very effectively for six  
years and in this time has made a significant 
contribution to our success also retiring from 
our board at the agm is senior independent 
director kjell almskog kjell has served on 
our board for six years and i thank him for  
his valued contribution during this time 
why are major industry figures 
attracted to petrofac
i think we are becoming an increasingly 
attractive employer for staff at all levels 
people see us as doing things differently  
to others in the industry they are joining us 
because they want to be part of our success 
and to contribute to our future growth
what do you believe has 
characterised petrofac’s success  
to date
our success is rooted in our people and our 
culture we have a great team of exceptional 
individuals who are very motivated and 
driven they personify the petrofac culture 
and values 
the high level of employee share ownership 
also helps explain why we are different –  
and our success almost one in three of  
our people participate in one or more of  
our share schemes and i believe that this 
creates a huge degree of alignment between 
employees the company and our external 
shareholders they all share one aspiration  
of building longterm sustainable value 
although we have continued to make great 
progress we remain vigilant to complacency 
and are focused on continually developing  
our people and evolving our business to  
stay at pace with the changing needs of  
our customers 
2011 marks the 30th anniversary of 
the foundation of petrofac and the 
20th anniversary of you joining the 
company can petrofac remain 
successful over the longterm
absolutely the 2010 annual report theme 
– ‘we’ve come a long way but the journey is 
just beginning’ – is absolutely right before we 
look forward i would like to briefly look back 
and thank everyone who contributed to our 
journey over the last three decades especially 
ralph martin who passed away in february 
this year as one of petrofac’s original 
founders ralph was an inspiration to everyone 
that knew and worked with him we all miss 
him a great deal 
there is no doubt that in the last 30 years 
petrofac has achieved a great deal but if we 
stay focused on execution and delivery as i 
am sure we will we have a fantastic journey 
ahead in the coming years i am confident 
that we will continue to create value for  
our shareholders and maintain our strong 
growth trajectory i am looking forward to 
participating in this next stage of our journey
ayman asfari
group chief executive
interview with the group chief executive
business review 22    petrofac annual report and accounts 2010
petrofac’s range of services meets our customers’ 
needs across the full life cycle of oil  gas facilities 
our successful track record spans 30 years and 
several hundred projects and is firmly based on  
a partnership approach an absolute commitment 
to health and safety and respect and responsibility  
for the communities in which we operate
operating review business review
23    petrofac annual report and accounts 2010
we have delivered against a consistent strategy our vision  
is for petrofac to be the global oil  gas industry’s premier 
facilities and infrastructure provider admired by customers 
and employees for delivering consistently and rewarding 
excellence
strategy
this means
  working to worldclass standards
  focusing always on customer satisfaction
  respecting the environment and being 
sensitive to the communities in which  
we work
  promoting and rewarding on merit
safety and integrity
services across the asset life cycle
new regions
integrated services for resource holders
training and hiring local resources
attracting and retaining key personnel
acquiring complementary businesses
we aim to achieve our vision by delivering 
against seven key strategic initiatives  
our progress during the year and some  
of our future plans are outlined in the  
following pages
our 
strategic 
initiatives
operating review  24    petrofac annual report and accounts 2010
our strategic initiatives
providing a range of services 
across the life cycle of the 
energy asset
we aim to provide a range of services 
that meet our customers’ needs across 
the life cycle of oil  gas assets our 
services include the design and build  
of oil  gas facilities the operation 
maintenance and management of 
facilities and personnel training
developments during 2010
the award of a contract in october 2010  ■ ■
for the development of the laggan tormore 
gas processing plant on the shetland 
islands forms part of the strategic growth 
plan for the offshore engineering  
operations business being our first 
predominantly lumpsum engineering 
procurement and construction epc 
contract in the uk continental shelf 
ukcs we are confident that the 
combination of our ukcs operations 
maintenance and engineering experience 
and our engineering  construction  
epc track record can deliver success  
in this market
in december 2010 we were awarded a ■ ■
contract for the development of the sepat 
offshore early production system on the 
east coast of peninsular malaysia the 
contract represents our first major offshore 
engineering procurement construction 
installation and commissioning epcic 
contract and builds upon our  
offshore experience gained on energy 
developments’ don and cendor projects
through acquisition see pages 45 and 48 ■ ■
for more detail we have made the first 
steps to position ourselves in the renewable 
energy and low carbon sectors which have 
the potential to be a material market for us 
over the longterm
future milestones
our first major epc award in the ukcs  ■ ■
and our first significant offshore epcic 
contract give us the opportunity to build 
our credentials in these areas
we will continue to review opportunities  ■ ■
to expand our service offering to meet  
our strategic goals
maintaining and  
improving our high safety 
and integrity standards 
wherever we work
we operate in some difficult and hazardous 
environments and the safety of our people  
is paramount at all times we aim to provide  
a safe working environment for all operations 
that are designed constructed operated 
managed or supported by petrofac
developments during 2010
we designated 2010 as the year of integrity ■ ■
and quality across our engineering 
businesses and created the role of director 
of integrity to champion best practice 
technical integrity was also the theme  
of our annual safety seminar which was 
attended by 90 senior managers including 
our group chief executive group chief 
operating officer and our seven business 
unit managing directors
during the year our employees and ■ ■
subcontractors completed 76 million 
manhours 2009 70 million of activity  
our lost time injury and recordable injury 
frequency rates are key performance 
indicators and are reported on page 29  
and summarised as follows
our recordable incident frequency rate  ■ ■
for 2010 fell considerably to 018 per 
200000 manhours 2009 036 which 
compares well with industry published 
data our lost time injury frequency rate 
was slightly higher at 0026 per 200000 
manhours 2009 0020 after four 
successive years of improvement to 2009
the 2010 lost time statistics above include ■ ■
one fatality which is detailed on page 60
future milestones
our health and safety performance is ■ ■
reviewed in full on pages 60 and 61 in  
the corporate social responsibility report 
through campaigns such as ‘horizon zero’ 
we are committed to improving our safety 
performance 25    petrofac annual report and accounts 2010
developments during 2010
throughout 2010 we worked on  ■ ■
the us100 million first phase of the  
south yoloten project for turkmengas  
in turkmenistan following the successful 
completion of the first phase we 
commenced the 315 month us34 billion 
second phase in late december 2010 
turkmenistan is a market where we  
will be able to draw on our extensive 
experience of designing and constructing 
facilities to handle and process sour gas 
see page 40 for more detail
we began working on our first major project ■ ■
in iraq for an international oil company in 
mid2010 undertaking the engineering 
procurement fabrication and construction 
management services for the development 
of a new early production system
while remaining focused on our key markets 
of the ukcs the middle east and africa  
the commonwealth of independent states 
and the asia pacific region we aim to expand 
into new countries and regions that offer 
exciting growth opportunities particularly 
where they are in close proximity to our 
existing operations
in november 2010 as well as acquiring a ■ ■
15 interest 126 on a fully diluted basis 
the group entered into a strategic alliance 
agreement with seven energy a nigerian 
production and development company to 
assist in the development of its production 
processing and transportation assets  
we have been examining how to establish 
an ongoing local presence in nigeria a 
high growth market for a number of years 
and we believe that this partnership gives 
us a platform to do so see page 45 for  
more detail
future milestones
we aim to build upon our positions in ■ ■
turkmenistan iraq and nigeria over the 
next few years as we anticipate significant 
capital and operational expenditure in  
these markets
we will continue to look at measured ■ ■
expansion into new countries and regions 
for example central africa
expanding our offering into 
new regions prioritising 
areas with major 
hydrocarbon reserves and 
significant capital and 
operational expenditures
operating review 
business review 26    petrofac annual report and accounts 2010
our strategic initiatives 
continued
providing fully integrated 
services for resource 
holders under flexible 
tailored commercial 
models which leverage 
our service capability and 
may include the provision 
of capital
drawing on the extensive capabilities  
of the wider group through our energy 
developments and production solutions 
business units we seek to provide fully 
integrated services for resource holders 
under flexible commercial models that 
are aligned to their specific requirements 
developments during 2010
a key part of energy developments’ ■ ■
strategy is to consider divestment  
or ‘harvest’ of assets once they have been 
developed following the commencement 
of oil production and significant progress 
on commissioning of the production 
infrastructure on the don fields in the ukcs 
in 2009 and early 2010 we disposed of our 
interests through the enquest demerger  
in april 2010 thereby realising significant 
value for our shareholders see page 46  
for more detail
through production solutions we secured ■ ■
our first production enhancement contract 
in july 2010 for the ticleni oilfield and  
its eight satellite fields in romania  
our services will cover a range of 
operations drilling management 
production engineering facilities upgrade 
and training skills to increase production 
through improving recovery rates 
optimising operational efficiencies  
and investing to upgrade the facilities  
see page 44 for more detail
in early 2011 we were awarded a risk ■ ■
service contract rsc for the development 
of the berantai field offshore peninsular 
malaysia the rsc represents a departure 
from the established production sharing 
contract psc framework in malaysia  
we aim to demonstrate how the  
integrated delivery of our services can  
add significant value for resource holders 
under this alternative commercial framework  
see page 48 for more detail
future milestones
we plan to create significant growth in  ■ ■
the group and value for our shareholders 
through the provision of integrated services 
to resource holders
training and hiring local 
resources where we operate 
to help develop national 
workforces
there is an increasing demand from 
resource holders to use and develop 
local workforces as they seek wider 
economic benefit from the development 
of their energy infrastructure we  
believe that understanding how to 
harness local resources effectively 
is key to our success
developments during 2010
the use of local resources through  ■ ■
direct employment and the use of local 
subcontractors is becoming increasingly 
important in many of the countries in which 
we operate aided by our training capability 
we have a long track record of working  
with local workforces and subcontractors
in turkmenistan for example the  ■ ■
incountry team on the south yoloten 
project has more than 70 local content 
which represents a significant achievement  
in a country where the development of  
oil  gas reserves is in its early stages
in october we opened a stateoftheart ■ ■
technical training centre in syria which  
we designed refurbished and equipped 
and which we will operate for five years 
the centre part of the syrian government’s 
commitment to develop competent 
personnel for the growing oil  gas sector 
has been donated by petrofac as part of 
our longterm commitment to csr and 
training see page 66 for more details
future milestones
in late 2010 we commenced training ■ ■
operations at a facility in hassi messaoud 
algeria in the years ahead we will  
look to train algerian workers in piping 
mechanical electrical and instrumentation 
disciplines to support our activities in  
the country 27    petrofac annual report and accounts 2010
identifying acquiring and 
growing complementary 
businesses where they 
expand our skill set and 
support our strategic goals
we have acquired 12 businesses in the 
last ten years to broaden our capability 
acquisitions have been in the areas of 
training operations and maintenance 
well operations management production 
enhancement and the renewable energy 
and low carbon sectors
developments during 2010
in january 2010 we acquired scotvalve ■ ■
services limited scotvalve which 
provides servicing and repair for oilfield 
pressure control equipment scotvalve  
is headquartered in aberdeen but its 
interests in the middle east and north 
africa enable offshore engineering  
 operations to provide repair and 
maintenance services within a wider 
geographic footprint
in april 2010 we acquired stephen ■ ■
gillespie consultants limited sgc  
which designs and manufactures metering 
systems sgc brings specialist capability 
and systems that will expand and 
differentiate offshore engineering  
operations’ offering in metering services 
and enable us to provide managed 
solutions for our customers
the acquisitions of tnei services limited ■ ■
tnei a specialist consultancy supporting 
the energy power and renewable sectors 
and co2deepstore a company focused 
on the co2 geological storage sector of  
the carbon capture and storage market 
represent the first steps in positioning  
us in the renewable energy and low  
carbon sectors see pages 45 and 48  
for more details
future milestones
we will continue to review acquisition ■ ■
targets which broaden and deepen  
the capability of the group
attracting and retaining 
specialists and key personnel
we are a people business and skilled 
personnel remain in high demand 
policies to promote and reward on merit 
targeted but extensive employee share 
ownership a portfolio of worldclass 
projects and exciting prospects are  
key to our continued success
developments during 2010
petrofac has continued to be successful  ■ ■
in accessing international labour markets 
including graduates in particular in the 
middle east and the indian subcontinent 
we grew our headcount from 11700 at  
the beginning of the year to approximately 
13900 at 31 december 2010
the capacity and capability of our  ■ ■
largest reporting segment engineering  
 construction has substantially  
increased over the year with an increase  
in epc headcount
1
 from 5600 to 7 000
our share ownership plans play an ■ ■
important role in helping to attract and 
retain key personnel and in encouraging  
a culture of personal responsibility that is  
critical to our success we extended the 
reach of our share plans during the year 
and now have around 3900 participants 
31 december 2009 3000 representing 
around 30 31 december 2009 28  
of the eligible workforce
future milestones
we plan to continue to broaden and ■ ■
strengthen our senior management team 
and to grow headcount particularly in 
engineering  construction through our 
existing operational centres which will  
be supported by building a second tower 
adjacent to our largest operational centre  
in sharjah uae and by opening a third 
office in india in delhi
1  epc headcount is defined as headcount of the engineering  construction reporting segment and the headcount 
of the mumbai chennai and jakarta offices that are managed through engineering services but primarily support 
engineering  construction
operating review 
business review 28    petrofac annual report and accounts 2010
key performance indicators
to help the group assess its performance the  
board and executive management set annual  
kpi targets and monitor and assess performance 
against these benchmarks every month  
throughout this business review performance  
is assessed against these kpis the annual  
measures of which are presented here
revenue
measures the level of operating activity 
and growth of the business
revenue for the year as reported in  
the consolidated income statement
ebitda
including the gain on  
the enquest demerger
ebitda means earnings before interest 
tax depreciation amortisation and 
impairment and provides a measure of 
the operating profitability of the business
ebitda is calculated as profit before  
tax and net finance income as per  
the consolidated income statement 
adjusted to add back charges for 
depreciation amortisation and 
impairment charges as per note 3  
to the financial statements
net profit  
excluding the gain on  
the enquest demerger
provides a measure of the net 
profitability of the business that is  
profit for the year attributable to  
petrofac limited shareholders
profit for the year attributable  
to petrofac limited shareholders 
excluding the gain on the enquest 
demerger as reported in the 
consolidated income statement
us millions us millions us millions 
08 09 10
3330
3655
4354
08 09 10
4190 
5497
7594
08 09 10
2650
3536
4330 29    petrofac annual report and accounts 2010
return on capital 
employed roce
roce is a measure of the efficiency 
with which the group is generating 
operating profits from its capital
roce is calculated as ebita earnings 
before interest tax amortisation and 
impairment charges calculated as 
ebitda less depreciation per note 3  
to the financial statements divided by 
average capital employed being total 
equity and noncurrent liabilities per 
the consolidated balance sheet
 cents per share cash generated  
from operations 
us millions
 
cash conversion 

earnings per share 
diluted eps
eps provides a measure of net 
profitability of the group taking  
into account changes in the capital 
structure for example the issuance  
of additional share capital
as reported in the consolidated income 
statement and calculated in accordance 
with note 7 to the financial statements
cash generated from 
operations and cash 
conversion
these kpis measure both the  
absolute amount of cash generated 
from operations and the conversion  
of ebitda to cash
cash generated from operations is  
as per the consolidated cash flow 
statement cash conversion is cash  
from operations divided by ebitda 
excluding the gain on the enquest 
demerger in 2010
lost time injury and 
recordable injury 
frequency rates
provides a measure of the  
safety performance of the group 
including partners
lost time injury lti and recordable 
injury ri frequency rates are measured 
on the basis of reported lti and ri 
statistics for all petrofac companies 
subcontractors and partners expressed 
as a frequency rate per 200000 
manhours we aim to continually 
improve our safety record but our  
target for these measures is zero
backlog
the group uses this kpi as a measure  
of the visibility of future earnings 
backlog consists of the estimated 
revenue attributable to the uncompleted 
portion of lumpsum engineering 
procurement and construction contracts 
and variation orders plus with regard  
to engineering services and facilities 
management contracts the estimated 
revenue attributable to the lesser of 
the remaining term of the contract  
and in the case of lifeoffield facilities 
management contracts five years 
backlog is not an audited measure 
other companies in the oil  gas industry 
may calculate this measure differently
employee numbers
provides an indication of the group’s 
service capacity
for the purposes of the annual report 
employee numbers include agency 
contract staff and the group’s share  
of joint venture employees
us millions number of employees recordable injury  
rates per 200000  
manhours
lost time injury  
rates per 200000 
manhours
08 09 10
527
469
652
08 09 10
77 11
10319
16246
08 09 10
5866
12763
2073
08 09 10
1400
2283
327
08 09 10
0033
0020
0026
08 09 10
3997
8071
11699
08 09 10
11100
11700
13900
08 09 10
032
036
018
operating review 
business review 30    petrofac annual report and accounts 2010
enterprise risk management 
and key risks
the management of risk is critical to the achievement 
of our corporate objectives without a robust risk 
management framework we could not for example 
maintain our high safety and integrity standards or 
continue to grow and expand our range of services 
both technically and geographically
over and above the achievement of our 
corporate objectives the management of  
risk is a crucial element of our competitive 
advantage and the subsequent creation 
and preservation of shareholder value our 
commerciallyinnovative and flexible business 
model which generates differentiated returns 
can involve taking on additional risk where  
it can be quantified and managed as a  
result efforts to make our enterprise risk 
management system comprehensive and 
robust are given high priority within the group
the group’s focus on risk was emphasised  
at our 2010 leadership conference where 
senior management made a review of our  
risk management system one of the group’s 
top priorities for 2011 recommendations  
for change will be presented to the board  
and outlined in the 2011 annual report and 
accounts the coming review is especially 
relevant given the 2010 publication of the 
financial reporting council’s new uk code 
which introduced a number of changes 
including a more explicit requirement on 
company boards to articulate risk appetite 
and identify the significant risks they are 
prepared to take
enterprise risk management system
our enterprise risk management system is 
designed to ensure that all significant risks 
to our reputation and shareholder value are 
appropriately monitored and mitigated in line 
with the board’s policy these risks fall into 
three areas
industry risks – the systemic exposure to ■ ■
fluctuations in core commodity prices and 
demand for our services these risks are 
reviewed and managed directly by the 
board and our senior management team
country risks – the exposure to external ■ ■
country factors that are inherent in  
the environments in which we operate 
including security political risk legal risk 
and transparency bribery and corruption 
exchange rates and local infrastructure  
project teams ensure these risks are 
reviewed and appropriate responses  
are built into the structure of the project 
execution and contracting model  
wherever possible our corporate functions 
monitor this risk environment and the risk 
committee of the board provides additional 
review and oversight the board retains 
approval authority for any significant new 
country entry
projectspecific risks – pertaining to  ■ ■
the execution of projects including  
technical risk budget and schedule risk 
performance guarantee levels safety risk 
and environmental risk these risks are 
directly managed by our project teams 
they are also considered during the risk 
review process which reviews all new 
business proposals before any formal 
commitments are entered into our 
business unit managing directors and  
their management teams report on  
discrete execution risks to the executive 
management team at the monthly 
executive committee excom meetings  
a summary of the discrete risks reviewed 
are reported to the board at each 
scheduled meeting through this review 
process a constant focus on maintaining 
and improving our execution capability  
is ensured
board level review
the board has ultimate responsibility for 
managing risk its role is to ensure that the 
group defines its risk appetite maintains  
a sound system of risk management and 
internal controls and satisfies itself that 
appropriate systems are in place to identify 
assess and manage key risks in accordance 
with the terms of the new uk code 31    petrofac annual report and accounts 2010
in order to fulfil its responsibilities the board 
receives assurance from the following 
processes and committees
direct board level risk review
the board directly reviews risk reports from 
each petrofac business at every scheduled 
board meeting these reports cover all areas 
of risk but focus on project execution risks 
they provide the board with an update on 
specific discrete risks to our interests and the 
management strategies deployed to mitigate 
them more details about the risk matrices 
produced by each business and reviewed  
by the board are found on page 77 
risk committee and audit committee
these committees focus on the overall 
balance of risk and the risk management 
systems within the company
the risk committee is comprised of 
nonexecutive directors though executive 
management are in attendance its principal 
task is to review and monitor nonfinancial 
risks and to set policy and review compliance 
of the business in mitigation of these risks 
the committee achieves this through the 
approval of policies which are further discussed 
on page 77 to date the committee has 
approved three group policies a sovereign 
and financial market risk policy an ethical 
social and regulatory risk policy and an 
operational and contractual risk policy
the ongoing review of these policies and  
the consideration of group performance in 
complying with them represents the board’s 
primary forum for assessing the effectiveness 
of our risk management framework for 
example during 2010 management made  
a number of changes to its commitments  
to monitor and mitigate risk in several areas 
throughout the group including bribery and 
corruption sovereign risk counterparty risk 
and security risk 
the audit committee is also comprised of 
nonexecutive directors and among other 
responsibilities it reviews the effectiveness of 
the group’s financial and operational internal 
control systems our internal audit function 
receives all risk reports that are presented  
to the board and the risk committee and 
shares its findings with the audit committee
enterprise risk committee and  
group risk review committee
the enterprise risk committee and group 
risk review committee look at country  
and projectspecific risks associated  
with entry into certain new geographies  
or contractual commitments they are  
not formal committees of the board they  
are management committees which are  
chaired by the group chief operating officer 
and the group chief executive respectively 
the enterprise risk committee which was 
formed in 2009 focused its efforts during 
2010 on country and third partyspecific risks 
in highrisk territories a list of such highrisk 
territories was defined by the board in early 
2010 and periodic review of this list will take 
place a review now takes place where the 
group wishes to conduct new business in  
any predefined highrisk territory whether we 
have previously operated there or not in such 
cases approval is required from the group 
chief operating officer or the chief executive 
of energy developments and production 
solutions in 2010 the enterprise risk 
committee met on an ad hoc basis to 
consider country and third party risks  
in countries including iraq and nigeria  
both of which are classified as highrisk
preaward new projects and investments  
are reviewed by the business unitlevel risk 
review committee based on the delegated 
authority matrix if the new commitment is of 
significant value it will be escalated from the 
business unit committee to the group risk 
review committee which meets as often as 
is required from there approval to commit  
to the project or investment will be required 
from the group chief operating officer or the 
board primarily based on project size andor 
duration the remit of this committee extends 
beyond the consideration of new projects  
and includes
moving into new territories ■ ■
providing new services ■ ■
making capital investments ■ ■
entering lease commitments ■ ■
making acquisitions andor establishing ■ ■
joint venture relationships
business unitlevel review
significant responsibility for risk identification 
review and mitigation exists at the business 
unit level as operational teams are closest to 
the detail of our business as a result we have 
wellestablished procedures embedded in  
the organisation for the management of risk
business unit risk review committee
preaward all new projects and investments 
go through a robust risk review process at  
the business unit level the first stage involves 
review at the project team level involving bid 
risk analysis cost and schedule risk analysis 
commercial risk management plans and bid 
risk reporting subject to this review being 
completed satisfactorily the potential  
award moves to review by the business  
unit risk review committee 
the delegated authority framework defines 
the levels of review that are required based  
on the level of risk potential projects are 
approved at the business or group level  
or escalated to board level review
monthly executive committee
postaward execution is managed by our 
project teams and continuously reviewed 
within business units by our executives on a 
weekly monthly and quarterly basis issues 
arising from these sessions are picked up  
in the monthly executive committee where 
the business unit managing directors meet 
with the group chief executive and his direct 
reports to review both the performance  
of each business unit and its discrete risks 
these meetings focus on strategies to 
address and mitigate the identified risks 
these are reported to the board along with  
all discrete risks at each scheduled board 
meeting as described above
monthly risk reporting
in late 2010 we established a requirement for 
each business unit to produce monthly reports 
measuring the health of risk management 
within their business this achieves a 
bottomup consideration of strategic risk 
issues in each business rather than relying on 
board level review a combination of qualitative 
and quantitative measures are taken of the 
following seven factors
the risk to achievement of the annual ■ ■
business plan and targets
the level of market risk and competition ■ ■
the level of customer relationship risk ■ ■
the level of commercial and contractual risk ■ ■
the level of execution risk ■ ■
the level of counterparty risk ■ ■
the level of resource risk ■ ■
the level of risk described in these reports will 
be incorporated into the risk report which is 
reviewed by the board as described above
key risks
the key risks that could lead to a significant 
loss of reputation or prevent us from 
executing our strategy and creating 
shareholder value are summarised here 
along with our approach to mitigating  
these risks and our progress during 2010
operating review 
business review 32    petrofac annual report and accounts 2010
enterprise risk management and key risks 
continued
industry risk description mitigation progress in 2010
level of 
demand for  
the group’s 
services 
the demand for our services 
is linked to the level of capital 
and operational expenditure 
by the oil  gas industry
as noted in the ‘operating environment’ 
section we expect the demand for our 
services to remain robust over the longterm 
our recent success in securing substantial 
new contract awards gives us outstanding 
visibility of revenues through 2011 and beyond
our continuing geographic and service 
expansion has helped to grow the size  
of the addressable market for our services
for information about how we are 
incrementally growing our geographic 
footprint and expanding our service  
offering see our strategic initiatives  
on pages 25 and 26
oil  gas 
commodity 
prices
longterm expectations of  
the price of oil  gas may 
have an impact on the level  
of new investment in the 
industry and may therefore 
affect demand for our 
services
the financial performance of 
energy developments is more 
leveraged to the price of oil  
gas through its coinvestment 
in upstream oil  gas assets 
and its financial results may 
therefore be impacted
as detailed in the ‘operating environment’ 
section demand for our services should  
not be significantly impacted by shortterm 
fluctuations in oil  gas prices and has proven 
robust despite significant volatility in oil  gas 
prices over the recent economic downturn
our formal policy to hedge a proportion  
of our direct exposure to oil  gas prices 
provides us with a degree of protection 
against fluctuations in the sale price variations 
for oil  gas
under our hedging policy we aim to hedge 
75 of our forecast production levels for  
the next 12 months using predefined 
hedging instruments and with predefined 
counterparties we will not undertake hedging 
until a development has achieved steadystate 
production
see note 33 to the financial statements for 
details of the oil  gas derivative instruments 
that were in place at 31 december 2010
availability  
of essential 
executive or 
project staff
the availability of skilled 
personnel remains one of the 
most significant challenges 
facing the oil  gas industry 
we remain confident that our policies to 
promote and reward on merit targeted  
but extensive employee share ownership 
management and technical training 
programmes and access to international 
labour markets in particular the middle east 
indian subcontinent and asia a portfolio of 
worldclass projects and exciting prospects 
for continued growth will enable us to attract 
and retain the necessary skilled personnel  
to undertake our projects in hand
we have increased the number of employee 
shareholders or participants in employee 
share schemes to approximately 3900 
2009 3000
we have decided to open a third indian 
office in delhi to tap another pool of 
resources where the shortage of skilled 
engineers is less pronounced than in 
western countries
for more information about how we 
manage this risk see our strategic  
initiatives on page 26
country risk description mitigation progress in 2010
security we operate in a number of 
countries where the security 
risk is high
our group head of security is responsible  
for undertaking reviews and establishing 
procedures for securing the safety of  
our personnel we also use specialist 
consultancies and security services to  
advise us and to provide protection
during 2010 we strengthened the resource 
dedicated to security management and 
invested in the development of sound 
security controls in key territories 
particularly iraq
we redefined the use of the enterprise  
risk committee which now focuses on 
country and third partyrisks in certain 
highrisk territories
business 
continuity
we are potentially exposed  
to inter alia natural hazards 
acts of terrorism war and civil 
unrest that could impact our 
infrastructure either through 
the unavailability of physical 
assets or disrupted access  
to systems and data
we have rigorous business continuity plans  
in place at each of our key operating centres 
which are designed to ensure continued 
access to our critical business functions
of our six key operating centres woking  
and aberdeen are fully certified and meet  
the bs 25999 certification standard 
during 2010 our aberdeen operational 
centre achieved certification of its business 
continuity system the first among its peers 
to do so
in addition the business continuity strategy 
at our sharjah mumbai chennai jakarta 
and kuala lumpur offices has been fully 
implemented and is currently undergoing 
extensive testing the certification process 
at these offices excluding kuala lumpur 
has been initiated and we expect this 
process to be completed in 2011 33    petrofac annual report and accounts 2010
country risk description mitigation progress in 2010
exchange 
rates
significant movements in 
exchange rates could impact 
our financial performance
while we operate in a number of diverse 
geographical locations the majority of our 
revenues are denominated in us dollars  
or currencies pegged to the us dollar in 
contracts priced in us dollars or currencies 
pegged to the us dollar where the group  
is procuring equipment or incurring costs  
in other currencies we aim to fully hedge 
transactional exposures using forward 
currency contracts 
offshore engineering  operations’ revenues 
and costs are principally denominated in 
sterling the group’s policy is not to hedge  
the sterling profits generated by these 
activities as they are substantially matched by 
the sterling overhead costs of our corporate 
office and other ukbased businesses 
while we report our results in us dollars  
our share price is quoted in sterling our share 
price may therefore be impacted by changes 
to the us dollarsterling exchange rate 
see note 33 to the financial statements for 
details of our foreign currency exposures 
and how they are managed 
sovereign 
change of law 
and contract 
enforcement
we operate in a number of 
countries where our ability  
to rely upon our contracts  
for protection is potentially 
reduced by the opaqueness 
of the legal system
management carefully monitors this risk 
wherever it is perceived to be significant  
we will take all reasonable measures to 
reduce and limit the exposure through the  
use of for example out of country arbitration 
advanced payments and careful cash 
management specific consideration of  
this risk is a feature of all new business  
risk reviews and is a major focus of the  
risk committee and the board
during 2010 we commenced a process to 
review the viability of securing sovereign risk 
insurance we aim to complete this in 2011
in 2010 the board also approved a new 
standard on sovereign risk 
during 2011 the board intends to define 
maximum sovereign risk exposures
breach of legal 
or regulatory 
code
we recognise the potential 
financial and reputational  
risk that could result from a 
breach of local or international 
laws particularly in respect of 
behaviour relating to bribery 
and corruption
as noted in the corporate governance report 
on page 71 we have wellestablished policies 
and procedures to address these risks 
including a code of business conduct which 
all employees are required to confirm that  
they have read and understood during 2010 
we rolled out a code of business conduct 
elearning module
management takes a riskbased approach  
to due diligence and risk assessment and  
is increasing the level of due diligence 
undertaken in respect of new contracts in 
predefined highrisk countries including 
commissioning independent investigation 
where appropriate 
during 2010 the board approved a set  
of new companywide risk management 
procedures designed to protect the 
company from exposure to bribery  
and corruption implementation of these 
new risk management procedures has 
begun and a training and communication 
programme for our employees will be  
rolled out in 2011 
during 2010 we increased our use of 
independent investigatory consultants  
in situations involving parties over which  
we have some influence for example  
joint venture partners agents subcontractors 
and in some cases our vendors as a 
consequence of some of these investigations 
we took remedial action to reduce our risk
during 2010 our board made new 
commitments to review potential exposures 
to human rights issues in our operations  
in 2011 we will review our systems for 
ensuring trade compliance with local laws 
and sanctions compliance as well as 
refreshing our code of business conduct
operating review 
business review 34    petrofac annual report and accounts 2010
country risk description mitigation progress in 2010
political risk we are exposed to potential 
regime change and civil 
unrest that could affect  
our operations
we monitor carefully the changing landscape 
of political risk particularly for countries  
that are regarded as high political risk 
environments this is also reviewed regularly 
by the board and the board risk committee
for highrisk countries our management  
will also seek to limit political risk exposure  
in individual contracts when agreeing  
terms and conditions with our customers
during 2010 we redefined the use of the 
enterprise risk committee which now 
focuses on country and third party risks in 
certain highrisk territories prior to petrofac 
committing to new projects or investments
we intend to acquire sovereign risk 
insurance in 2011
project risk description mitigation progress in 2010
contract 
performance
our financial performance 
could be materially affected 
by the performance of a 
relatively small number of 
large contracts particularly 
those which are lumpsum 
furthermore our operational 
performance is important in 
maintaining our reputation  
for successful project delivery 
we have a strong trackrecord of successful 
project execution which reflects our rigorous 
approach to risk identification and mitigation 
from tender to project completion 
our assurance frameworks for technical risk 
reviews involve the progress made on key 
projects being formally reported to the board 
and senior management on a regular basis 
our design integrity assurance process 
involves the robust challenge of design 
specifications whether or not they are defined 
by the customer including peer assessment 
we undertake ongoing reviews of integrity risk 
throughout the life of a project
our subcontractor risk management  
strategy involves the retention of competent 
subcontractors with a track record of delivery 
combined with the use of local companies as 
is often required by law we have a number  
of strong subcontractor relationships with 
proven high quality companies that we seek 
to work with wherever possible
as regards financial performance we  
do not recognise profits in the early stages  
of lumpsum contracts and we maintain 
contingencies to cover unforeseen  
cost increases
during 2010 we took steps to mitigate 
significant risk on new contracts
in turkmenistan we structured our ■ ■
contract in two stages so that we  
could measure and mitigate risk  
before committing ourselves to the  
larger epc phase
in iraq we decided not to take lumpsum ■ ■
construction risk on our first major project 
in the country instead we are working  
on a lumpsum engineering and 
procurement basis and a reimbursable 
construction management basis
our acquisition of a stake in seven energy ■ ■
has provided us with a lower risk entry 
into the nigerian market and the 
opportunity to gain experience in the 
operating environment before taking  
on an enlarged scope of work
enterprise risk management and key risks 
continued 35    petrofac annual report and accounts 2010
project risk description mitigation progress in 2010
counterparty there is a risk of commercial 
counterparties defaulting on 
payment terms or financial 
counterparties defaulting  
on deposits that we hold  
with them
in engineering  construction we typically 
receive advance payments on contracts 
which generally have positive cash flow 
profiles over the duration of the contract
in offshore engineering  operations many 
contracts are neutrallyfunded or have modest 
working capital requirements our services 
are often critical in ensuring that customers 
continue to produce oil  gas and 
consequently they are likely to honour 
contractual terms in some cases we request 
a parent company guarantee or a letter of 
credit to further mitigate counterparty risk  
in energy developments remuneration is  
from oil  gas sales to a range of customers 
including national oil companies who are 
generally wellfunded nonetheless the group 
continues to regularly monitor its receivable 
balances and take appropriate action  
where necessary
with respect to counterparty risk arising from 
other financial assets we regularly monitor 
our exposure and ensure that our financial 
assets are spread across a large number  
of creditworthy financial institutions our 
sovereign and financial market risk policy has 
established limits on counterparty exposure
further analysis of credit risk and other 
financial risks associated with or managed 
through the use of financial instruments such 
as interest rate and liquidity risk are disclosed 
in note 33 to the financial statements
at the end of 2010 we converted into  
the larger epc phase of the south yoloten 
contract in turkmenistan as this is our 
largest contract to date we have secured  
a larger than normal cash advance from  
the customer as a way of mitigating 
counterparty risk
financial counterparty exposure is now 
reviewed on a monthly basis by the  
treasury management committee and 
material exposures are monitored daily  
by group treasury 
during 2010 we redefined our financial 
counterparty limits and our risk management 
strategy of counterparty risk both of which 
were approved by the board
cost inflation unexpected inflation in costs 
could adversely impact the 
financial performance of  
our contracts
our largest exposure to cost inflation is  
in the provision of lumpsum engineering  
 construction services our exposure  
to increases in capital expenditure costs 
associated with energy developments’ 
projects is managed in a similar manner  
to lumpsum engineering  construction 
projects
the majority of the costs of our offshore 
engineering  operations and engineering 
training services and production solutions 
contracts are reimbursed by customers  
either on an actual cost basis or through  
a periodically revised schedule of rates
during 2010 we managed cash before and 
after bid submissions in the following ways
conditional on the award of a major ■ ■
contract we typically negotiate 
agreements to procure equipment andor 
arrangements with key subcontractors 
on backtoback terms where possible
expectations of wage inflation are ■ ■
factored into project costings for  
bid submissions and budgets
the group maintains contingencies  ■ ■
to cover unforeseen cost increases
health  
safety and 
environmental 
performance
a serious health safety or 
environmental incident on  
any of our projects has the 
potential to cause significant 
commercial and reputational 
damage
our strong culture of health safety and 
environmental hse awareness is central  
to our operational and business activities  
our system of business management  
and our delivery of quality and business 
excellence as we enter new geographical 
markets sometimes with new customers and 
partners and assume responsibility for new 
infrastructure it is particularly important that 
our focus on hse is maintained our financial 
exposure to a significant hse incident is 
generally mitigated through our commercial 
arrangements and insurance programme 
although an incident may have a financial 
impact on our performancebased income
during 2010 we appointed a group head 
of environment to help raise standards 
across the company and lead strategic 
environmental initiatives
as of 31 december 2010 95 of our 
facilities were accredited to iso 14001 
requirements for the environmental 
management systems they have in place
recorded incident data demonstrates  
our ongoing improvement in managing 
health and safety risks see pages  
60 and 61 for details
 
the list above does not purport to be exhaustive there may be other risks and uncertainties not presently known to us or that we currently 
deem to be less material which could affect the performance of the business
operating review 
business review 36    petrofac annual report and accounts 2010
operating environment
in contrast to the decrease in global demand  
for oil  gas in 2009 as a result of the economic 
downturn 2010 saw oil demand rise by 
approximately 32
1
 leading to a sustained  
recovery in oil prices which averaged around  
us80
2
 per barrel during the year
while such shortterm indicators are positive  
it is the medium to longterm trends in global  
energy demand and supply that are most  
relevant in shaping our operating environment
overview
the international energy agency’s iea 
‘new policies’ scenario
3
 anticipates that  
global primary demand for energy will 
increase by approximately 36 from 2008  
to 2035 or around 12 per annum growth 
is driven by nonoecd demand particularly 
in china which is now the world’s largest 
energy consumer india and the middle east 
meanwhile bp projects that world primary 
energy demand will rise by 39 over the  
next 20 years
4
 equivalent to 17 per annum 
driven by growth in the global population 
gross domestic product gdp and energy 
intensity per capita
what is common to both studies is the 
conviction that fossil fuels will remain the 
predominant means of satisfying global 
energy demand over the longterm under  
the iea’s more conservative projection albeit 
based on different assumptions demand  
for oil is expected to increase by 15 an 
average of 05 per annum to approximately 
99 million barrels per day by 2035 global 
demand for gas is expected to increase 
considerably faster at 14 per annum 
reaching approximately 4500 billion cubic 
metres per annum bcma by 2035 equivalent 
to approximately 75 million barrels of oil per day
the natural decline of existing oil  gas 
production is of even greater significance  
than the anticipated growth in demand  
for oil  gas cambridge energy research 
associates undertook a study of 1000 
oilfields and while only 40 of production 
came from fields in decline the aggregate 
decline rate applied to all fields currently  
in production was estimated at 45 per 
annum
5
 similarly in 2009 the iea estimated 
that less than one third of global gas 
production in 2030 will be met by existing 
production
6
 largescale investment in oil  
gas projects is therefore required to both limit 
and compensate for decline rates through 
enhanced oil recovery and investment in new 
developments to replace existing production 
and satisfy the expected growth in demand
1 international energy agency ‘oil market report’ 18 january 2011
2 for example brent a benchmark crude oil averaged us7950 per barrel for 2010 2009 us6167 per barrel
3  in the iea’s world energy outlook 2010 the ‘reference’ scenario which describes ‘what would happen if among 
other things governments were to take no new initiatives bearing on the energy sector’ is replaced by the ‘current 
policies’ scenario but the ‘midcase’ which is referred to here is termed the ‘new policies’ scenario which assumes 
that governments will implement the measures that they have already declared
4  bp  ‘energy outlook 2030’ january 2011 bp’s projection is “not a ‘business as usual’ extrapolation or an attempt  
at modelling policy targets instead it is built ‘to the best of our knowledge’ reflecting our judgement of the likely path 
of global energy markets to 2030”
5  cambridge energy research associates ‘the future of global oil supply understanding the building blocks’ 2009
6 international energy agency ‘world energy outlook 2009’ november 2009 37    petrofac annual report and accounts 2010
engineering  construction and engineering 
 construction ventures
driven by the operating environment 
described on page 36 investment in oil  gas 
infrastructure is expected to be more than 
us15 trillion in the period 2010 to 2035
1
 
approximately us6 trillion in excess of 
us200 billion per annum of this expenditure 
is expected to be in our core engineering  
construction markets of the cis middle east 
and africa although our current addressable 
market is a subset of the total market  
we had a successful year for new contract 
awards for engineering  construction in 
2010 with an order intake of us6 billion 
however this represents a relatively small 
share of this large and growing market  
our strategy is to move incrementally into 
new geographies and expand our range 
of services so that our addressable market 
grows as a percentage of the overall global 
market consequently we expect demand  
for the group’s services that rely on capital 
expenditure predominantly the engineering  
construction business units to remain strong 
over the longterm
operational expenditures
industrywide operational expenditures  
are expected to increase the average  
cost per barrel of developing operating and 
maintaining new fields which are increasingly 
in more remote or harsher environments is 
likely to rise over time the cost of maintaining 
and producing mature fields which require 
greater ‘healthcare’ as they deplete is also 
likely to increase increasing operational 
expenditures should benefit a number of  
our businesses we look at the operating 
environment for each in more detail
offshore engineering  operations
around 90 of offshore engineering  
operations’ revenues are generated from 
activities in the ukcs the ukcs market  
is relatively concentrated and during the 
economic downturn many customers took 
the opportunity to retender contracts we 
succeeded in retaining and extending many 
contracts where we were the incumbent 
contractor and have grown our market share 
by securing a number of new contracts  
see page 43 internationally we have a small 
proportion of the available market and would 
like to grow our market share as we extend 
our geographic reach as a result  
of securing new contracts and extensions 
backlog has increased from us16 billion  
to us24 billion over the course of 2010
engineering services
after a modest increase in 2010 capital 
expenditure on exploration and production 
spending is expected to increase more 
substantially in 2011
2
 which should see  
an increase in conceptual studies and  
feed studies this will hopefully lead to  
an increase in opportunities for external  
work for our engineering services business
training services 
we believe that the longterm drivers for  
this business remain robust
the industry will be required to recruit  ■ ■
and train many new skilled engineers  
and technicians to replace those set  
to retire over the next few years
there is an increasing focus on local ■ ■
content requirements particularly as 
sovereign state resource holders try  
to extract more economic value from  
oil  gas developments in this regard 
training services supports not only our 
customers but also the rest the group
following events in the gulf of mexico in ■ ■
2010 there is likely to be an increasing 
focus in some markets on critical incident 
management and emergency response 
training as well as on quality assurance 
and technical training
we estimate our current market share 
to be around 2 of the global market  
for the training services that we provide  
the above drivers should all increase the  
size of our potential market over the medium 
to longterm and we have ambitions to grow  
our relatively small market share in what is  
a highly fragmented market
1 international energy agency ‘world energy outlook 2010’ november 2010
2 by around 16 according to jp morgan cazenove ‘global ep spending analysis’ 8 february 2011
energy developments and  
production solutions
we believe that a strategic opportunity exists 
for the group to support some of the world’s 
major oil  gas resource holders
resource holders need to develop new 
opportunities and invest increasing levels  
of time effort and capital in operating and 
maintaining their existing production as 
many resource holders are wellfunded 
or have alternative sources of capital  
and there is often political sensitivity  
around transferring ownership of reserves 
we believe that resource holders’ key 
requirement is capability
drawing upon the extensive capabilities of  
the wider group which include engineering 
operations training well management  
and specialist petrotechnical consulting 
businesses we are seeking opportunities to 
provide a fully integrated service for resource 
holders we are happy to work under a range 
of flexible commercial models that are aligned 
to specific customer requirements such 
projects may cover upstream developments 
both greenfield and brownfield and related 
energy infrastructure investments and can 
include the provision of capital
the recent awards to petrofac of the ticleni 
contract in romania see page 44 for more 
detail and the berantai project in malaysia 
see page 48 are interesting examples of 
what we believe are very exciting opportunities 
for the group
in summary
we had an exceptional year in 2010 securing 
a number of new contracts across the group 
as a result our backlog finished the year  
at a record level of us117 billion 2009 
us81 billion we have continued that 
success as we move into 2011 having 
secured a contract in algeria in january 2011 
for us12 billion and a risk service contract 
for the berantai field in malaysia overall we 
have outstanding visibility of revenues for 
2011 and beyond
notwithstanding that we still face significant 
competition in many of our established 
markets the key drivers of capital and 
operational expenditures and our geographic 
focus should ensure that our medium  
to longterm prospects remain strong
world oil production by type  
in the new policies scenario
source world energy outlook 2010 
©
oecdiea  
figure 319 page 122
0
100
1990 1995 2000 2005 2010 2015 2020 2025 2035
mbd
2030
20
40
60
80
unconventional oil
natural gas liquids
crude oil fields yet  
to be found
crude oil fields yet  
to be developed
crude oil currently 
producing fields
operating review 
business review 38    petrofac annual report and accounts 2010
review of operations  39    petrofac annual report and accounts 2010 operating review 
our operations are organised into seven business units which report under four segments
reporting segment
engineering  construction 
engineering  construction ventures
 engineering  construction
offshore engineering  operations  offshore engineering  operations
engineering services 
training services 
production solutions
 engineering training services and production solutions
energy developments  energy developments
we present below an update on each of the group’s reporting segments
revenue operating profit
1
net profit
2
ebitda
us millions 2010 2009 2010 2009 2010 2009 2010 2009
engineering  construction 32539 25090 4389 3124 3730 2651 4743 3373
offshore engineering  
 operations 7219 6267 245 1 78 172 128 273 197
engineering training services  
and production solutions 3553 3497 266 345 276 324 347 426
energy developments 1882 2487 1912 774 1564 462 2410 1609
corporate consolidation  
and elimination 1651 787 177 101 164 29 179 108
group 43542 36554 6635 4320 5578 3536 7594 5497
revenue growth operating margin net margin ebitda margin
growthmargin analysis  2010 2009 2010 2009 2010 2009 2010 2009
engineering  construction 297 259 135 125 115 106 146 134
offshore engineering  operations 152 193 34 28 24 20 38 31
engineering training services  
and production solutions 16 315 75 99 78 93 98 122
energy developments 243 621 1016 31 1 831 186 1280 647
group 191 98 152 11 8 128 97 174 150
1 profit from operations before tax and finance costs
2 profit for the year attributable to petrofac limited shareholders
business unit
business review 40    petrofac annual report and accounts 2010
review of operations 
continued
engineering  construction
engineering  construction generally 
undertakes engineering procurement 
and construction projects on a lumpsum 
basis with a typical duration of between 
two to four years and is focused on 
markets in the middle east africa  
asia pacific and the commonwealth  
of independent states particularly the 
caspian region
order intake in 2010 exceeded us60 
billion this includes our largest ever 
award of us34 billion for the second 
phase of our contract with turkmengas 
on the south yoloten project in 
turkmenistan as well as contracts 
in qatar kuwait and malaysia
the engineering  construction reporting segment 
includes the group’s sharjahbased engineering  
construction business unit and engineering  
construction ventures which has been established 
to target new markets such as abu dhabi saudi 
arabia and turkmenistan
we have delivered good progress on our 
current portfolio of contracts including 
the handover or substantial completion  
of the following
in syria we completed and commissioned ■ ■
the ebla gas plant for petrocanada in  
april 2010 two months ahead of schedule 
earning an early completion bonus we 
have also completed and commissioned 
the jihar gas plant for the hayan petroleum 
company a joint venture between the 
stateowned syrian petroleum company 
and ina industrija nafte ddnaftaplin  
of croatia
in oman we completed the harweel ■ ■
cluster development project for the 
petroleum development oman pdo 
achieving the introduction of hydrocarbons 
in january 2011
in kuwait we substantially completed the ■ ■
mina alahmadi refinery pipelines project 
for kuwait oil company koc which was 
awarded in november 2008
in algeria we made good progress on  ■ ■
the in salah gas compression project for 
sonatrach bp and statoil two of the  
three fields are now in operation and the 
compression facility and power generation 
on the krechbah field were substantially 
completed by the end of the year
we were awarded the following principal 
contracts during the year on which initial 
progress has been in line with our expectations
gas sweetening facilities qatar
in march 2010 we were successful in 
securing an award for gas sweetening 
facilities in qatar from qatar petroleum  
the contract for more than us600 million 
includes the engineering procurement 
installation and commissioning of gas 
sweetening facilities in qatar’s messaieed 
and dukhan industrial districts the project 
includes a sulphur recovery upgrade in 
messaieed and an acid gas recovery plant  
in dukhan work on the projects is due for 
completion within 38 months
revenue
us millions
net profit
us millions
net profit margin

08 09 10
1994
2509
3254
08 09 10
2063
2651
3730
08 09 10
104
106
115
pipelines from mina alahmadi to 
power stations kuwait
in july 2010 we were awarded a us400 
million contract by kuwait oil company for 
epc services for the installation of fuel gas 
and gas oil pipelines from mina alahmadi  
to the azzour and shuaiba power stations  
in kuwait the project follows on from the 
pipelines contract referred to above and is 
expected to last approximately two years
water injection project kuwait
in august 2010 we were awarded a further 
epc project by koc for us430 million for 
effluent water and sea water injection facilities 
the project involves the installation of a  
new central injection pumping facility and 
modifications to three existing gathering 
centres and seawater treatment plant when 
completed both effluent water and sea water 
will be fed into a central injection pumping 
facility and injected into the wells with the 
objective of increasing oil recovery from the 
raudhatain and sabriyah fields completion 
is estimated within 36 months
sepat offshore early production 
system malaysia
in december 2010 we secured an award for 
the engineering procurement construction 
installation and commissioning of an 
offshore early production system on  
the east coast of peninsular malaysia  
the contract worth approximately us280 
million was awarded by petronas carigali 
sdn bhd first oil is expected by the end  
of 2011 and the project is estimated to 
be completed by april 2012
south yoloten development 
turkmenistan
in december 2010 we commenced 
the second phase of the south yoloten 
contract worth us34 billion for 
turkmengas the stateowned national gas 
company of turkmenistan this followed the 
completion of the first phase of the project 
which involved a front end engineering and 
design feed study and early engineering 
work for the gas processing development  41    petrofac annual report and accounts 2010
commencing the 
second stage of 
engineering work 
of the south yoloten  
gas field development 
t urkmenistan
the second phase of the contract is 
scheduled to last 315 months during which 
time we will provide engineering procurement 
and commissioning work on a lumpsum 
basis for a 10 bcma gas processing plant 
along with the infrastructure and pipelines  
for the entire 20 bcma development the 
structuring of this contract in two phases  
was important for risk mitigation and the work 
completed in phase one gives us a higher 
level of confidence that we can execute the 
project in accordance with our high standards
results
high activity levels due principally to  
projects won in 2009 and late 2008 resulted 
in engineering  construction growing 
revenues strongly by 297 to us32539 
million 2009 us25090 million the main 
contributors to revenue were the el merk 
central processing facility in algeria the  
asab project in abu dhabi the kauther  
gas compression project in oman the  
mina alahmadi refinery pipelines project  
in kuwait and the karan utilities package  
in saudi arabia
net profit increased by 407 to us3730 
million 2009 us2651 million representing 
a net margin of 115 2009 106 the 
increase in net margin is due to continued 
strong operational performance including 
the delivery of a number of projects during 
the year and first time profit recognition on  
a number of projects a variation order on a 
project agreed in the first half of 2010 was not 
reflected in the interim results leading to an 
understatement of revenue by us35 million 
and net profit by us32 million these 
amounts have been recognised in the second 
half of 2010 and therefore there is no overall 
financial impact on the reported results for 
the year ended 31 december 2010
over the year engineering  construction 
grew its headcount from 4200 to 5400 in 
response to the record intake in 2009 and  
in anticipation of our largest ever award in 
turkmenistan in addition headcount in our 
engineering offices in mumbai and chennai 
which principally support our engineering  
construction activities – although they are 
reported within our engineering training 
services and production solutions segment 
– also grew strongly at 31 december 2010 
we had approximately 1600 employees in 
our indian offices 2009 1300 
at 31 december the engineering  
construction backlog stood at a record 
us90 billion 2009 us62 billion 
reflecting the high level of order intake  
during the year
operating review 
business review 42    petrofac annual report and accounts 2010
review of operations
continued
offshore engineering  operations
offshore engineering  operations’ 
activities are primarily in the ukcs  
and are predominantly provided on  
a reimbursable basis but often with 
incentive income linked to the successful 
delivery of performance targets many  
of our operations contracts are longterm 
typically three to five years and in the 
case of the provision of duty holder 
services
1
 are often openended
activity levels in offshore engineering  
 operations improved in 2010 due to 
the commencement of work on major 
contracts awarded in 2009 good bidding 
success and a general improvement in 
market conditions our strong record of 
operational performance companywide 
capability and established presence in 
core markets helped us achieve an order 
intake of us16 billion taking backlog 
to record levels of us24 billion
offshore engineering  operations provides 
engineering and construction services at all 
stages of greenfield and brownfield offshore 
projects in addition through the provision of 
operations management services we deliver 
production and maintenance support and  
extend field life
1  contracts where the group takes full responsibility  
for managing a customer’s asset and is responsible 
for the safety case of the asset reporting to the  
uk department of energy and climate change
providing duty  
holder services 
to sajaa gas plant 
sharjah 43    petrofac annual report and accounts 2010
the key awards secured were
sharjah government duty holder 
contract uae
in october 2010 we secured a duty 
holder contract to provide a full range  
of facilities management services to the 
government of sharjah on the sajaa gas 
plant and related assets this contract 
which furthers our aim to grow the 
offshore engineering  operations 
business internationally will run for  
five years and is worth more than 
us250 million
laggan tormore epc contract uk
in october 2010 we won an engineering 
procurement supply construction 
commissioning and startup contract 
with total for the development of a gas 
processing plant on the shetland islands 
offshore engineering  operations  
will develop this facility supported by 
engineering  construction this is  
the first time that we have secured a 
predominantly lumpsum epc contract  
in the uk the contract is worth more 
than £500 million with first gas expected 
in q2 2014
maersk oil engineering services 
contract uk
in november 2010 we were awarded  
a contract worth £40 million over three 
years for the provision of engineering 
services to the ukcs assets of maersk 
oil the contract includes three oneyear 
options for extension and broadens 
petrofac’s scope of services for these 
assets building upon the offshore 
operations and support services we  
have been providing since 2000 
in addition to securing these new 
awards we have been successful in 
extending a number of our operations 
and maintenance contracts with both oil 
majors and independents these include 
a fiveyear agreement with bhp billiton  
to provide operations and maintenance 
personnel support for the liverpool bay 
development in the irish sea and a 
fiveyear extension to our operations  
and maintenance support contract  
with cnr international in the north sea 
from october 2010 the technical 
services agreement with the government 
of dubai was reported through the 
offshore engineering  operations 
reporting segment having previously 
been reported through engineering 
training services and production 
solutions the transition from having 
operational control over these assets  
to the new technical services agreement 
was effected smoothly
acquisitions
we successfully completed two small 
acquisitions in 2010 which broaden our 
capability scotvalve services limited 
which provides servicing and repair for 
oilfield pressure control equipment and 
stephen gillespie consultants limited 
which designs and manufactures 
metering systems see note 10 to the 
financial statements
results
reported revenue for the year increased 
by 152 to us7219 million 2009 
us6267 million and revenue excluding 
‘passthrough’ revenue
1
 increased  
by 206 to us5264 million 2009 
us4364 million reflecting the 
commencement of major contracts 
secured in the second half of 2009 and  
a general improvement in the operating 
environment approximately 90 of 
offshore engineering  operations’ 
revenue is generated in the ukcs with 
these revenues generally denominated in 
sterling the average us dollar to sterling 
exchange rate for 2010 was broadly 
similar to the rate for 2009
net profit increased by 345 to us172 
million 2009 us128 million again 
reflecting increased activity levels  
net margin on revenue excluding 
passthrough revenue increased to  
33 compared to 29 in 2009 
driven by new higher margin contracts
over the year offshore engineering  
operations grew its headcount from 
4100 to 4400 mostly attributable to the 
staff added on new contracts including 
laggan tormore and the sharjah 
government duty holder contract
backlog for offshore engineering  
operations increased to a record high  
of us24 billion at 31 december 2010 
2009 us16 billion this includes 
approximately half of the backlog booked 
in relation to the total epc contract 
awarded in october 2010 the remainder 
of the backlog has been booked  
by engineering  construction as it  
will support offshore engineering  
operations on the project
revenue
us millions
net profit
us millions
08 09 10
777
627
722
net profit margin

 on revenue excluding 
passthrough revenue
08 09 10
30
29
33
08 09 10
164
128
172
1  passthrough revenue refers to the revenue 
recognised from low or zero margin thirdparty 
procurement services provided to customers
operating review 
business review 44    petrofac annual report and accounts 2010
review of operations
continued
engineering training services  
and production solutions
engineering services provides early 
stage engineering studies including 
conceptual studies and feed studies 
primarily on a reimbursable basis 
engineering services has two offices  
in india – in mumbai and chennai – 
which primarily support engineering  
construction and a uk office in woking 
which is more externally focused activity 
levels were significantly higher at  
our indian offices in 2010 reflecting 
engineering  construction’s increased 
demand for the unit’s services resulting 
from the reporting segment’s record 
backlog entering into 2010 and its 
contract wins throughout the year  
at our woking office activity levels were 
marginally lower utilisation rates rose 
across all three offices throughout 2010
training services provides competence
led training services consultancy and 
managed solutions which are designed 
to increase competence and minimise 
risk services are provided primarily on  
a reimbursable basis delegate numbers 
were slightly higher than in 2009 and  
we saw strong growth from international 
markets including our facilities at 
sakhalin island russia and baku 
azerbaijan in october 2010 our training 
centre located near homs in syria was 
opened at a ceremony attended by the 
syrian prime minister the facility which 
petrofac will operate for five years  
will deliver operations and maintenance 
training for syrian graduates joining the 
oil  gas industry
training services remains focused  
on strategic business development 
opportunities both in the uk and 
internationally demand for our training 
services business is driven by a number 
of factors including the ‘nationalisation’ 
of government workforces the ageing of 
the industry’s personnel and the potential 
increase in industry regulation in the 
wake of the gulf of mexico incident 
these provide us with interesting medium 
to longterm opportunities
production solutions provides customers 
with a wide range of services to  
help improve production profitability 
operational efficiency asset integrity and 
the recovery of their reserves in addition 
to providing these specialist services on 
a standalone basis we are increasingly 
offering customers these services 
packaged together where we are 
remunerated on a tariff or quasiequity 
basis we were awarded our first such 
‘production enhancement’ contract by 
petrom in early july 2010 under the 
terms of the 15year contract which 
includes an option for extension by a 
further ten years petrofac will provide 
production enhancement services to 
petrom as the concession holder for  
the ticleni oilfield and its eight satellite 
fields in romania we will be paid a tariff 
per barrel of oil produced including  
an enhanced tariff for incremental 
production petrofac successfully 
completed the transition to assume 
full operational responsibility for these 
fields in november 2010 average  
oil production volumes from the first 
two months of operation were around  
23 above baseline production
continued  
demand for our 
training services
the engineering services training services and 
production solutions business units are reported 
together in this segment 45    petrofac annual report and accounts 2010
in november 2010 production solutions 
entered into a strategic alliance with 
seven energy international limited 
‘seven energy’ a nigerian production 
and development company under the 
terms of the agreement petrofac agreed 
to invest us100 million to acquire a  
15 interest in seven energy 126  
on a fully diluted basis and will assist 
seven energy with the development  
of its production processing and 
transportation assets seven energy  
has also issued warrants which subject 
to the satisfaction of certain performance 
conditions and milestones in relation to 
project execution will enable us to invest 
up to a further us52 million and take 
our interest to 192 on a fully diluted 
basis petrofac is providing experienced 
personnel to seven energy and is 
represented on its board and 
management committees the 
opportunity to coinvest and codevelop 
with seven energy while deploying  
some of our own people will give us the 
platform to establish a local presence  
in nigeria a high growth market where 
we have been seeking commercial 
opportunities for some years
in october 2010 following a successful 
three and a half years of our service 
operator contract for dubai petroleum’s 
offshore oil  gas assets we successfully 
completed the transition to a technical 
services agreement with the government 
of dubai the technical services 
agreement will be reported through 
offshore engineering  operations
acquisitions
within engineering services the 
acquisition of tnei represents the  
first step in positioning petrofac in  
the renewable energy sector tnei  
was acquired in june 2010 for a total 
consideration of £61 million see note 10 
to the financial statements tnei is a 
specialist consultancy providing services 
in the areas of power transmission and 
distribution particularly in relation to 
offshore wind projects planning and 
environmental consent and energy 
management tnei has 50 staff in 
newcastle and manchester the 
acquisition further broadens petrofac’s 
technical consulting capacity
results
reported revenue for the year was 
slightly higher at us3553 million  
2009 us3497 million as was revenue 
excluding ‘passthrough’ revenue at 
us3228 million 2009 us3097 
million with an increase in revenues in 
both engineering services and training 
services being partially offset by lower 
revenues in production solutions as a 
consequence of the transition of our role 
on the dubai petroleum contract from 
service operator to a technical services 
agreement and now accounted for in 
offshore engineering  operations
net profit was 148 lower at us276 
million 2009 us324 million principally 
reflecting the change in scope on the 
dubai petroleum contract this was  
also the primary driver for net margin  
on revenue excluding passthrough 
revenue falling to 85 2009 104
at 31 december 2010 headcount – 
including longterm contractors –  
was higher at 3400 2009 2900 the 
addition of approximately 900 romanian 
workers on the ticleni oilfield more than 
offset the reduction in headcount that 
followed the transfer of dubai petroleum 
staff to the government of dubai we 
also continued to grow our mumbai and 
chennai offices which are reported 
through engineering services but 
predominantly support the businesses in 
our engineering  construction reporting 
segment we have recently decided to 
open a third indian office in delhi and 
expect to accomplish this during 2011
backlog for the engineering training 
services and production solutions 
reporting segment was unchanged  
at yearend at us03 billion 2009 
us03 billion the main factors affecting 
backlog related to production solutions 
which saw order intake – primarily arising 
from the ticleni contract – offset by  
the change in scope on the dubai 
petroleum contract
revenue
us millions
net profit
us millions
net profit margin

08 09 10
510
350 355
08 09 10
331
324
276
08 09 10
73
104
85
 on revenue excluding 
passthrough revenue
dubai petroleum
operating review 
business review 46    petrofac annual report and accounts 2010
energy developments
where we can leverage our service capabilities  
to realise value mitigate risks and reduce costs 
energy developments provides a fully integrated 
service for resource holders under flexible 
commercial models that are aligned to their 
requirements projects cover upstream 
developments both greenfield and brownfield  
and related energy infrastructure projects  
and can include the provision of capital
the cendor field had another year of good 
performance producing an average of 13300 
bpd of oil 2009 14400 bpd and achieving 
production uptime of over 99 production  
is now in decline as a result of the natural 
decrease in field pressure energy 
developments received approval for the  
field development programme fdp for  
the second phase of development of block 
pm304 in november 2010 this second 
phase will involve the replacement of the 
existing mobile offshore production unit 
mopu and floating storage and offloading 
fso vessel with a floating production 
storage and offloading fpso vessel  
and fixed wellhead structures designed  
to increase production capacity to 35000 
bopd preparations for this second phase  
are progressing well with the aim of beginning 
work in the first half of 2011
ohanet algeria
energy developments in a joint venture with 
bhp billiton as joint venture operator japan 
ohanet oil  gas co and woodside energy 
algeria has invested more than us100 
million for a 10 share in a rsc with 
sonatrach algeria’s national oil company 
through engineering  construction we 
undertook the epc contract for the gas 
processing facilities in joint venture with  
abb lummus and were responsible for part 
of the onsite commissioning works as part 
of the rsc the joint venture contractors  
in the first demonstration of our ‘build 
and harvest’ strategy we completed the 
demerger of energy developments’ ukcs 
assets including its investments in the don 
fields in april 2010 these assets were 
demerged to create enquest plc an 
independent company which subsequently 
listed on the london and stockholm stock 
exchanges our investment in the don project 
generated a capital gain of us1249 million 
and an internal rate of return from inception  
to demerger of approximately 35 we 
believe this transaction demonstrates the 
value of our ‘build and harvest’ strategy
during the year good progress was made on 
energy developments’ portfolio of operational 
assets cendor ohanet chergui and the 
kyrgyz petroleum company kpc refinery 
as explored below
cendor pm304 malaysia
energy developments operates the cendor 
field in block pm304 offshore peninsular 
malaysia in which it holds a 30 interest 
this interest was acquired in 2004 and is  
held by way of a production sharing contract 
psc energy developments’ partners on  
this field are petronas kuwait foreign 
petroleum exploration company kufpec 
and petrovietnam which hold interests  
of 30 25 and 15 respectively 
are reimbursed for development costs and  
their share of the project’s operating costs 
the joint venture contractors’ return for 
undertaking this investment is earned by way 
of remuneration equivalent to a percentage  
of the eligible development costs and our 
entitlement is paid from the monthly liquids 
production hence any changes in production 
will vary the number of days over which the 
entitlement is earned 
overall production was slightly lower than in 
2009 averaging approximately 113000 bpd 
of oil equivalent 2009 123100 bpd of oil 
equivalent on average we earned our share 
of the monthly liquids production by the  
11th day of the month 2009 15th reflecting 
higher average oil  gas prices partly offset 
by slightly lower production rates the  
rsc contract is due to expire at the end  
of october 2011 eight years from first gas  
over which time we expect to have earned 
our defined return 
chergui field tunisia
in tunisia energy developments has a 45 
operating interest in the chergui gas plant 
this interest was obtained in 2007 from 
entreprise tunisienne d’activités pétrolières 
etap the tunisian national oil company 
which holds the remaining 55 interest 
energy developments’ interest is held through 
a concession the commercial export of gas 
commenced in august 2008 produced gas 
is sold to the national gas company société 
tunisienne de lélectricité et du gaz steg 
under a gas pricing formula fixed by existing 
law in which the price of gas is linked to 
freeonboard mediterranean fob med  
fuel oil prices
the chergui gas plant produced an average 
of 27 8 million standard cubic feet per day 
mmscfd of gas during the year 2009 265 
mmscfd above the original nameplate design 
capacity of 20 mmscfd a third production 
well was tied into the plant in early july 2010 
to boost the production rate and increase  
gas recovery production in december 2010 
was the highest recorded rate since the 
startup of the gas plant in june 2008 the 
development programme for 2011 includes 
the commitment to drill two to three wells  
to increase reserves and to explore the 
production of oil as well as gas from the 
field following recent civil unrest in tunisia 
we have had some short unplanned shutins 
of production but generally the plant is 
operating normally we continue to keep  
the situation under review
review of operations
continued 47    petrofac annual report and accounts 2010
kpc refinery kyrgyzstan
energy developments owns a 50 share in 
the kyrgyz petroleum company kpc which 
is engaged in the refining of crude oil and the 
marketing of oil products from the 10000 bpd 
capacity kpc refinery kpc is jointly owned 
by petrofac and kyrgyzneftegaz the 
stateowned oil  gas company in the kyrgyz 
republic petrofac has managed kpc’s 
facilities and operations since 1998
during 2010 the refinery performed in line 
with expectations producing an average of 
approximately 1700 bpd 2009 2000 bpd 
principally of gasoline diesel and fuel oil the 
decrease in throughput was primarily due to 
civil unrest in the country which shut down 
operations and halted processing at the 
refinery in april and june 2010 on both 
occasions the demobilisation of expatriate 
and local staff was deemed necessary 
fpf1 floating production facility 
undeployed
in july 2009 energy developments  
acquired a floating production facility ah001 
subsequently renamed the fpf1 from hess 
and endeavour energy uk the fpf1 had 
been deployed on the hessoperated ivanhoe 
and rob roy fields in the uk north sea 
from 1989 with the renee and rubie fields 
produced over it since 1999 the vessel has 
a processing capacity of 45000 bpd of oil 
and 56 mmscfd of gas with water injection 
capability of 90000 bpd and water treatment 
of 40000 bpd
the vessel remains quayside at the mcnulty 
offshore facility in newcastleupontyne  
while options for its redeployment on fields 
including those where energy developments 
has or can take an interest are considered 
several options for deployment including  
in the uk north sea have been identified  
and are being pursued with conceptual 
engineering and proposal preparation  
work we expect that a redeployment 
contract for the vessel will be secured in 
2011 we are currently completing general 
repair and upgrade work on the vessel  
which will be followed by planned specific 
drydock work to satisfy external verification 
requirements to obtain a class certificate  
this will enable the fpf1 continued operation 
in the harsh environment of the uk north sea 
for ten years without the need for a  
special survey
 
chergui gas plant  
produced an average  
of 27 8 million standard 
cubic feet per day in 2010
revenue
us millions
net profit
us millions
08 09 10
153
249
188
08 09 10
219
462
1564
08 09 10
891
1609
2410
ebitda
us millions
operating review 
business review 48    petrofac annual report and accounts 2010
gateway storage company  
limited uk
in december 2010 energy developments 
acquired a 20 interest in gateway storage 
company limited gateway to progress and 
develop the gateway gas storage project  
in the east irish sea this project would  
add nearly 30 to the current gas storage 
capacity in the uk market and has secured 
the first gas storage licence from the uk 
department of energy  climate change  
in february 2010 petrofac joined gateway  
as the technical project operator and is 
represented on gateway’s board
berantai field development and  
east fortune fpso malaysia
in january 2011 energy developments 
signed a rsc to lead the development of the 
berantai field offshore peninsular malaysia 
for petronas malaysia’s national oil 
company petrofac has a 50 interest in  
the rsc alongside our malaysian partners 
kencana energy sdn bhd and sapura energy 
ventures sdn bhd both of which hold a 25 
interest together known as the ‘berantai 
partners’ the berantai partners will develop 
the field and will subsequently operate the 
field for a period of seven years after first  
gas production
the capital budget for the full field 
development excluding delivery of the  
fpso is approximately us800 million  
of which petrofac’s share is 50 under the 
terms of the rsc the berantai partners are 
expected to receive a rate of return linked to 
their performance against an agreed incentive 
structure including project costs timing to first 
gas and sustained gas delivery measured  
six months after project completion with 
an ongoing incentive structure based on 
operational uptime
acquisitions
petrofac completed the acquisition of 
co2deepstore in april 2010 a ukbased 
co2 storage company see note 10 to the 
financial statements the combination of 
co2deepstore and petrofac establishes  
a leading development capability for co2 
storage projects providing a complete 
service for power generators and other  
co2 emitters
in october 2010 co2deepstore signed  
an agreement with shell uk limited shell 
for the redevelopment of the goldeneye  
gas field in the north sea as a potential  
co2 storage facility the agreement will see 
co2deepstore and shell work together to 
develop the potential co2 storage solution  
for the scottishpower carbon capture and 
storage ccs project work on the initial 
design phase for the project is due to 
complete in the first half of 2011 and subject 
to satisfactory contract negotiations achieve 
contract award later in the year
co
2
deepstore provides  
investment and service capability  
for the ccs market
energy developments
continued
review of operations
continued 49    petrofac annual report and accounts 2010
1 for example brent a benchmark crude oil averaged us7950 per barrel for 2010 2009 us6167 per barrel
results
energy developments’ revenue was lower 
at us1882 million in 2010 2009 us2487 
million primarily due to the disposal of  
the don assets following the april 2010 
demerger on a likeforlike basis excluding 
the contribution of the don assets energy 
developments’ revenue was marginally  
higher at us1728 million this year  
2009 us1704 million
including the gain on the enquest demerger 
net profit for energy developments rose by 
238 to us1564 million 2009 us462 
million excluding this gain despite the higher 
average oil price in 2010
1
 and notwithstanding 
the nonrecurring ntp68 writeoff of us37 
million in the prior year the loss of contribution 
from the don assets as well as lower 
production on cendor meant that profit  
was lower at us315 million 2009 us462 
million on a likeforlike basis excluding the 
contribution of the don assets and the gain 
on the enquest demerger trading net profit 
for energy developments was us294 
million in 2010 2009 us335 million
at 31 december 2010 headcount had grown 
to 600 2009 500
an analysis of energy developments’ oil  gas 
reserve entitlements is presented on page 159
asset
name
country asset
type
investment 
commitment 
customer date of 
investment
partners partner  
interests
licence 
operator
berantai malaysia oil  gas field risk service  
contract
petronas january 2011 petrofac 
kencana 
sapura
50 
25 
25
petrofac energy 
developments
kencana
sapura
cendor malaysia oil field production  
sharing contract
petronas may 2004 petrofac
petronas
kufpec
petrovietnam
30
30
25
15
petrofac energy 
developments 
chergui tunisia gas field concession etap february 2007 etap
petrofac
55
45
etap
fpf1 vessel currently 
located in the  
united kingdom
floating  
production  
facility
owner of  
infrastructure
na july 2009 none 100 owned  
by petrofac
na
gateway united kingdom gas storage  
facility
equity stake in a  
company developing  
the project
na december 2010 various 20 owned  
by petrofac
petrofac
energy 
developments
kpc  
refinery
kyrgyzstan refinery equity stake in a  
company which  
owns the infrastructure
kyrgyzneftgaz january 2004 petrofac
kyrgyzneftgaz 
50
50
petrofac
energy 
developments
ohanet algeria gas field risk service  
contract
sonatrach july 2000 bhp billiton 
japan ohanet  
oil  gas 
woodside energy 
petrofac
45
30
 
15
10
bhp billiton
 
operating review 
business review 50    petrofac annual report and accounts 2010
senior management team
3 marwan chedid
managing director engineering  
construction ventures 
marwan joined petrofac’s engineering  
construction business as a project manager 
when the business was first established  
in sharjah in 1992 and was subsequently 
promoted to regional director at the  
same time as becoming a member of the 
engineering  construction board in 2007  
marwan was appointed chief operating  
officer of the engineering  construction 
international business with daytoday 
responsibility for the successful delivery of 
overall operations in january 2009 he was 
appointed managing director of engineering  
 construction ventures marwan previously 
worked for a major civil and mechanical 
construction business based in the gulf and 
the middle east for 12 years and has more 
than 28 years’ experience in the oil  gas 
sector he holds a degree in mechanical 
engineering from the american university  
of beirut age 50 
4 bill dunnett
managing director offshore engineering  
 operations 
bill has over 26 years’ experience in the 
oil  gas industry and now leads the offshore 
engineering  operations business bill  
joined petrofac energy developments in  
2007 with responsibility for asset development  
and production which included leading the 
project management and operation of the 
greater don area fields in the united kingdom 
continental shelf and the chergui field 
development in tunisia prior to joining 
petrofac bill spent eight years at halliburton 
and its subsidiary kbr as a senior vice 
president and corporate officer and his 
responsibilities included membership of the 
kbr executive leadership team global 
operations and maintenance bill spent his 
earlier career with mobil north sea and shell 
he is a chartered engineer and graduated 
with a first in engineering from heriot watt 
university age 48
5 gordon east 
managing director production solutions 
gordon joined petrofac in 2006 as managing 
director of petrofac facilities management 
now offshore engineering  operations  
he now leads the production solutions 
business which works with customers to 
increase production and improve reservoir 
recovery covering specialist consultancy 
technology applications and large scale 
production enhancement projects prior  
to joining petrofac gordon spent more  
than 20 years with conocophillips in various 
leadership and management roles throughout 
the upstream business worldwide he has 
also held nonexecutive roles in the dti  
and cabinet office gordon has an ma  
in engineering from cambridge university  
and an msc in petroleum engineering from 
imperial college london age 47 
1 robin pinchbeck
group director of strategy and corporate 
development
robin joined petrofac in 2002 after 23 years 
with bp  he moved to the oil services sector 
and from 1995 to 1998 was managing 
director of atlantic power  gas a leading 
north sea operations services provider and 
pioneer of the contractor ‘duty holder’ model 
atlantic power  gas was sold in 1998 to 
petroleum geoservices asa which was 
subsequently purchased by petrofac in  
2002 robin established petrofac’s facilities 
management business now known as 
offshore engineering  operations robin  
is a graduate of imperial college london  
and stanford university california age 58
2 richard milne
group director of legal  
and commercial affairs
richard joined petrofac in 2004 with overall 
responsibility for advising on the legal and 
commercial aspects of the group’s activities 
richard was heavily involved in petrofac’s 
successful admission to listing on the 
london stock exchange in 2005 and in 
developing the group’s governance and 
compliance framework as a member of the 
group’s senior management team richard 
participates in the group’s risk review process 
and advises on corporate matters as well as 
on all commercially significant issues affecting 
the group prior to joining petrofac richard 
spent some 15 years in corporate finance 
after working in the insurance brokerage 
industry richard is a graduate of oxford 
university and qualified as a solicitor age 55
1 2 3 4 5 51    petrofac annual report and accounts 2010
6 paul groves
managing director training services 
paul joined petrofac in june 2009 as 
managing director of petrofac’s training 
services business paul has overall 
responsibility for developing and running  
the group’s global training and consultancy 
activities paul previously worked with  
shell from 2001 where he held a number  
of business developmentled roles within  
the organisation a chartered engineer  
and scientist paul started his career as  
a lecturer of physics at oxford university 
before moving into a number of management  
and development roles in organisations  
such as alcan aluminum limited and  
british gasbg plc age 50
7 rob jewkes
managing director energy developments
rob joined petrofac in 2004 with the objective 
of building europebased engineering 
services business at our woking office  
to complement the existing engineering  
 construction business in sharjah in 2009 
rob was appointed managing director  
of petrofac energy developments he  
has more than 30 years experience in  
the oil  gas industry and prior to joining 
petrofac rob served as chief executive 
officer of clough engineering the main 
operating company of the australian 
engineering group clough limited rob  
holds a degree in civil engineering from  
the university of western australia age 55
8 subramanian sarma
managing director engineering  
construction
subramanian joined petrofac’s engineering  
 construction business as a project 
manager in 1997 and has held various 
positions since then in 2007 he was 
promoted to the position of executive vice 
president projects  deputy chief operating 
officer of petrofac international with 
responsibility for the delivery of epc projects 
in the middle east north africa and caspian 
regions subramanian now heads petrofac’s 
engineering  construction business with 
overall responsibility for the current operation 
and its continued growth prior to joining 
petrofac subramanian worked for kvaerner 
and jacobs in india and oman and has more 
than 30 years’ experience in the oil  gas 
industry he holds an msc in chemical 
engineering from the indian institute of 
technology age 52
9 rajesh verma
managing director engineering services 
rajesh joined petrofac engineering  
construction in 1992 as a project manager 
when the business was first established  
in sharjah during his tenure he has been 
responsible for executing a number of epc 
projects and subsequently been in charge  
of technical services for the ec business 
he has also been responsible for a number  
of strategic initiatives for the company 
including setting up design offices in mumbai 
 chennai in india rajesh now leads the 
engineering services business which brings 
together petrofac’s operations in woking 
mumbai  chennai he has more than 
39 years’ experience in the oil  gas  
industry and holds a degree in mechanical 
engineering from the birla institute of 
technology and sciences in india age 61
 
9 7 6 8
senior management team
business review 52    petrofac annual report and accounts 2010
financial review
an increase in net margin due to excellent 
operational performance with good progress 
on our portfolio of projects including the 
completion or substantial completion of five 
large epc projects during the year and first 
time profit recognition on a number of 
projects the net margin for the group 
excluding the gain on the enquest demerger 
increased to 99 2009 97 due to  
net margin improvement in engineering  
construction and offshore engineering  
operations offset by net margin reduction  
in the engineering training services  
and production solutions and energy 
developments reporting segments and an 
increase in net corporate and other costs 
net corporate and other costs increased  
due to a reduction in intragroup interest 
income earned as a result of petrofac limited 
capitalising a loan to energy developments  
as part of the enquest demerger corporate 
support costs incurred in relation to  
the demerger and an increase in other 
shareholder related costs
ebitda
reported ebitda increased 381 to 
us7594 million 2009 restated us5497 
million excluding the gain on the enquest 
demerger of us1249 million 2009 nil 
ebitda increased by 154 to us6345 
million 2009 restated us5497 million 
representing an ebitda margin of 146 
2009 restated 150 despite an increase  
in ebitda margins in the engineering  
construction and offshore engineering  
operations reporting segments only partially 
offset by lower margins in the engineering 
training services and production solutions 
and energy developments reporting 
segments the group ebitda margin was 
lower due to a reduction in the share of group 
ebitda excluding the effect of corporate 
consolidation and elimination adjustments 
from the higher margin energy developments 
reporting segment following the enquest 
demerger from 287 in 2009 restated to 
178 in 2010 engineering  construction’s 
share of group ebitda excluding the effect 
of corporate consolidation and elimination 
adjustments and the gain on the enquest 
demerger increased to 727 2009 restated 
602 due to strong revenue and margin 
growth in the engineering  construction 
reporting segment and the relative decrease 
in energy developments’ contribution
revenue
group revenue increased by 191 to 
us43542 million 2009 us36554 million 
due to strong growth in engineering  
construction and offshore engineering  
operations partly offset by a decrease in 
energy developments following the enquest 
demerger in april 2010 the strong growth  
in the engineering  construction reporting 
segment up 297 which accounted for 
approximately threequarters of the group’s 
revenue was as a result of high levels  
of activity on lumpsum epc contracts 
particularly on those contracts awarded in 
2009 and late 2008 the increase in revenues 
in offshore engineering  operations up 
152 was as a result of activity on major 
contracts awarded in the second half of  
2009 and 2010 and a general improvement  
in market conditions
operating profit
group operating profit for the year was 
us6635 million 2009 restated us4320 
million an increase of 536 excluding  
the gain on the enquest demerger group 
operating profit increased by 247 to 
us5386 million 2009 restated us4320 
million and operating margins increased to 
124 2009 restated 118 the increase  
in operating margin was predominantly due  
to an increase in the operating margin in 
engineering  construction but also higher 
operating margins in energy developments 
and offshore engineering  operations 
partially offset by a reduction in operating 
margin in the engineering training services 
and production solutions reporting segment 
and a decrease in the proportion of group 
operating margin generated by the high 
margin energy developments reporting 
segment following the enquest demerger
net profit
reported profit for the year attributable to 
petrofac limited shareholders increased 
57 8 to us557 8 million 2009 restated 
us3536 million excluding the gain on the 
enquest demerger of us1249 million 2009 
nil profit for the year attributable to petrofac 
limited shareholders increased to us4330 
million 2009 us3536 million an increase 
of 264 on a likeforlike basis
1
 the increase 
was driven primarily by strong revenue growth 
in engineering  construction along with  
1   likeforlike net profit growth excludes the trading net profit from energy developments’ demerged assets of 
us127 million for the year ended 31 december 2009 and us21 million for the year ending 31 december 2010
 19
group revenue increased to 
us43542 million
08 09 10
3330
3655
4354
revenue
us millions
08 09 10
4190
5497
7594
ebitda
us millions
08 09 10
2650
3536
5578
net profit
us millions 53    petrofac annual report and accounts 2010
backlog
the group’s combined backlog at the end of 
2010 stood at record levels of us117 billion 
2009 us81 billion reflecting high levels  
of order intake during the year both in 
engineering  construction us60 billion 
and offshore engineering  operations 
us16 billion
exchange rates
the group’s reporting currency is  
us dollars a significant proportion  
of offshore engineering  operations’  
revenue is generated in the ukcs and those 
revenues and associated costs are generally 
denominated in sterling however there was 
little change in the average exchange rate  
for the us dollar against sterling for the years 
ended 31 december 2010 and 2009 and 
therefore little exchange rate impact on our 
us dollar reported results the table below 
sets out the average and yearend exchange 
rates for the us dollar and sterling as used 
by the group for financial reporting purposes
interest 
net finance income for the year was lower at 
us51 million 2009 us64 million due to 
lower average net cash balances compared 
to the prior year see ‘operating cash flow 
and liquidity’ 
taxation
an analysis of the income tax charge is  
set out in note 6 to the financial statements  
the income tax charge for the year as  
a percentage of profit before tax was  
165 excluding the gain from the  
enquest demerger upon which there  
was no chargeable gain for uk corporate 
tax purposes the income tax charge for the 
year as a percentage of profit before tax was 
marginally higher than the prior year at 203 
2009 restated 193 the increase was  
due to energy developments’ effective tax 
rate excluding the gain from the enquest 
demerger which increased to 503  
2009 308 due to ring fence expenditure 
supplement no longer being available for 
claim following the enquest demerger 
notwithstanding the adjustments made in  
the prior year in respect of the applicability  
of the lower tax rate to the group’s projects 
in oman the engineering  construction 
effective tax rate decreased to 168  
2009 restated 188 due to material 
changes in the jurisdictions in which  
profits were earned
earnings per share
fully diluted earnings per share increased to 
16246 cents per share 2009 10319 cents 
an increase of 574 in line with the group’s 
increase in profit for the year attributable to 
petrofac limited shareholders excluding the 
gain on the enquest demerger fully diluted 
earnings per share increased by 222 to 
12609 cents per share 2009 10319 cents
operating cash flow and liquidity
the net cash generated from operations was 
us207 3 million 2009 us12763 million 
representing 327 of ebitda excluding  
the gain on the enquest demerger 2009 
2283 the lower net cash inflow compared 
to the prior year was due principally to an 
unwinding of advance payments received 
from customers in relation to engineering  
construction projects with the 20 advance 
payment on our major award in turkmenistan 
not being received until after the yearend 
and a build up of in work in progress much  
of the increase in work in progress related  
to one engineering  construction project 
where billing was delayed pending 
contractual amendments the work in 
progress position on this project began  
to improve during the second half of 2010 
following finalisation of the contractual 
amendments and we expect it to normalise 
over the coming months 
at 31 december 2010 the group’s net  
cash was lower at us9753 million  
2009 us13001 million as the net result  
of cash generated from operating profits  
before working capital and other noncurrent 
changes of us667 million less
net working capital outflows of us451 ■ ■
million including a reduction in advance 
payments received from customers and  
an increase in work in progress in relation 
to engineering  construction projects 
totalling us491 million in 2009 the group 
received net working capital inflows of 
us714 million including us439 million  
of advance payments on engineering  
construction projects
investing activities of us254 million ■ ■
including
the investment of us100 million to  –
acquire a 15 stake in seven energy 
126 on a fully diluted basis  
see page 45 for details
the acquisition of tnei co – 2deepstore 
scotvalve and stephen gillespie 
consultants at a cost of us15 million 
and the investment of an initial us8 
million for a 20 stake in gateway  
gas storage see page 48
capital expenditure of us59 million   –
in relation to energy developments’ 
portfolio of assets including us26 
million on the don fields prior to the 
enquest demerger and us16 million on 
cendor pm304 near field development
capital expenditure on other property  –
plant and equipment of us72 million 
including temporary project camp 
facilities office equipment and furniture 
and sitebased vehicles predominantly 
in engineering  construction
financial reporting exchange rates 
ussterling 2010 2009
average rate for the year 154 156
yearend rate 156 162
us 1 1  7 bn
the group’s backlog stood at record levels 
at 31 december 2010
financial review
business review 54    petrofac annual report and accounts 2010
capital expenditure
capital expenditure on property plant and 
equipment was lower during the year ended 
31 december 2010 at us1162 million 2009 
us3754 million as almost threequarters of 
the capital expenditure in the prior year was  
in relation to the now demerged don assets 
the principal elements of capital expenditure 
during the year were
investment in temporary project camps ■ ■
office improvements equipment and 
furniture and vehicles in engineering  
 construction reflecting the increase  
in activity levels and personnel  
of us601 million
additions to energy developments’  ■ ■
oil  gas assets including
development expenditure on the   –
don assets prior to demerger  
of us261 million
upgrade works on the fpf1 floating  –
production facility of us7 3 million
capital expenditure on intangible oil  gas 
assets during the year was us156 million 
2009 us292 million in respect of 
capitalised expenditure on near field appraisal 
wells in relation to energy developments’ 
interest in block pm304 offshore malaysia
shareholders’ funds
total equity at 31 december 2010 was 
us7791 million 2009 restated us897 5 
million the main elements of the net 
movement were net profit for the year of 
us557 9 million less dividends paid in the 
year of us1320 million the distribution on 
the enquest demerger of us5445 million 
see note 11 to the financial statements  
and the purchase of treasury shares of 
us365 million which are held in the 
petrofac employees benefit trust for the 
purpose of making awards under the  
group’s share schemes see note 23 
to the financial statements
return on capital employed
the group’s return on capital employed 
including the gain on the enquest demerger 
for the year ended 31 december 2010 was 
652 2009 469
dividends and distribution
the company proposes a final dividend of 
3000 cents per share for the year ended  
31 december 2010 2009 2510 cents 
which if approved will be paid to 
shareholders on 20 may 2011 provided 
they were on the register on 26 april 2011 
shareholders who have not elected before  
4 march 2011 to receive dividends in  
us dollars will receive a sterling equivalent  
of 1842 pence per share
together with the interim dividend of  
1380 cents per share 2009 1070 cents 
equivalent to 891 pence this gives a total 
dividend for the year of 4380 cents per share 
2009 3580 cents an increase of 223
in addition to the interim and final dividends 
the company made a noncash distribution 
of one enquest share for every one petrofac 
limited share held immediately prior to the 
demerger which for accounting purposes 
had a total fair value of us5533 million 
equivalent to 16008 cents per share
forwardlooking statements
the business review pages 16 to 54 
contains forwardlooking statements with 
respect to the financial condition results 
and operations of the group by their nature 
forwardlooking statements involve a number 
of risks uncertainties or assumptions that 
could cause actual results or events to differ 
materially from those expressed or implied  
by the forwardlooking statements these 
risks uncertainties or assumptions could 
adversely affect the outcome and financial 
effects of the plans and events described 
herein forwardlooking statements contained 
in the business review regarding past  
trends or activities should not be taken as 
representation that such trends or activities 
will continue in the future petrofac limited 
undertakes no obligation to update the 
forwardlooking statements contained in 
this review or any other forwardlooking 
statements made
financing activities of us201 million ■ ■
including
payment of the 2009 final dividend   –
and 2010 interim dividend totalling 
us132 million
repayment of interestbearing loans   –
and borrowings of us32 million
financing the purchase of treasury   –
shares for the purpose of making  
awards under the group’s share 
schemes of us36 million
taxes paid of us99 million ■ ■
the group reduced its levels of interest
bearing loans and borrowings to us877 
million 2009 us1173 million following 
scheduled loan repayments in 2010 despite 
a reduction in the net assets of the group as  
a result of the enquest demerger the group’s 
gross gearing ratio fell to 113 2009 
restated 131 reflecting the reduction 
in interestbearing loans and borrowings
the group’s total gross borrowings before 
associated debt acquisition costs at the  
end of 2010 were us918 million 2009 
us1231 million of which 395 was 
denominated in us dollars 2009 510  
and 605 was denominated in sterling 
2009 490
as detailed in note 33 to the financial 
statements the group maintained a balanced 
borrowing profile at 31 december 2010  
with 517 of borrowings maturing within  
one year and 483 maturing between  
one and five years 2009 47 2 and 528 
the borrowings repayable within one year  
include us289 million of bank overdrafts 
representing 315 of total gross borrowings 
which are expected to be renewed during 
2011 in the normal course of business 2009 
us466 million and 379 of total gross 
borrowings repayable within one year 
including us200 million of revolving  
credit facilities
none of the company’s subsidiaries  
are subject to any material restrictions  
on their ability to transfer funds in the  
form of cash dividends loans or advances  
to the company
gearing ratio 
2010 2009
 
us millions unless otherwise stated  restated
interestbearing loans and borrowings a 877 1173
cash and short term deposits b 10630 14174
net cashdebt c  b – a 9753 13001
total net assets d 7791 8975
gross gearing ratio ad 113 131
net gearing ratio cd net cash  net cash 
 position position
financial review
continued 55    petrofac annual report and accounts 2010
business review 56    petrofac annual report and accounts 2010
our csr strategy 
health safety 
security and 
integrity assurance 
the safety of both our operations  
and our people is a strategic priority  
in 2010 we took systematic steps to 
further protect both action included  
an international programme to assess 
and develop our oil spill response 
capability comprehensive security 
arrangements in highrisk countries  
and a groupwide employee road safety 
awareness campaign 
turn to page 60 to find out more
allows us to grow  
our reputation as a 
socially responsible 
company
planning for  
a better future
petrofac works in partnership with the 
communities in which we operate from 
our strategic commitment to training local 
workers to our joint business ventures  
with customers and sponsorships of schools 
we work handinhand with our stakeholders
such close partnerships underpin our 
business strategy our relationships with 
customers reflect and depend upon our 
respect for their communities and to recruit 
and retain exceptional people we must be a 
responsible employer to remain successful 
we need to make responsible business 
practices – which to us mean achieving 
commercial success in ways that respect 
people communities and the natural 
environment – part of our culture 
due to our rapid growth our approach to 
corporate social responsibility csr has not 
been as coherent as we would have wished 
but this is something we are proactively 
addressing in 2010 our board committed  
to the development of a new csr strategy 
aligned to the ten principles of the un global 
compact to which we became a signatory  
in 2009 we also worked to strengthen the 
strategic focus senior management and 
organisation of the areas that are particularly 
linked to the wider csr arena health safety 
security environment and integrity assurance 
hsseia human resources hr compliance 
and community investment
we are now embarking on a wellplanned 
csr journey we still have a long way to  
go but believe recent activities have set us  
on the road to becoming the truly socially 
responsible company we want to be 57    petrofac annual report and accounts 2010
environment
limiting carbon emissions meeting 
exacting environmental management 
standards and monitoring customer 
discharges are just some of the ways  
we limit our impact on the environment 
we also seek to enhance the natural 
world in 2010 our third planet petrofac 
month mobilised thousands of staff  
in environmental activities ranging from 
mangrove planting to litter collection  
turn to page 62 to find out more
community
we want every community in which 
petrofac works to feel included and 
respected and for our legacy there to  
be greater selfsufficiency increased 
business opportunities and new 
locallydeveloped skills our investment 
in education involves assisting young 
people at all levels from primary school 
funding to scholarships in india and 
engineering fellowships in the uk 
turn to page 66 to find out more
marketplace
ethical behaviour is promoted and 
encouraged right across petrofac in 
2010 we commissioned transparency 
international to review our bribery and 
corruption risk management strategy and 
emphasised our commitment to human 
rights we sought guidance on how we 
could improve manage and integrate 
csr practices within our organisation 
and carried out a targeted survey of 
stakeholder perceptions of petrofac 
turn to page 58 to find out more
corporate social responsibility
our people
petrofac’s success is rooted in its 
exceptional people in 2010 we acted  
to ensure our global workforce continued 
to have the right technical and leadership 
skills to serve our customers and grow 
our business groupwide hr initiatives 
included the launch of a global 
performance management capability 
and the introduction of a consistent 
employee grading system 
turn to page 64 to find out more
 corporate social responsibility 58    petrofac annual report and accounts 2010
marketplace
our business ethics
ethical conduct is one of petrofac’s five  
core values we strive to display the highest 
standards of transparency and integrity in  
the way we operate and to deliver on our 
promises
as a signatory to the united nations global 
compact we are committed to making 
continuous improvements in our approach  
to human rights labour environment and 
anticorruption in 2010 we submitted 
updates on our progress in the areas of  
the environment and anticorruption which 
as is customary were posted on the global 
compact website
our code of business conduct sets out clear 
standards of behaviour for our entire group 
and highlights our speaking up process 
whereby employees can raise concerns  
in complete confidence we ask all our 
employees partners and subcontractors 
to acknowledge the code by the end of 
2010 around 6000 employees have now 
completed a bespoke elearning module  
on the code
combatting corruption
as our code of business conduct states 
petrofac does not permit the giving or 
receiving of bribes in 2010 in consultation 
with our businesses we developed a risk 
management standard that covers the full 
remit of bribery and corruption in response  
to the uk bribery act 2010
in 2011 we will deliver an extensive education 
programme across the group to implement 
our risk management standard and to 
help ensure that we have a consistent  
and effective risk management strategy for 
the prevention of bribery and corruption in  
our operations
other anticorruption activities include
commissioning transparency international ■ ■
to review our bribery and corruption risk 
management system and attending a 
number of transparency international 
sponsored events
being a signatory of the world economic ■ ■
forum’s partnership against corruption 
initiative and attending its annual 
conference in december 2010
human rights
in 2010 petrofac updated its ethical social 
and regulatory risk policy wwwpetrofaccom
communities to emphasise that it ‘does not 
engage in any business activities that could 
implicate the company directly or indirectly 
in the abuse of human rights’ in 2011 we 
plan to undertake a review of our exposure to 
this risk in the countries in which we operate
engaging with our stakeholders
we are keen to learn from and engage with 
others to ensure that we pursue best practice 
and focus on the areas of most significance 
for our stakeholders
during the year we undertook our first 
stakeholder survey to gauge awareness of 
and response to petrofac the survey was 
undertaken on our behalf by a specialist  
third party and around 100 of petrofac’s 
stakeholders were surveyed on an 
unattributed basis including customers 
partners suppliers shareholders analysts 
media industry bodies ngos and 
community groups the results were shared 
with the group’s leadership team at the 
annual leadership conference and will  
be used a benchmark for future surveys
in 2010 we undertook a benchmarking 
exercise with business in the community 
bitc to assess our strengths and 
weaknesses across the four management 
areas marketplace workplace community 
and environment we have used the  
bitc framework to form the basis of  
our csr reporting  
as a result we have developed a csr 
strategy that addresses the most important 
corporate responsibility issues for petrofac 
namely climate change local content 
skills and education and road safety 
in 2011 we plan to broaden the dialogue 
around our csr strategy with the involvement 
of external audiences as part of a 
stakeholder engagement programme
delivering 
stakeholder survey
 
 
 
stakeholders completed a reputation 
survey on petrofac in 2010
100
elearning in petrofac
 
 
the approximate number of employees 
who had completed cobc elearning  
by the end of 2010
6000 59    petrofac annual report and accounts 2010
the highest standards of 
transparency and integrity  
in the way we operate
corporate social responsibility
 corporate social responsibility 60    petrofac annual report and accounts 2010
health safety security and  
integrity assurance 
ensuring 
the safety of our people 
customers and operations 
is our highest priority
in 2010 we continued to focus on two 
areas
the technical integrity of the plants we ■ ■
design build and operate to minimise  
the risk of major accidents such as fire  
and explosion
the prevention of occupational safety risks ■ ■
to help prevent personal injury
plant integrity
during the year petrofac reinforced  
the importance of robust asset integrity 
management with an internal education  
and awarenessraising programme we 
designated 2010 as the year of integrity and 
quality across our engineering businesses 
and created supporting elearning modules 
dvds of case studies and customised 
presentations technical integrity was  
the theme of our annual safety seminar 
which was attended by 90 senior managers 
including our group chief executive group 
chief operating officer and petrofac’s seven 
business unit managing directors we also 
created the role of director of integrity to 
champion best practice 
the circumstances were also separately 
reviewed by the executive management team 
notwithstanding this deeply regrettable 
incident our safety performance – which we 
measure according to occupational safety 
and health administration rules – was 
maintained at a similar level to 2009 our 
recordable incident frequency rate was  
018 per 200000 manhours 2009 036 
and our lost time injury frequency rate was 
0026 2009 0020 there were 13 ‘major 
potential incidents’ 2009 23 ‘potential’ is 
the key word here – the criteria for reporting 
is the potential for harm so although very 
few of these incidents actually resulted in 
personal injury or damage all were reviewed 
in great detail 
safe driving is one of our eight ‘golden rules 
of safety’ and in 2010 was the focus of a 
groupwide employee campaign during  
the year our vehicles travelled more than  
77 million km between locations or on 
project sites equivalent to driving almost 
2000 times around the globe our driving 
incident frequency rate which records  
major or serious vehicle incidents fell  
from 029 incidents per million km driven  
in 2009 to 003 whilst this improvement is 
encouraging we continue to regard driving 
as one of our biggest areas of risk and will 
not slacken our efforts to improve further
we investigate all incidents and accidents 
circulate guidance from lessons learnt and 
follow up actions our aspiration is to have 
no recordable incidents of any kind and 
were pleased that many sites achieved  
this during the year
our asset integrity review board met 
monthly to review plant integrity the board 
is chaired by our offshore engineering  
operations managing director and our 
hsseia director and involves operations 
managers from all operated sites the 
meetings help anticipate potential issues 
and provide a forum for peer review  
and support in 2010 we improved  
the metrics we use to measure asset 
integrity performance and analyse trends  
each operation reports against around  
30 measures covering plant reliability and 
condition the management of maintenance 
and assurance activities and organisational 
matters such as competence assurance
following recent events in the gulf of 
mexico we acted to confirm that our 
operations are protected against major 
incidents and in the event they do  
occur that we respond effectively  
our programme included
an assessment of oil spill response ■ ■
capability at all oil  gas production facilities 
review of emergency response ■ ■
arrangements
a technical safety review of five major ■ ■
facilities
new group standards for oil spill response ■ ■
and integrity management 
a revision to our standards for emergency ■ ■
response and crisis management 
we continued to work with the wider 
industry to reduce risk petrofac training 
services is a leading emergency response 
trainer while our uk emergency response 
service centre in aberdeen provides a 
24hour integrated response capability we 
are members of the uk oil spill prevention 
and response advisory group and actively 
support the uk oil  gas industry safety 
initiative step change in safety and its 
working groups
a safe working environment
we strive to ensure that all our people have 
a safe and secure workplace 
sadly in 2010 a fatal accident occurred at 
our el merk project in algeria the incident 
was investigated fully and the results of the 
investigation were reviewed at our quarterly 
group incident review board which  
is a senior level review attended by all  
the business unit managing directors to 
make sure that lessons learned from any 
significant incident are effectively shared 
77 million km
we drove 77 million km or almost  
2000 times around the world
driving incident frequency rate
incidents per million km driven
08 09 10
022
029
003 61    petrofac annual report and accounts 2010
our people have a safe  
working environment
staff health and welfare
high standards of staff health and  
welfare are both good employer practice 
and essential to efficient operations  
we provide health and fitness checks  
for senior managers and comprehensive 
medical assessments for those at risk 
particularly when located offshore and 
abroad exercise and recreational facilities 
are provided at most sites to encourage 
personal fitness and medical teams are 
based at most facilities occupational  
health support is also available
security 
the hazardous nature of our work is 
heightened in some countries by political 
instability or civil unrest to meet such 
challenges petrofac invests a great  
deal of effort in protecting the security  
of our people and of our physical assets
in 2010 our recently appointed group head 
of security implemented a security audit  
of all our facilities this rolling programme 
complements the security review and 
preparations we carry out before 
commencing all new projects during  
the year we carried out a comprehensive 
review in turkmenistan and our move  
into iraq and nigeria involved particularly 
intensive security provisions 
we monitor intelligence about changing 
security situations and keep our staff 
informed for example by sending out 
weekly travel and security guidance  
we act quickly to protect our people  
when conditions deteriorate in 2010  
we evacuated a number of staff from 
perceived troublespots
lost time injury frequency rate
per 200000 manhours
0057
06 07 08 09 10
0067
0033
0020
0026
recordable incident frequency rate
per 200000 manhours
041
06 07 08 09 10
035
032
036
018
manhours worked
million manhours completed by 
employees and subcontractors
08 09 10
67
70
76
corporate social responsibility
 corporate social responsibility 62    petrofac annual report and accounts 2010
environment
reducing 
contributing to communities
we aim to bring petrofac people and  
the community together to make a positive 
difference to our environment
our third annual planet petrofac environment 
month celebrated biodiversity in support  
of the united nations’ ‘international year  
of biodiversity’ thousands of employees  
at 17 locations took part in such activities as 
mangrove and native tree planting collections 
for orphanages guided nature walks 
community lectures and littercollections  
on beaches and seabeds
as part of our partnership with local 
communities we are a member of the arab 
forum for environment and development 
and within the uae work closely with the 
emirates environmental group and sponsor  
a renewable energy research programme  
at the american university of sharjah
1650 
trees were planted as part of environment 
month campaign in 2010
carbon emissions
 
 
 
 
tonnes of carbon emissions  
generated in 2010
08 09 10
185
208 206
tonnes of co2 emitted
thousands
205695
in 2010 petrofac acted  
to both limit our impact  
on the environment and to 
work with stakeholders to 
protect the natural world 
we appointed a group head of environment 
to help raise standards across the company 
and lead strategic environmental initiatives 
the new role complements the environment 
teams already active in our business units
we also developed plans for a companywide 
environment steering group involving senior 
business heads and functional environment 
managers this group will focus on strategic 
issues such as pollution prevention waste 
management and resource consumption  
and will be supported by an environmental 
working group
our carbon footprint
our operations including joint venture 
operations but excluding customerowned 
facilities emitted 205695 tonnes of co2 
2009 208100 this reduction is due to the 
fact that our share of the co2 emissions for 
the dons field was lower as the asset was 
transferred to enquest plc in april as a  
result of the demerger of our ukcs assets
petrofac is proactive in sharing carbon 
generation data in 2010 we contributed  
to the worldwide carbon disclosure  
project and in the uk participate in  
the government’s carbon reduction 
commitment energy efficiency scheme
monitoring for customers
as well as measuring our own carbon 
emissions petrofac monitors and collects 
carbon data for the facilities we manage for 
customers we also perform more extensive 
monitoring for customers of the north sea 
facilities that we operate under the osloparis 
convention environmental management 
requirements additionally under the terms  
of the european environmental emissions 
monitoring system we monitor discharges  
of hydrocarbons heavy metal and radiation 
contamination and for air emissions of  
sulphur dioxide oxides of nitrogen and  
volatile organic carbons as well as for carbon 
dioxide we also segregate all waste leaving 
operated facilities and report it by category
environmental standards
comprehensive environmental impact 
assessments are carried out prior to all new 
projects we follow a systematic approach  
to environmental management even in 
geographies where such high standards  
are not required by law around 95 of  
work that we do calculated by manhours 
expended is covered by the independently 
verified iso 14001 international standard   corporate social responsibility
63    petrofac annual report and accounts 2010
our global  
carbon footprint
corporate social responsibility 64    petrofac annual report and accounts 2010
our people
our customers use 
petrofac because they 
know they can rely on the 
skills and commitment of 
our people 
in 2010 we continued to take steps to ensure 
we had the best people with the right skills 
to serve our customers – not just now but for 
decades to come such activity is essential in 
the context of the wider industry’s challenge 
to ensure it has the right talent for the future 
we focused particularly on resourcing talent 
management and employee engagement and 
on developing a more integrated organisation
effective resourcing
we applied a more strategic approach to 
companywide resourcing including the 
drafting of a fiveyear human resource 
strategy and the appointment of a head  
of resourcing 
we recruited widely including the 
appointment of more than 120 senior 
managers to meet the immediate needs 
of our expanding business and help provide 
the next generation of leaders 
reflecting our strategic commitment to local 
content wherever possible we aim to recruit 
train and develop employees from local 
communities for example following the 
december 2010 award of a contract to 
develop the sepat offshore early production 
system in malaysia we are staffing the project 
almost entirely with local employees 
talent management
we want to make sure our employees have 
the right technical and managerial skills to 
succeed during the year we further refined 
our development programmes for all levels  
of staff
to coach the executives of tomorrow  
we began a partnership with the london 
business school to create ‘petrofac 
leadership excellence’ the programme  
to aid the development of our senior people 
will be rolled out in 2011 in november 2010 
we also gathered more than 70 of our  
most senior managers at a leadership 
conference to share best practice strengthen 
relationships and teamwork and build 
strategic understanding
to nurture leadership potential we assessed 
recent graduate recruits and designed 
development opportunities for those likely to 
become managers or directors additionally 
all our business units took steps to create 
challenging assignments to equip people  
for more senior positions
we built development frameworks for  
our wider workforce by commencing the 
introduction of individual development  
plans for all employees the extension of our 
elearning capability to around two thirds of 
our locations was another step towards our 
strategy of improving technical competences 
creating one petrofac
our new enterprise resource planning erp 
system tempo which we began rolling out 
in 2010 is helping to establish a consistent 
approach to group hr initiatives the system 
supports the launch of a global performance 
management capability including an annual 
appraisal with midyear review a common 
supporting 
our values
91 of participants in our survey share 
our company values
petrofac people are
safe ■ ■
ethical ■ ■
innovative ■ ■
costconscious ■ ■
responsive to customers  ■ ■
and always focus relentlessly  
on delivering results
“ i never cease to be impressed  
by the determination of our people 
throughout our 30year history  
we have encountered numerous 
challenges particularly in relation  
to the execution of our projects  
in these instances it is the absolute 
commitment – the relentless focus –  
on finding a solution that has often 
created positive outcomes from  
difficult situations”
ayman asfari 
group chief executive
behavioural competence framework and  
clear visibility of development needs  
in another move towards groupwide 
consistency we began the roll out of  
a global grading system for employees
petrofac has a committed and engaged 
workforce in 2009 our biennial employee 
survey petrovoices showed 91 of 
participants share company values and 
almost one in three employees are part  
of our share incentive schemes as part of  
our support for employee share ownership 
we implemented an employee share portal 
and an automated staff share dealing facility 
in addition in early 2010 we appointed an 
experienced share plan manager to help 
improve our service to employees we were 
delighted to be commended by ifs proshare 
as part of its annual award scheme
effective communication
communication is key to engaging our people 
and creating a unified culture 
during the year we sought to communicate 
more effectively with our dispersed 
multicultural workforce many of whom work 
in remote locations with limited digital access
new talent
 
 
 
 
 
new staff joined petrofac in 2010
–  97 of graduates hired since 2008  
are still working for petrofac
–   graduates recruited  
2008 – 104 
2009 – 120 
2010 – 107
–  4 of petrofac employees left  
by choice in 2010
3200 65    petrofac annual report and accounts 2010
the development and 
training of our people
we created a team briefing framework  
partly in response to calls for better internal 
communication particularly at a local level  
in the petrovoices survey ‘team talk’ 
incorporates strategic business unit and  
local content and following a 2010 pilot will 
be rolled out globally it will form one part of  
a planned ‘toolkit’ to help the whole business 
communicate more effectively
specific staff communication programmes 
supported key group activity such as the 
enquest demerger the employee grading 
initiative the erp roll out the petrovoices 
survey results and environment month  
we also continued to produce the quarterly 
petrofacts magazine and again ran the picture 
petrofac photography competition for staff
in line with further petrovoices survey 
feedback our business units evolved their 
own communications strategies supported 
by intranets newsletters and event 
programmes
in 2011 a new internal communications 
manager will manage the continuing 
development of our employee communications 
offering including the planned launch of  
a more powerful companywide intranet 
during the year we will also undertake  
our third petrovoices employee survey
we are proud of how highly our people 
identify with our values as mentioned above 
in our most recent employee survey 91 of 
participants said they shared petrofac’s values
in 2011 we will celebrate employees who 
particularly embody our values in the way  
they work with the launch of the petrofac eve 
awards programme designed to recognise 
and reward excellence values and energy 
this is a new initiative that will be open to  
all employees worldwide to demonstrate  
how they embody one or more of the values 
in their daily activities in addition to raising 
awareness of our values and what they mean 
the awards seek to celebrate and recognise 
the achievements of the exceptional people 
who work across our group
corporate social responsibility
 corporate social responsibility 66    petrofac annual report and accounts 2010
community
investing 
petrofac aims to build 
relationships with  
and to create value  
for the communities  
we work with around  
the world
we believe this approach both fosters local 
stability during the period of our projects  
and by encouraging the development of the 
wider community – beyond our workforce – 
helps build sustainable communities for the 
longterm 
to ensure we approach future community 
investment in the best way in 2010  
we developed a new strategy this new 
community investment strategy involves a 
fivestage process as shown in the diagram 
below that will ensure that
national community investment strategies ■ ■
are developed for each new market prior  
to entry with csr planning part of the 
prebid activity
local stakeholders are involved in strategic ■ ■
planning to assess community needs and 
expectations and in ongoing dialogue
evaluation systems are developed for all ■ ■
new projects
continuous improvement cycle 
the strategy is being implemented by our  
first fulltime group head of corporate social 
responsibility who was appointed in 2010
delivering projects with local employees is 
integral to our business strategy and one  
of our key differentiators our community 
investment approach supports this strategy 
by helping to equip communities with 
essential skills
in october 2010 we designed refurbished 
and equipped syria’s first oil  gas training 
centre see case study as a donation to the 
syrian government in support of its drive to 
develop personnel for its growing oil  gas 
sector in algeria we built a construction  
skills training centre to equip local people  
for work in the national oil  gas industry
apart from supporting professional 
development our community investment 
programme fosters all levels of learning  
from elementary and secondary schooling  
to higher education this support ranges  
from providing scholarships to pupils in india 
and kyrgyzstan to funding employee ‘science 
ambassadors’ who visit uk schools enthusing 
young people about science and engineering 
during the year the first intake of uk 
engineering students from the petrofac  
royal academy of engineering fellowship 
programme finished their yearlong masters 
courses in financing the £250000  
threeyear programme we hope to go  
some way to offset the scarcity of engineers 
at western universities that is leading to  
a critical skills shortage in our industry
developing local workforces
aspiring syrian oil  gas workers now 
have the chance to develop their skills  
at the country’s first dedicated industry 
training centre
the national training centre was 
designed refurbished and equipped by 
petrofac and was inaugurated in october 
2010 by the syrian prime minister his 
excellency mohammad naji ottri it will 
deliver yearlong competenceled training 
courses to up to 120 syrian people each 
year with instruction in technical english 
and in technical and safety training across 
the electrical mechanical instrumentation 
and production disciplines
speaking at the launch event group chief 
executive ayman asfari said
“ petrofac has been active in syria  
since the early nineties through  
our engineering  construction 
business and we have grown up 
alongside the oil  gas industry 
here we have been honoured 
today by the presence of  
his excellency the prime minister  
which reflects the importance  
of this new facility to syria and  
i am proud of our involvement”
phase 2
review  
and plan
phase 4
manage  
and support
phase 3
deploy  
and 
implement
phase 1
visit and 
assess
phase 5
stand
alone 67    petrofac annual report and accounts 2010
in communities  
we live and work in
investing 
£100000 
raised by employees for local  
good causes around the world
reflecting the focus we place on safe driving 
internally our community education focus 
extends to road safety in the uae for 
example we have committed dhs 15 million 
to support a yearlong sharjah police road 
safety campaign aimed at young drivers and 
in the uk donated £15000 to an aberdeen
area school ‘safe drive stay alive’ campaign 
engaging employees
staff csr champions encourage our people 
to engage in local good causes around the 
world in 2010 employeeled activity included 
sharjah employees raising us100000 
– which was matched by petrofac – for 
pakistani flood victims aberdeen staff raising 
£40000 to fund juvenile diabetes research 
and our woking office sponsoring a teenage 
sailor with disabilities who is aiming to 
compete in the 2012 paralympic games
looking ahead our key community objective 
for 2011 is to fully assess and understand the 
wide range of activities that we are involved  
in across the organisation and to measure 
their value the development of kpis for  
our community investment programme  
is another priority
for more information about  
our csr programmes see 
wwwpetrofaccomcommunities
corporate social responsibility
 corporate social responsibility 68 petrofac annual report and accounts 2010
directors’ information 
directors who served in 2010
1 3 4 2
1 rodney chase
nonexecutive chairman 
a
 
rodney became nonexecutive chairman  
of petrofac in june 2005 he spent 38 years 
at bp plc including 11 on its board and  
was deputy group ceo on his retirement in 
may 2003 his other roles at bp included time  
as ceo of the exploration  production and 
marketing and refining divisions rodney is a 
nonexecutive director of computer sciences 
corporation nalco company and tesoro 
corporation he is a former board member  
of tesco plc boc plc and diageo plc 
rodney is 67 
rodney is stepping down from the board  
at the 2011 agm
2 ayman asfari
group chief executive 
a
ayman became group chief executive of 
petrofac limited in january 2002 he joined 
the group in 1991 to establish petrofac 
international of which he was ceo he 
has more than 30 years’ experience in the  
oil  gas industry having formerly worked  
as managing director of a major civil and 
mechanical construction business in oman 
he is a member of the board of trustees of the 
american university of beirut ayman is 52
3 maroun semaan
group chief operating officer
maroun was appointed group chief 
operating officer in january 2009 with 
overall responsibility for engineering  
construction engineering  construction 
ventures engineering services offshore 
engineering  operations and training 
services he joined the group in 1991 to 
establish petrofac international previously  
he managed oil  gas pipeline process 
facilities and civil works construction 
contracts in oman and bahrain with the 
consolidated contractors international 
company he is a member of the board of 
trustees of the american university of sharjah 
and a founding member of the board of 
trustees of the arab forum for environment 
and development maroun is 55
4 kjell almskog
senior independent director  
nonexecutive director 
a b c d
kjell joined the petrofac board in march 2005 
he was chief executive of kvaerner from 1998 
until its merger with aker in 2001 before this 
he spent 13 years with the international abb 
group including time as deputy group ceo 
and head of the oil gas  petrochemicals 
division kjell is nonexecutive deputy 
chairman of kverneland group asa 
nonexecutive board member of equinox 
offshore accommodation limited and a 
senior adviser to the taylor group kjell is 70
kjell will retire from the board at the  
2011 agm 69 petrofac annual report and accounts 2010
governance
8 5
a member of the nominations committee
b member of the audit committee
c member of the risk committee
d member of the remuneration committee
6 7
directors’ information
5 keith roberts
chief financial officer
keith joined petrofac as chief financial 
officer in march 2002 he was formerly a 
managing director and operating committee 
member of corporate finance advisory  
firm hawkpoint partners his previous 
experience includes roles in commercial 
banking with standard chartered bank 
and county bank the merchant banking 
subsidiary of national westminster bank 
he is a former nonexecutive director of 
the peacock group plc keith is 54
6 rijnhard van tets
nonexecutive director 
a b c
rijnhard became a nonexecutive director  
in 2007 he is general partner of laaken  
asset management nv rijnhard advised  
the managing board of abn amro between 
2002 and 2007  having previously served  
as a managing board member for 12 years  
at abn amro his roles included that  
of chairman of the wholesale clients and 
investment banking group he is non
executive chairman of arcadis nv euronext 
amsterdam nv euronext nv and equity trust 
holdings sarl and a nonexecutive director 
of iff europe nyse euronext inc stichting 
administratiekantoor bührmann nv and of 
various charities rijnhard is 63
7 thomas thune andersen
nonexecutive director 
a b d
thomas became a nonexecutive director  
in may 2010 he spent 32 years at the  
ap møllermærsk group with an international 
career ending as ceo and president of 
mærsk’s oil  gas as he also served 
on mærsk’s main board and its executive 
committee from 2005 to 2009 he is a 
nonexecutive director of scottish  southern 
energy plc chairman of the lloyds register 
group board of trustees chairman of the 
british danish chamber of commerce and  
a nonexecutive director of vkr holding 
thomas is 56
8 stefano cao
nonexecutive director 
a c d
stefano became a nonexecutive director  
in may 2010 he is ceo of sintonia sa  
a holding company owning infrastructure 
assets including toll roads airports and 
telecoms stefano has 33 years’ experience 
in the oil  gas industry from 2000 to 2008 
he was coo of eni’s exploration  production 
division before which he spent 24 years  
at saipem spa the international oil  gas 
services group holding such senior roles  
as ceo chairman and coo he is a former 
independent director of telecom italia spa 
stefano is 59 70 petrofac annual report and accounts 2010
directors’ information
directors appointed in 2011
9 norman murray
nonexecutive director 
e
norman joined the petrofac board as a 
nonexecutive director in march 2011 with  
the intention that he will succeed rodney as 
chairman after the 2011 agm he is chairman 
of cairn energy plc and a nonexecutive 
director of greene king plc and robert 
wiseman dairies plc prior to his portfolio 
career norman spent 25 years in the venture 
capital industry he cofounded morgan 
grenfell private equity limited and was  
also a director of morgan grenfell asset 
management limited he is a former 
chairman of the british venture capital 
association and a past president of the 
institute of chartered accountants of 
scotland norman is 63 
10 roxanne decyk
nonexecutive director 
f
roxanne joined the petrofac board in  
march 2011 having retired from the royal 
dutch shell group after 11 years she held  
a number of roles at shell including head  
of global government affairs and corporate 
affairs director and was a member of shell’s 
executive committee from 2005 to 2009  
prior to joining shell roxanne had various 
roles at amoco corporation and navistar 
international she is an independent  
director of snapon incorporated and  
alliant techsystems inc she is a former 
director of logica plc and material sciences 
corporation roxanne is 58
11 andy inglis
chief executive energy developments and 
production solutions
andy joined petrofac in january 2011 and 
was appointed to the board in march 2011 
he spent 30 years with bp most latterly as 
ceo of its exploration  production business 
andy was an executive director on the bp plc 
board between 2007 and 2010 he started 
his bp career as a project engineer on various 
north sea projects followed by commercial 
and operating roles in bp’s upstream 
business he became executive vice 
president and deputy chief executive  
of bp exploration  production in 2004  
he is a former nonexecutive director  
of bae systems plc andy is 51
9 10 11
e  norman murray will be appointed chairman  
of the nominations committee after the  
2011 agm subject to shareholder approval
f  roxanne decyk will be appointed to the 
nominations audit risk and remuneration 
committees after the 2011 agm subject to 
shareholder approval 71 petrofac annual report and accounts 2010
governance
corporate governance report
corporate governance 
report
your board is responsible for 
promoting longterm shareholder value 
in a responsible manner that takes 
account of our various stakeholders
dear shareholder
this is my final governance report as i will be stepping down  
from the board at the forthcoming annual general meeting agm 
since i joined the board we have made great progress in many  
areas including in relation to our governance framework nevertheless 
we are always seeking to improve our processes within the 
overarching principle that we do what is best for our company  
and its shareholders 
we are aware that companies are in my view quite correctly being 
challenged to write governance reports that are more engaging and  
less riddled with the ‘fungus of boiler plate reporting’ in response 
this year we have tried to write a more accessible report
what is our approach to governance
petrofac is incorporated in jersey and has a premium listing on  
the london stock exchange the company is therefore expected  
to meet the uk’s highest standards of regulation and corporate 
governance a company with a premium listing is required by the 
united kingdom listing authority to adopt the new uk corporate 
governance code ‘uk code’ regardless of whether it is incorporated 
in the uk or elsewhere
 
this marks a change from last year when due to our jersey 
incorporation we were not obliged to adhere to the uk code’s 
predecessor the combined code at that time we were merely 
required to govern ourselves in line with governance practice in jersey 
where there is no formal code however petrofac has chosen to follow 
the combined code since the company first listed almost six years 
ago as we felt it was best practice we now welcome the change in 
the compliance regime for premium listed companies incorporated 
outside the uk
 
we understand though that good governance goes beyond 
adherence to a code although there is of course value in monitoring 
compliance against rules which are generally formulated for good 
reason nevertheless the fundamental value of good governance is 
that it seeks to ensure that a company is well run as well as promoting 
challenge accountability and transparency it provides a framework 
that articulates a company’s goals and objectives and allows decisions 
to be taken by the right people at the right time we believe that  
we have made good progress in strengthening and deepening our  
governance framework this year and will aim to improve further in 2011
the financial reporting council frc published the uk code in 2010 
the frc published the new code earlier than originally planned both 
in response to various corporate failures in 2008 and the publication  
of the walker report in 2009 on the governance of banks and other 
financial institutions questions were rightly asked at the time about 
whether the uk’s governance regime continued to be effective while 
the frc concluded that the uk’s ‘comply or explain’ regime continued 
to be largely appropriate it introduced a number of changes that  
we welcome in particular the more explicit requirement for boards  
to articulate their risk appetite and to identify and determine the 
significant risks they are prepared to take
we are required to apply the uk code from the start of 2011  
and formally report against it for the first time next year we believe 
however that it makes sense to tell you now about our progress  
in implementing the uk code and this is what we have done  
even if some matters are still work in progress
rodney chase  72 petrofac annual report and accounts 2010
this is the last year we report our compliance with the old combined 
code and i am pleased to say that we consider that throughout 2010 
the company complied with the main principles and all relevant 
provisions of the 2008 combined code
1
 
in addition to this report the company has also prepared a corporate 
social responsibility csr report that addresses our engagement with 
society in general this is on pages 56 to 67 
what should the board be doing
your board is responsible for promoting longterm shareholder  
value in a responsible manner that takes account of our various 
stakeholders
we provide entrepreneurial leadership that has grown and we believe 
will continue to grow the business to enable such continued growth 
we set corporate strategy and make sure that petrofac has appropriate 
financial capital and the right kind of people to deliver that strategy
to attract and retain high calibre employees we also seek to ensure 
that the company has the right remuneration policy and to make  
sure that we remain sustainable we focus on succession planning
we want our men and women to share our values as well as having 
the correct technical expertise this is particularly important for an 
international company like petrofac with employees drawn from 
more than 70 nations your board works hard to set the right tone  
by taking responsibility for our code of business conduct and for 
other important group policies
taking and managing risks are an integral part of being entrepreneurial 
nevertheless it is vital that we know and understand the significant 
risks that the company faces ensuring that petrofac has an appropriate 
framework of internal controls and risk management is therefore  
an essential part of your board’s work
we work to promote the success of the company for many people  
but our shareholders are of course our principal focus an essential 
part of our job therefore is maintaining a dialogue with shareholders
the board has a formal schedule of matters reserved to it for 
decision which includes
setting the group’s strategy ■ ■
approval to enter into contracts which are deemed to be material either ■ ■
strategically or by reason of size
approval of the annual budget ■ ■
approval of major corporate transactions ■ ■
approval of major changes to the group’s capital structure ■ ■
approval of key policies such as those relating to health safety ■ ■
security environment and integrity assurance hsseia and our  
code of business conduct 
preparing the group’s financial statements ■ ■
recommending or declaring a dividend ■ ■
reviewing the group’s overall governance arrangements including ■ ■
approval of the matrix of delegated authorities
maintaining effective internal controls and risk management ■ ■
succession planning and appointments to the board ■ ■
setting senior executive remuneration ■ ■
reviewing the performance of the board itself and its committees ■ ■
what did the board do in 2010 
having given some idea of our general responsibilities i will now 
set out some of the specific things that your board did in 2010 it is  
not an all encompassing list but it does include some of the year’s  
key highlights
entrepreneurial leadership
entrepreneurial leadership could be paraphrased as our management 
team putting strategy into action this year the board spent significant 
time overseeing the demerger of the don assets into enquest plc 
which represented a delivery of the ‘build and harvest’ strategy for 
energy developments also significant were the board’s approval for 
the ticleni contract and our investment in seven energy international 
limited which saw us both move into new geographies and do so via 
novel commercial arrangements which we want to pursue we also 
monitored the progress of the south yoloten contract in turkmenistan 
throughout 2010 and were pleased to end the year having successfully 
completed the conversion of its second phase
setting the tone
we approved a number of policies including our hsseia plan for 
2010 we worked hard to develop a more strategic approach to our 
csr activities we now have a dedicated group head of csr and 
monitored ongoing progress with two formal updates we also spent 
considerable time in risk committee discussing our response to  
the bribery act 2010 doubtless such discussions will continue in 
2011 particularly as the uk government recently announced a delay  
in implementing the act
setting strategy
we increased the time spent on discussing and setting strategy  
as well as having a dedicated day in may focused on strategy  
we now spend most of our december board meeting monitoring 
progress in strategic delivery with reference to our budget and 
fiveyear plans
increasing effectiveness
we undertook an externally facilitated board evaluation
succession planning
the quite extensive changes in the board’s composition are the 
culmination of more than a year’s work
accountability
we have started a process to ensure that we comply with the uk 
code’s new requirement that a board should articulate explicitly its  
risk appetite and determine the nature and extent of the significant 
risks it is prepared to take this will complement our long established 
framework of internal controls and risk management
 
1  a copy of the 2008 combined code is publicly available at wwwfrcorguk
corporate governance report 
continued 73 petrofac annual report and accounts 2010
governance
who is on the board
as chairman i am responsible for leading your board and ensuring 
that it operates effectively after a relatively long period of stability 
there have been a number of membership changes as it is now 
almost six years since we listed this reflects our broad policy that 
nonexecutive directors should generally serve two threeyear terms
we currently have 11 directors comprising the chairman six non
executive directors and four executive directors and they are listed  
in the table below
rodney chase chairman
kjell almskog senior independent  
director
thomas thune andersen nonexecutive director appointed  
13 may 2010
stefano cao nonexecutive director appointed  
13 may 2010
roxanne decyk nonexecutive director appointed  
1 march 2011
norman murray nonexecutive director appointed  
1 march 2011
rijnhard van tets nonexecutive director
ayman asfari group chief executive
maroun semaan group chief operating 
officer
andy inglis chief executive energy
developments and 
production solutions
appointed  
1 march 2011
keith roberts chief financial officer
this is intended however to be a temporary state of affairs after  
more than six years on the board both kjell and i will be stepping 
down from the board at the conclusion of the agm and the board  
will once again revert to nine directors
you can find biographies of your directors on pages 68 to 70 we have 
made considerable efforts to build a board with the right balance of 
diversity and industry expertise diversity is healthy as it helps guard 
against ‘group think’ and promotes constructive challenging debate 
you will see that your directors are drawn from across the world and 
have varied career histories with no single type of person dominating 
the board we are however fortunate in that our board has directors 
with a great deal of experience in the oil  gas industry both in 
exploration and production and lumpsum contracting this is 
essential if we are to safeguard the interests of shareholders
all nonexecutive directors who served during 2010 and to date are 
independent in judgement and character directors are required to 
disclose any potential conflict to the board for its consideration and  
i am not aware of any relationship or circumstance which is likely to 
prejudice or could appear to prejudice the judgement of any director
 
during 2010 bernard de combret michael press and amjad bseisu 
stepped down from the board and i thank each of them for their 
respective contributions to the growth of petrofac thomas thune 
andersen and stefano cao are proving worthy successors this year 
roxanne decyk norman murray and andy inglis joined the board and  
i welcome them norman murray will take over as chairman subject  
to shareholder approval at the agm 
corporate governance report
how is the board organised
as a jersey company our board is unitary in nature this means  
that all our directors share equal responsibility for the decisions that 
we make executive and nonexecutive directors need to be able  
to work together in an atmosphere of openness trust and mutual 
respect it is therefore important that all directors see the chairman  
as a fair and impartial individual his relationship with the group  
chief executive and the senior independent director are particularly 
important since these two individuals represent the views of 
management and nonexecutive directors respectively
i hold regular private meetings with ayman asfari and kjell almskog 
both between and at our board meetings i believe therefore that i am 
equally informed about the views of management and nonexecutive 
directors this insight assists me in two ways i am better able to set 
the agenda for our board meetings and i can ensure that all directors 
contribute at our meetings
both the chairman and group chief executive have clearly defined 
terms of reference and these are set out in writing the split in 
responsibilities is shown in the table below
roles
chairman group chief executive
lead the board implement strategy
ensure effective communication 
with shareholders
develop manageable goals 
and priorities
ensure effective communication 
flows between directors
lead and motivate the 
management teams
facilitate the effective 
contribution of all directors
develop proposals to present 
to the board on all areas reserved 
for the board’s judgement
our secretary to the board mary hitchon makes sure that we  
adhere to proper process and follow applicable rules and regulations  
i rely upon her to advise me on governance matters and she is also 
available to all other members of the board furthermore if any 
director wishes to take independent professional advice at the 
company’s expense he or she can do so 
 
the board is assisted by four committees namely the nominations 
audit risk and remuneration committees each committee is 
responsible for reviewing and overseeing activities within its particular 
terms of reference at each facetoface board meeting the chairman 
of each committee provides a summary of any committee meeting 
held since the previous board meeting and the minutes of committee 
meetings are ordinarily circulated to the board reports for 2010  
from each of these committees are provided from pages 79 to 95  
and copies of each committee’s terms of reference are available on 
the company’s website the secretary to the board acts as secretary 
to all of our committees 
petrofac board
nominations
committee
audit
committee
risk
committee
remuneration
committee
takes primary 
responsibility  
for succession 
planning and  
the selection 
process for new 
board members
monitors the 
integrity of the 
company’s 
financial 
statements and 
reviews financial 
internal controls 
and financial risk 
management 
systems
oversees the 
group’s risk 
management 
and internal 
control 
processes for 
nonfinancial 
matters
agrees the 
remuneration 
policy for some 
members of senior 
management  
and sets individual 
compensation 
levels 74 petrofac annual report and accounts 2010
how often does the board meet
our board meets facetoface six times per year generally for a 
minimum of two days at least two of our meetings are longer as 
during our annual programme of events we also hold a dedicated 
strategy day and a site visit committee meetings are held first 
followed by a full board meeting we set the calendar two years  
in advance although there have been some occasions when we  
have been forced to revise dates details of attendance by board  
and committee members at such meetings in 2010 are detailed in  
the table below 
as well as our physical meetings we hold a number of telephonic 
board meetings generally to consider an item of business that  
cannot be held over until the next facetoface meeting
corporate governance report 
continued
board
nominations
committee
audit
committee
risk
committee
remuneration
committee
meetings held in 2010 6 5 3 3 4
rodney chase
nonexecutive chairman
6 6 5 5 – – –
kjell almskog
senior independent director
6 6 5 5 3 3 3 3 3 3
thomas thune andersen
1
nonexecutive director
3 3 3 3 2 2 – 3 3
stefano cao
1
nonexecutive director
3 3 3 3 – 1 1 3 3
rijnhard van tets
2
nonexecutive director
5 6 3 3 3 3 3 3 1 1
ayman asfari
group chief executive
6 6 5 5 – – –
maroun semaan
group chief operating officer
6 6 – – – –
keith roberts
chief financial officer
6 6 – – – –
former directors
amjad bseisu
3
chief executive energy developments
2 2 – – – –
bernard de combret
4
nonexecutive director
3 3 2 2 – 2 2 1 1
michael press
4
nonexecutive director
3 3 2 2 1 1 2 2 1 1
figures in brackets denote the maximum number of meetings that could have been attended
1 from 13 may 2010
2 rijnhard van tets was unable to attend one board meeting due to a previous engagement
3 to 4 april 2010
4 to 13 may 2010 75 petrofac annual report and accounts 2010
governance
where does the board meet 
we hold our board meetings at a variety of locations across the globe 
nevertheless we make sure that we always hold at least one meeting 
each year in jersey our place of incorporation in addition we hold 
one meeting each year in sharjah as this is the location of our biggest 
office and the centre of our engineering  construction business 
while in sharjah the board takes the opportunity to meet around 50 
members of our sharjah management team over an informal dinner 
 
we also make sure that the board holds one meeting where petrofac 
has business in october 2010 we visited both singapore and 
malaysia in singapore we visited our training centre where the 
managing director of training services and its local management 
team updated the board on progress in relation to strategy for the 
business globally and for singapore we also met customers who  
use the training centre and had lunch with employees in malaysia  
we met representatives of petronas and other local partners  
over dinner before holding our board meeting the following day in  
our kuala lumpur office our board meetings not only allow us to  
consider formal business they also help us to really get to know 
petrofac its people and its customers 
 
who attends board meetings
as well as directors and the secretary to the board we have regular 
guests from operational and functional management in 2010 marwan 
chedid gordon east rob jewkes and richard milne all members  
of senior management whose biographies are provided on pages  
50 and 51 attended part or all of at least one meeting several  
other members of operational management one or two tiers below 
managing director level also attended meetings we also had regular 
updates from the functional heads of hsseia human resources 
strategy and csr we consider that this regular exposure to our senior 
management is beneficial it helps directors get to know the company 
and its senior management better and it makes for more effective 
board meetings that whilst always professional are nevertheless  
lively and engaging
what is the selection process for the board
we have a formal rigorous and transparent selection procedure  
for the appointment of directors
the nominations committee is responsible for recommending  
a director to the full board the full board with the exception  
of the existing chairman takes responsibility for considering  
the appointment of a new chairman
for an executive appointment to the board the nominations 
committee will consider whether an individual is able to contribute 
both as an executive and at board level the committee will assure 
itself that the individual will be able to think strategically and consider 
his or her responsibilities in relation to internal controls and risk 
management 
individuals need to have sufficient time to give to our board care  
is taken to establish the existing commitments of all prospective 
nonexecutive directors particularly the chairman individuals  
are required to let the board know if their commitments change  
after appointment there is a detailed report on the activities of  
the nominations committee on page 79
how do we decide what directors are paid
the remuneration committee is responsible for determining the 
remuneration and terms of employment of executive directors and 
some members of senior management it is also responsible for 
determining the chairman’s fee a detailed report on the activities  
of the remuneration committee is provided on pages 84 to 95 
executive directors effectively determine the fees of nonexecutive 
directors since this responsibility lies with the board as a whole 
excluding those directors whose fees are being determined
 
what is our approach to shareholders reelecting directors
in the past we followed the accepted convention that one third of our 
directors generally the longest serving members of the board submit 
themselves for reelection at the agm the uk code states however 
that all directors should submit themselves for reelection every year 
there has been some ambiguity as to whether companies should 
seek to adopt the new recommendation in 2011 or 2012 your board 
has concluded that it would offer shareholders the opportunity  
to reelect all directors at our 2011 agm
how do we get the best out of the board
it is important that we get the best out of our board meetings we 
invest considerable time effort and expense in arranging meetings  
so it is important that directors are able to make the best possible 
contribution we believe that the following aspects of support for 
directors are essential 
board papers ■ ■
secretary to the board ■ ■
induction ■ ■
training ■ ■
evaluation ■ ■
board papers
it is essential that board papers are well written and relevant  
they should be dispatched in a timely manner so all directors  
have adequate time to read them our papers are generally of a  
high standard and for our facetoface meetings are dispatched  
in hard copy format to directors one week before a board meeting 
this is important given that our directors are based around the world 
when we hold a telephonic board meeting the secretary to the  
board ensures that papers are circulated electronically generally  
at least 24 hours before the meeting
 
secretary to the board
it is important that board members particularly our nonexecutive 
directors have a principal point of contact within the organisation  
the nonexecutive directors receive a great deal of support from 
various individuals within petrofac particularly at committee level  
and are encouraged to contact individuals directly if they wish we do 
however have a highly capable secretary to the board whom we may 
approach for general support and advice or when we do not know 
whom to contact on a particular matter she ensures that we receive 
appropriate information as and when appropriate and this extends  
far beyond dispatching board papers or writing minutes
 
corporate governance report corporate governance report 76 petrofac annual report and accounts 2010
induction 
recent governance developments emphasise the importance of 
directors receiving an appropriate induction and ongoing training in 
2010 in liaison with ayman asfari and maroun semaan and with the 
help of the secretary to the board i created induction programmes for 
our newly appointed nonexecutive directors thomas thune andersen 
and stefano cao 
visits visits to our sharjah mumbai london woking and  
aberdeen offices to meet our managing directors and 
many of their direct reports
meetings meetings with functional heads such as our director  
of legal and commercial affairs group heads  
of hsseia human resources internal audit  
tax communications and csr head of enterprise  
risk management and group financial controller
seminars
 
 an individuallytailored seminar led by the secretary  
to the board and a partner from our legal advisers 
freshfields on the role and responsibility of a director  
of a uklisted entity
 a seminar led by a partner from the remuneration 
consultants deloitte llp on the role and responsibility  
of the remuneration committee
to ensure that time was spent constructively and conversations  
could focus on key topics we encouraged all employees who met  
the directors to prepare a presentation
 
we are currently in the process of developing and delivering tailored 
induction programmes for roxanne decyk norman murray and  
andy inglis
 
training
the chairman is responsible for the training needs of all directors 
under the uk code
whereas we have traditionally provided regular technical training 
updates during committee meetings we are now developing a  
series of more formal seminars these will be held outside committee 
meetings so that the topics under review can receive more time and 
focus and will be individually tailored for petrofac at least some of the 
seminars will be led by external advisers we have always supported 
directors who wish to attend external seminars run by professional 
advisers and we will continue to do so
despite such general support we have not always tracked the full 
extent of director training going forward the secretary to the board 
will record all formal training undertaken by directors both internally 
and externally this will enable the chairman to assess whether any 
board members need additional training support
 
evaluation 
icsa board evaluation led a very helpful evaluation of our board 
during the year each director was interviewed individually on a 
confidential basis by the same icsa representative and asked for  
his views on topics relating to the board’s performance in addition 
icsa observers including the interviewer attended a board meeting 
icsa presented a report of recommendations to the board after 
which directors were invited to comment the secretary to the board 
and i subsequently worked together to place the recommendations 
within the broader context of a board’s responsibilities we then 
discussed the board’s performance at a further board meeting  
and agreed that we could be more effective by
strategic discussion increasing the amount of time we spend on 
strategic discussion we now have not only  
a dedicated strategy day in may but a further 
half day in december in may we engage  
in ‘blue sky thinking’ and in december  
we monitor progress against strategy  
by reference to the group’s budget for the 
forthcoming year and our fiveyear plans  
in addition we have agreed a programme  
of ‘deep dive’ presentations to the board  
on specific strategic matters
risk appetite seeking to articulate better our risk appetite 
and significant risks
succession planning increasing our focus on succession planning 
by ensuring the issue is regularly included on 
the nominations committee agenda
delegated authorities revisiting our matrix of delegated authorities 
so that the board best uses the finite amount 
of time available to it the group has grown 
extensively over recent years and it is no 
longer appropriate for the board to consider 
certain matters which it considered in the past
these items are all work in progress with some more developed  
than others as one would expect following a meaningful evaluation 
although we are required to conduct an annual appraisal the reality  
is that a board should always be seeking to improve its performance
 
as in previous years my appraisal was conducted by michael press 
our then senior independent director michael did this through a series 
of questionnaire led interviews with directors before meeting with me 
to present feedback
 
how does the board formally satisfy itself that it has sound 
risk management
the board is responsible for reviewing the effectiveness of petrofac’s 
risk management and internal control systems including financial 
operational and compliance controls
this year we decided that our annual review would be conducted by 
the full board in previous years we relied upon the audit committee 
to conduct a review of our internal controls we decided that this 
approach was no longer appropriate given the increasing amount  
of work being done by the risk committee at present the audit 
committee concentrates on financial internal controls and the risk 
committee focuses on operational controls the combined work of 
the two committees provided the basis of a formal report to the full 
board after which we concluded that the group maintained a sound 
risk management and internal control framework
as with all companies our system of internal control and risk 
management can only ever provide reasonable and not absolute 
assurance against material misstatement or loss 
corporate governance report 
continued 77 petrofac annual report and accounts 2010
governance
what is our reference for satisfying ourselves that we have  
a sound risk management system
we look to the revised turnbull guidance which was published by  
the frc in 2005 this is a principles based approach that requires 
your board to be thoughtful about how best to discharge its 
obligations turnbull suggests that boards consider four broad  
themes when attempting to assess the internal control and risk 
management framework
do you know and understand your significant risks ■ ■
how do you monitor your internal controls and risk management ■ ■
system
is your board receiving information which allows it to identify when ■ ■
delivery of its goals are under threat
what is your general control environment like ■ ■
the uk code provides more explicit guidance than the old combined 
code in relation to significant risks it states that a board should 
determine the nature and extent of the significant risks it is willing 
to take in order to achieve its strategic objectives the change in 
emphasis means that going forward a board should be proactively 
articulating a company’s risk appetite rather than being satisfied with 
simply identifying and managing significant risks we are currently 
reviewing our processes to meet the requirements of the uk code 
more effectively
how does the board identify petrofac’s significant risks
our head of enterprise risk management provides the board with  
a written report before each board meeting giving details of our current 
significant risks and how we plan to mitigate them the risks that we 
consider significant today are shown on pages 30 to 35
our head of enterprise risk management drafts his report by 
reference to
risk matrices he receives from each of our individual business units ■ ■
bottom up approach
the work of the enterprise risk committee which is chaired by the ■ ■
group chief operating officer top down
how do we intend to respond to changes in the uk code 
regarding risk management
your board established a risk committee in 2007  with the remit to 
oversee the group’s framework of operational internal controls and risk 
management systems as reported last year the committee approved 
three group policies as shown in the table below these policies were 
reviewed during the course of the year and revised as appropriate the 
committee considers performance against each policy at least once  
a year through the policies we feel that the committee goes a long 
way to articulating the company’s risk appetite and we will continue  
to build on this work
policy
articulates our attitude to risks  
related to
sovereign and financial market  
risk policy 
country inflation commodity currency 
credit and counterparty
ethical social and regulatory  
risk policy
ethics contractual liability non
compliance with a country’s local  
laws and regulations
operational and contractual  
risk policy
project performance business continuity 
leadership change and hsseia
how does petrofac monitor its internal control and risk 
management system
each of our business units has its own business management system 
that incorporates policies and procedures that assist with the business 
units’ risk management in addition each business unit produces  
its own risk matrix or register each business unit’s management  
team meets regularly and monitors the risk matrix as a matter of 
course they note any change in risk assessment at an individual  
and aggregate level and seek to take appropriate mitigating action 
should they believe it necessary the risk matrices for each business 
are formally reviewed each month by the following individuals
ayman asfari ■ ■  group chief executive
maroun semaan ■ ■  group chief operating officer
keith roberts ■ ■  chief financial officer
richard milne ■ ■  group director of legal  commercial affairs
paul green ■ ■  head of enterprise risk management 
if a situation occurs which local management judges to be serious  
it will be reported up the chain of command immediately 
we have a group internal audit department the audit committee 
approves its audit universe and its annual plan of audits and the  
group head of internal audit attends all audit committee meetings 
when he reports on any significant findings in relation to our internal 
controls the group head of internal audit would report any serious 
weakness or lapse in internal controls including evidence of fraud  
to the chairman of the audit committee upon discovery as customary 
with an organisation of our size we rely upon selfassessment by 
employees to some extent all senior managers and selected 
employees are required to provide an annual assurance that they  
have complied with the group’s code of business conduct during  
the year
does the board receive information which allows it  
to identify when delivery of its goals are under threat 
the board receives a comprehensive written report from keith 
roberts the chief financial officer at each facetoface board 
meeting as well as periodic updates between such meetings  
the board is kept very well informed about the group’s financial 
performance for the year to date compared to the year’s budget or  
the latest revised forecast explanations for variances are provided 
the budget and fiveyear plans provided by management for the 
board’s review incorporate risk analysis as a matter of course  
over the years this analysis has increased in sophistication and  
will doubtless continue to do so
of course in addition to financial goals we have strategic and 
operational goals ayman asfari provides us with a full presentation  
on business operations at each facetoface board meeting during 
which he highlights possible impediments to the delivery of our goals
what does petrofac’s general control environment look like 
this is quite hard to define but easier to recognise to do so it is worth 
asking such questions as 
does the company seem well run with processes that employees ■ ■
know about and adhere to
do employees understand the minimum behaviour expected of ■ ■
them and conversely what will not be tolerated 
are there processes in place that allow employees to report ■ ■
something that they consider to be untoward
is the culture one that encourages openness ■ ■
does management make efforts to find out what employees  ■ ■
think and feel about the organisation 
corporate governance report 78 petrofac annual report and accounts 2010
petrofac has made great efforts to build the foundations for a control 
environment that does all of these things the table below shows 
some of our more significant achievements 
our people we recruited a group head of human 
resources two years ago and are 
increasingly seeing the benefits of having  
a global approach to hr having the right 
kind of people is key we need to be able  
to recruit people who will thrive here and 
equally to develop our existing employees
our code of  
business conduct
 all of our employees are provided with our 
code of business conduct and some 6000 
employees have now completed the related 
elearning module
our ‘speaking up’  
facility
 all employees have the ability to contact  
in confidence an independent third party 
called expolink if they believe that the code 
of business conduct has been breached 
we investigate all matters brought to our 
attention and the audit committee is 
provided with regular retrospective reports
our matrix of delegated  
authorities
we have defined lines of responsibility  
and delegation of authority throughout the 
group our matrix sets out those matters 
which are judged to require board sanction 
examples include
doing business in high risk locations ■ ■
entering into a new contract above  ■ ■
a certain financial size
investing in a project which puts  ■ ■
a significant level of capital at risk
the matrix also sets out those matters 
which are delegated to management 
management is assisted in deciding whether 
or not to undertake any new business 
through a series of risk review committees
other policies hsseia disclosure and communications 
share dealing code conflicts and as 
already detailed our group risk policies 
reviewed by the risk committee
we are not complacent and know we always have further work to do 
but nevertheless we are pleased with what has been achieved to date
 
how does the board make sure that it is aware of its 
shareholders’ views
ayman asfari keith roberts and jonathan low our head of investor 
relations provide a presentation to research analysts including a 
question and answer session following the announcement of our  
full year and half year results this is broadcast live on our website  
and may therefore be followed by all shareholders ayman keith and 
jonathan also conduct a series of individual meetings with existing 
and potential shareholders in the week following our full year and  
half year results 
ayman and keith are therefore well placed to provide the rest of the 
board with their insights into shareholder sentiment directors also 
receive brokers’ research notes from jonathan
we have also established an annual practice of offering analysts  
and some institutional shareholders the opportunity to visit at least  
one of our operations in october 2010 we took a group of analysts  
and investors to syria where they visited two ec projects the ebla 
and jihar gas plants and the national training centre in homs
 
we write to our major shareholders annually offering them the 
opportunity to meet me or the senior independent director this year 
both thomas thune andersen in his capacity as chairman of the 
remuneration committee and i met some of our major shareholders
 
all shareholders receive hard copies of our annual report and 
accounts and half year reviews these and all announcements  
we make to the market may also be downloaded from our website
 
who are our major shareholders
those shareholders with holdings of 3 or more as at 25 february 2011 
are as follows 
number of  
ordinary shares
percentage 
of issued  
share capital
ayman asfari and family 62782114 1816
maroun semaan and family 28082676 812
legal  general group plc 12605890 364
our articles of association have been drafted so that any shareholder 
with 3 or more of our voting rights must disclose its holding  
this brings us in line with uk incorporated companies ordinarily 
shareholders of jersey incorporated companies with a uk listing  
need only disclose their holdings if they hold voting rights of 5 or 
more in a company
 
additional information for shareholders
the company’s constitution by which the company is governed  
is called the company’s articles of association these can only  
be changed by shareholders in general meeting by way of special 
resolution this year we are proposing some minor changes to our 
articles and you can see further details outlined in our notice of agm 
 
our agm
we hold our agm in london as we believe that this is the best location 
for the majority of our shareholders we spend time and effort to try 
to ensure that shareholders find the event worthwhile
details of this year’s agm are set out in the notice of agm which 
accompanies the annual report and accounts as a matter of good 
practice we will conduct all resolutions on a poll and announce the 
results to the market as soon as possible after the meeting
i look forward to seeing as many of you as possible this year when  
my colleagues and i will be available to answer your questions
rodney chase
chairman of the board 
4 march 2011
corporate governance report 
continued 79 petrofac annual report and accounts 2010
governance
nominations committee 
report
dear shareholder
this year proved to be a particularly busy one for the nominations 
committee at the start of 2010 the committee agreed that it would 
initiate a search for a new chairman as i have now served for six 
years our senior independent director led the process and having 
agreed a job and person specification appointed search consultants 
egon zehnder international to assist i am delighted that this resulted  
in norman murray joining our board at the start of march with a  
view to him taking on the role of chairman when i step down at the 
conclusion of our agm
kjell almskog our senior independent director is also stepping  
down from the board at the same time we therefore appointed egon 
zehnder international to conduct a second search for a nonexecutive 
director roxanne decyk consequently joined our board at the same 
time as norman i am confident that norman will lead the board well 
and that he and roxanne will make strong individual contributions 
they both have oil  gas experience but have also spent time in other 
industries which will enrich the board’s debate i have greatly enjoyed 
serving on this board and i am sure that they will too
ayman asfari led energy developments and production solutions  
on an interim basis throughout 2010 we were delighted when  
an extensive search resulted in andy inglis being appointed chief 
executive of energy developments and production solutions at  
the start of this year the committee recommended that andy be 
appointed a director to the board and he joined the board in early 
march he not only leads a substantial part of our group but has 
extensive boardroom experience
in view of the changes to the board the committee considered  
the membership of the board’s committees after the agm and who 
should assume the role of senior independent director after kjell’s 
retirement the board agreed the committee’s recommendations  
on the composition of the various committees and on rijnhard van 
tets being appointed senior independent director rijnhard will be  
our longest serving nonexecutive director in may and will i am sure 
fulfil the role of senior independent director admirably
in making these changes the committee had due regard to the 
board’s overall size and composition 
we also considered succession planning more widely and will look  
at this aspect of our responsibilities in greater detail going forward 
since it is such an important element of ensuring that our business  
is sustainable 
on more prosaic matters we reviewed and revised our terms  
of reference so that they continue to conform with best practice
in summary i believe that your board has the right people to lead  
the company in 2011 and beyond
rodney chase 
chairman of the nominations committee
4 march 2011
membership
now rodney chase chairman
ayman asfari
kjell almskog
thomas thune andersen
stefano cao
rijnhard van tets
after agm norman murray chairman
ayman asfari
thomas thune andersen
stefano cao
roxanne decyk
rijnhard van tets
role of the committee
regularly reviews the board composition and structure
considers succession planning for directors and other senior 
executives
identifies and recommends candidates to be appointed to the board
nominations committee report 80 petrofac annual report and accounts 2010
audit committee report
dear shareholder
it was very much business as usual for the audit committee in 2010  
our calendar of meetings is now well established and is largely driven  
by our programme of communications to the market a more detailed 
description of the committee’s activities is provided later but in summary 
the committee considered the group’s full and half year results and 
formally reviewed the effectiveness of petrofac’s internal control and  
risk management systems i wish to thank my colleague kjell almskog 
who is stepping down from the board shortly he has provided invaluable 
support to the committee over the last few years roxanne decyk will 
join the audit committee in may and i look forward to working with her
the events of 2008 and thereafter have resulted in a great deal of  
debate about risk management and sound internal controls investors 
increasingly want to know whether or not a board has a real grasp  
of the risks facing the enterprise and if there are effective safeguards  
in place to mitigate them the audit committee has always worked 
closely with the risk committee in order to provide appropriate 
assurance to our board and in line with best practice i also serve on  
the risk committee to date the audit committee has concentrated  
on financial internal controls and the risk committee on operational 
risks while this approach has served us well the board agreed at the 
end of 2010 that the group’s increasing size and complexity meant that 
we should revisit the committees’ interface to ensure we have the best 
possible framework for understanding and managing our risks be  
they financial operational or compliance related the company has  
now appointed a group head of compliance and his appointment  
will doubtless influence our deliberations as we develop our future 
approach to assurance on all our internal controls
the uk code emphasises the need for directors to keep on top of 
technical developments which is particularly pertinent for the audit 
committee we intend to hold a series of dedicated seminars before  
our meetings in 201 1 focusing on changes to accounting standards  
that will specifically affect petrofac i have recent and relevant financial 
experience of course but it is important to keep that experience up  
to date
 
rijnhard van tets
chairman of the audit committee
4 march 201 1
membership
now rijnhard van tets chairman
kjell almskog
thomas thune andersen
after agm rijnhard van tets chairman
thomas thune andersen
roxanne decyk
role of the committee
monitors the integrity of the company’s financial statements and 
reviews significant financial reporting judgements
reviews internal control and risk management systems of a  
financial nature
monitors the effectiveness of the group’s internal audit function  
and reviews its material findings
oversees the relationship with the external auditors including 
agreeing their fee and assessing their independence and 
effectiveness 81 petrofac annual report and accounts 2010
governance
financial reporting
as set out in our directors’ statements on page 96 directors are 
responsible for preparing group financial statements in accordance 
with international financial reporting standards the group has  
an internal control and risk management framework in place which 
permits the company to prepare consolidated accounts and this 
includes policies and procedures to ensure that adequate accounting 
records are maintained and transactions accurately recorded 
in 2010 the committee reviewed the 2009 report and accounts  
and 2010 half year results furthermore in march 2011 we of course 
reviewed the 2010 report and accounts and you are reading these 
now as part of these reviews we discussed with keith roberts and 
the external auditors the significant accounting policies estimates  
and judgements that had been adopted
internal controls and risk management systems
the committee reviewed the group’s internal controls primarily 
through its engagement with our internal audit function and the  
risk committee our group head of internal audit ajit nair attends 
each committee meeting at the start of the year the committee 
agrees the annual internal audit plan which is drawn up on a  
riskbased approach any significant findings from internal control 
audits undertaken have been appropriately followed up and  
the necessary actions taken to address any weaknesses found  
ajit provides a progress report part way through the year as a 
consequence of which his plan may be revised and a final report  
at the end of the year
in 2010 the internal audit department completed 85 assignments 
across a broad crosssection of the group’s activities rijnhard van 
tets and kjell almskog served on both the audit and risk committees 
during the year and therefore had oversight of the risk committee’s 
work in relation to operational controls in addition the committee 
receives regular reports detailing matters reported by employees 
under our ‘speaking up’ or whistleblowing process
audit committee report
effectiveness of group internal audit and external auditors
the committee formally assessed the performance of our internal 
auditors and the external auditors ernst  young llp  and judged  
that both were effective in making its assessment of the external 
auditors the committee had due regard to their expertise resourcing 
and independence
 
nonaudit services policy
we have a nonaudit services policy that sets out under what 
circumstances we may appoint our external auditors to undertake 
additional nonaudit work this is reviewed by the committee  
each year our policy which remained unchanged from last year  
is summarised below
the external auditors are automatically prohibited from carrying out  ■ ■
work which might impair their objectivity
keith roberts as chief financial officer will seek approval from the ■ ■
committee before appointing the external auditors to carry out a piece 
of nonaudit work
if the fee is above us200000 –
if total nonaudit fees for the year are approaching 50 of the annual  –
audit fee
if the external auditors would ordinarily be prohibited from carrying  –
out the work but the chief financial officer wants to appoint them 
due to exceptional circumstances
the chief financial officer may appoint the external auditors to do all ■ ■
types of other work
details of nonaudit work carried out by ernst  young llp during 
2010 are provided in note 4e to the financial statements 82 petrofac annual report and accounts 2010
risk committee report 
dear shareholder
i took over the role of chairman of the risk committee in may i would like 
to thank my predecessor kjell almskog for his efforts he has left me with 
a solid foundation on which to build 
the walker report emphasised the importance of a risk committee and 
while the report’s focus was directed at banks and financial institutions  
it has influenced the wider corporate community in this day and age it  
is unrealistic to think that the audit committee of a company the size of 
petrofac can take sole responsibility for oversight of financial operational 
and compliance internal controls the workload would be excessive 
both committees will work independently but in a complementary way 
having had more than 30 years’ experience in the oil  gas industry  
both within ep and lumpsum contracting i believe that i can add  
real value to the risk committee’s work in relation to oversight of 
operational controls
i am very fortunate to be joined on the committee by rijnhard van tets 
and roxanne decyk rijnhard brings extensive banking experience 
which is particularly useful when considering sovereign and financial 
market risks roxanne has enjoyed a varied executive career that 
culminated in over ten years at shell where she was most recently head 
of government affairs i am sure that this experience will help her provide 
useful insights and advice on ethical and regulatory matters in short  
i believe that our committee is well placed to help the group continue  
to deepen its nonfinancial internal control processes 
the committee is supported by the head of enterprise risk 
management and maroun semaan keith roberts and richard milne 
attend meetings as a matter of course in addition the group treasurer 
and the head of insurance and the group head of security have also 
made presentations to the committee in this way we ensure that our 
discussions are as worthwhile as possible
this year as well as reviewing the three petrofac policies that cover 
nonfinancial controls we also devoted one meeting to considering the 
implications of the uk bribery act other areas of emphasis were the 
group’s insurance cover business continuity planning and security 
particularly in relation to new country entry 
 
stefano cao
chairman of the risk committee
4 march 2011 
membership
now stefano cao chairman
kjell almskog
rijnhard van tets
after agm stefano cao chairman
roxanne decyk
rijnhard van tets
role of the committee
reviews group risk policy and procedures
oversees group operational risk management systems including 
insurance provision
ensures effective monitoring of the group’s internal controls and 
risk management 83 petrofac annual report and accounts 2010
governance
the group’s overall risk management framework including details  
of the key risks facing the business is described on pages 32 to 35
review of policies
during the year the committee reviewed the following policies
sovereign and financial market risk policy ■ ■
ethical social and regulatory risk policy ■ ■
operational and contractual risk policy ■ ■
further detail about the areas covered by each of the policies is  
set out in a table on page 77 our reviews consider whether policies 
require amending and assurance that they are being adhered to 
across the group
 
uk bribery act
the uk passed a bribery act in 2010 that is scheduled to come  
into force in 2011 although later than originally planned the act 
modernises and consolidates existing uk law on bribery and 
corruption in particular the act creates a new corporate offence  
of failing to prevent bribery our code of business conduct is  
clear petrofac does not permit the giving or receiving of bribes 
nevertheless we have to ensure that we have adequate procedures  
in place which are designed to prevent bribery we have therefore 
spent considerable effort reviewing and amending our processes  
we will be supporting the roll out of our new processes with an 
extensive education programme across the group 
risk committee report
new country entry procedures
the risks associated with doing business in a new country are  
greater than those associated with a country which we know well  
we have therefore spent time reviewing our processes and intend  
to continue to refine them during 2011 
security
security comes under the remit of our hsseia department in 2010 
our group head of security gave a presentation to the committee on 
group security processes he covered both our approach to security 
in geographies where we are already established and also how we 
seek to ensure the security of our people when we are entering a new 
country he focused on iraq and turkmenistan as these are countries 
where we will be working in 2011 and beyond 
 
business continuity
we have now largely completed our business continuity planning  
for the group we are pleased that in 2010 the aberdeen office was 
awarded bs 25999 accreditation our woking office has held this 
accreditation since 2009
insurance
insurance will always be an essential part of risk transference for  
any organisation and we provide regular updates to the committee 84 petrofac annual report and accounts 2010
directors’ remuneration 
report
dear shareholder
i am delighted to have become chairman of petrofac’s remuneration 
committee during another year of exceptional performance with strong 
growth across all our kpis including revenue earnings and backlog  
as well as the successful demerger of the uk continental shelf assets 
from our energy developments business in april 2010 
our remuneration policy is geared towards having a significant proportion 
of reward linked to the continued success of the business as such  
our policy is for basic salaries to be at median or below with variable  
pay structured to allow executive directors to achieve upper quartile  
total remuneration if outstanding performance is achieved
we believe this approach will allow petrofac to attract retain and motivate 
high calibre individuals with the skills and capabilities to match our 
ambitions for continued growth and sustained success
accordingly as previously advised the committee reviewed executive 
remuneration during the year in the context of petrofac’s exceptional 
performance to date our review showed that basic salary levels 
continued to be appreciably below industry benchmarks and below 
lower quartile compared to uk companies of similar size total 
remuneration levels remained below market even after last year’s 
changes to performance related pay this gap continued to widen  
due to petrofac’s sustained strong growth 
therefore after careful consideration and consultation with major 
shareholders the committee has made an exceptional adjustment to 
executive director basic salaries for 201 1 in line with our remuneration 
policy basic salaries are still positioned at or below median
in addition we have made a relatively modest increase to the cash 
allowances for ukbased directors which are paid in lieu of pension  
and company car provision 
these changes will assist us in securing the key talent that is critical  
to the continuing success of the business indeed in january 201 1  
we were able to announce the appointment of andy inglis as chief 
executive energy developments and production solutions whose 
remuneration package is given on page 92
the committee is also proposing to make a minor administrative 
amendment to the deferred bonus share plan to extend participation  
to employees in certain petrofac joint venture organisations where 
appropriate further details are outlined on page 90 shareholder 
approval for this amendment will be sought at the forthcoming agm
the committee believes that these changes are in the best interests  
of shareholders
 
thomas thune andersen
chairman of the remuneration committee
4 march 2011 
membership
prior to the  
2010 agm
bernard de combret chairman
michael press
rijnhard van tets
between the 2010 
and 2011 agms
thomas thune andersen chairman
kjell almskog
stefano cao
after the  
2011 agm
thomas thune andersen chairman
stefano cao
roxanne decyk  85 petrofac annual report and accounts 2010
governance
introduction
this report has been prepared in accordance with schedule 8 to  
the large and mediumsized companies and groups accounts and 
reports regulations 2008 of the united kingdom and relevant listing 
rules of the financial services authority the remuneration committee 
takes responsibility for the preparation of the report which is approved 
by the board 
this report sets out the remuneration policy and principles under 
which directors and senior managers are rewarded and details the 
remuneration and share interests of each director for the year ended 
31 december 2010 
shareholders will be invited to approve this report at the annual 
general meeting agm this vote will cover the remuneration  
policy and overall remuneration packages and will not be specific to 
individual levels of remuneration the vote on the resolution will have 
advisory status only the members of the remuneration committee 
will be available at the agm to answer shareholders’ questions about 
directors’ remuneration 
the sections of this report dealing with directors’ emoluments and 
share interests have been audited pages 93 to 95 by the group’s 
external auditors
the board and the remuneration committee consider that 
throughout 2010 and up to the date of this report the company  
has complied with the provisions of the 2008 combined code  
relating to directors’ remuneration
information not subject to audit
role of the remuneration committee
the remuneration committee’s main tasks are to 
recommend and agree with the board the framework or broad ■ ■
policy for the remuneration of executive directors the chairman  
and certain senior managers
review the ongoing appropriateness and relevance of the ■ ■
remuneration policy
ensure that incentives are appropriate to encourage enhanced ■ ■
performance
approve the design of and set the targets for any performance ■ ■
related pay scheme 
review the design of all share incentive plans before approval by  ■ ■
the board and shareholders and monitor the application of the rules 
of such schemes and the overall aggregate amount of the awards
set the remuneration of all executive directors certain senior ■ ■
managers and the chairman within the agreed policy taking  
into account remuneration trends across the company and 
remuneration practices in other peer companies
attendance 
attendance at committee meetings is shown on page 74 in the 
corporate governance report 
what did the committee do in 2010
regular items other items
consideration of 2010 salary ■ ■
increases and prior year bonus and 
provisional performance share plan 
psp award levels for the year
approval of 2010 psp structure  ■ ■
and performance conditions
consideration of 2009 and 2010 ■ ■
bonus pools across the wider 
workforce
update on performance for ■ ■
subsisting psp awards
approval of remuneration report ■ ■
confirmation of vesting status  ■ ■
of 2007 psp awards
approval of 2010 deferred bonus ■ ■
share plan dbsp awards under 
the annual bonus award cycle
approval of 2010 psp awards ■ ■
review of provisional 2010 annual  ■ ■
bonus pools
review of restricted share plan ■ ■
rsp awards made during 2010
review of market positioning and  ■ ■
consideration of proposed 2011 
increases to basic salaries and  
cash allowances
consideration of feedback  ■ ■
from shareholders on the 
remuneration proposals for  
2010 and confirmation of  
2010 salaries
consideration of implications  ■ ■
of the demerger on subsisting 
awards under the company’s 
share plans
shareholder consultation in ■ ■
relation to proposed 2011  
salary increases
consideration of dbsp ■ ■
amendments to allow 
participation of joint venture 
employees where appropriate
directors’ remuneration report 86 petrofac annual report and accounts 2010
summary of remuneration elements – policy
fixed pay
salary based on role and contribution – market median or below ■ ■
cash allowance annual cash allowance in lieu of pension and company car contributions ■ ■
market standard for role and geographic location although current levels are below median ■ ■
pension petrofac does not provide any formal pension arrangements for executive directors ■ ■
variable pay
quantum performance conditions
annual bonus maximum cash award of 200 of salary ■ ■ subject to achievement of financial safety and personal ■ ■
performance targets
performance  
share plan
maximum award of 200 of salary  ■ ■
300 in exceptional circumstances
awards vest after three years subject to achievement  ■ ■
of performance conditions
50 of awards are subject to total shareholder return ■ ■
tsr relative to an international peer group on an index 
tsr basis
0 vesting below index –
30 vesting for performance equal to the index –
100 vesting for outperformance of the index by 25 –
50 of awards are subject to an achievement of ■ ■
compound annual growth in earnings per share eps
0 vesting for 10 growth per annum –
30 vesting for 15 growth per annum –
100 vesting for 20 growth per annum –
in 2007  the committee agreed that its remuneration policy for 
executive directors and certain senior managers would be as follows
basic salaries would be median or below against a relevant ■ ■
benchmarking group see below 
the variable elements of remuneration would be structured so that ■ ■
individuals could achieve upper quartile total remuneration subject 
to achievement of challenging performance standards
the committee believes that this policy will ensure that executive 
directors and senior managers are incentivised to deliver the group’s 
strategic goals and longterm shareholder value
annual bonus targets relate to the delivery of shortterm targets  
that the committee considers are critical drivers of business  
growth and delivery of performance in contrast the psp objectives  
reward longterm shareholder value creation and strong bottomline 
performance
the committee believes that the most appropriate pay comparators 
are
for the group chief executive and certain operational executives  ■ ■
a select group of international and uk oil  gas services  
companies to the extent that data in relation to such companies  
is publicly available
for certain functional executives ftse companies of a similar size ■ ■
and complexity
the committee also uses remuneration in uk companies of a similar 
size and complexity as a reference point when considering the 
remuneration of operational executive directors and senior managers
directors’ remuneration report
continued
support for the committee
the committee has appointed deloitte llp to provide independent 
advice on remuneration matters during 2010 deloitte llp did not 
provide any other advice to the company the committee also 
received support during 2010 from legal advisers norton rose and 
freshfields during 2010 freshfields acted as corporate lawyers to the 
company and norton rose provided advice on certain matters relating 
to compensation and benefits
during 2010 the following individuals none of whom were committee 
members attended at least part of one meeting
remuneration policy – executive directors
the committee aims to establish a level of remuneration which
is sufficient to attract retain and motivate executive directors and key ■ ■
executives of the calibre required to achieve the group’s objectives 
reflects the size and complexity of the group’s business together ■ ■
with an executive’s individual contribution and geographical location
individual role reason for attendance
carol arrowsmith partner at deloitte llp adviser
ayman asfari group chief executive to provide context for  
matters under discussion
geoff tranfield group head of hr to provide context for  
matters under discussion
richard milne director of legal and  
commercial affairs
advice on demerger
mary hitchon secretary to the  
committee
secretary
none of the above attended part of any meeting in which their own 
remuneration was discussed 87 petrofac annual report and accounts 2010
governance
2011 changes to executive director remuneration
petrofac has been one of the most successful public companies of 
recent times since ipo it has created exceptional shareholder value 
and as a result it is now an established member of the ftse 100
earnings growth during the period has been in excess of 550
in last year’s remuneration report the committee signalled its  
intention to review basic salaries during 2010 and in particular  
their impact on total compensation levels in the context of petrofac’s 
exceptional performance
the 2010 benchmarking review showed that basic salary levels 
remained below industry benchmarks and also below lower quartile 
compared to uk companies of similar size and complexity this had  
a significant impact on total remuneration which generally remained 
well below market competitive levels even after the changes to 
performance related pay last year this gap continued to widen given 
the outstanding performance and sustained growth of the business  
during 2010
there is upward pressure on remuneration levels within the oil  gas 
services industry both in the general workforce and at more senior 
levels it is a highly competitive industry in which securing increasingly 
sought after talent is critical to continuing success
the committee remains committed to the policy of modest basic 
salaries and having a significant proportion of pay linked to the 
continued success of the business however total compensation  
was uncompetitive to the extent that it was inhibiting petrofac’s ability  
to attract talent which is consistent with petrofac’s growth ambitions 
and succession planning strategy
taking the above factors into account the committee believed  
that it was a priority to deal with this issue following consultation  
with key shareholders from 1 january 2011 it decided to
increase executive director basic salaries by 20 ■ ■
make a relatively modest increase to the cash allowance paid to  ■ ■
uk executive directors in lieu of pension and company car provision 
as existing levels were significantly below the market the cash 
allowance was thus increased from £50000 to £65000 
following the increases basic salaries remain at median or below 
compared to the select oil  gas services comparator group and 
around lower quartile compared to the uk market cash allowances 
for ukbased directors continue to be modest
the committee and the entire board believe that these changes are 
in shareholders’ best interests and are wholly in line with our stated 
remuneration policy 
 
fixed and variable pay
a significant proportion of petrofac’s total remuneration package is 
variable there is a particular emphasis on longterm sharebased 
incentives to align closely directors’ interests with shareholders’ 
interests
the balance between the fixed basic salary and variable annual 
bonus and longterm incentive elements of remuneration varies 
depending on performance the charts below show the mix  
between fixed and variable pay excluding cash allowancesbenefits 
the actual mix may be higher or lower depending on the performance 
of petrofac and the individual 
composition of total remuneration at target and  
maximum performance
target performance
38  salary
39  annual bonus
23  psp
maximum performance
20  salary
40  annual bonus
40  psp
if an executive director receives a maximum cash bonus and 
maximum psp award equal to 200 of basic salary his fixed 
remuneration excluding cash allowancesbenefits would be one fifth 
of his overall remuneration with variable remuneration making up the 
balance at target performance his fixed remuneration would be 
broadly twofifths of his overall remuneration
individual elements of remuneration
fixed pay 
■  basic salary
■  cash allowances
■  noncash benefits
basic salary
ordinarily the committee determines an executive director’s basic 
salary at the beginning of each year and any change is applied with 
effect from 1 january basic salaries are set at median or below 
against the relevant benchmarking group and depend upon the 
individual’s role and contribution
as outlined on page 84 in light of petrofac’s exceptional growth  
and as remuneration levels had fallen further behind the market the 
committee determined that executive director basic salaries should  
be increased by 20 from 1 january 2011 following the increases 
basic salaries remain at around lower quartile compared to the uk 
market and at median or below compared to the oil  gas services 
comparator group the revised basic salaries are therefore wholly in 
line with petrofac’s remuneration policy
directors’ remuneration report 88 petrofac annual report and accounts 2010
changes to basic salaries are as follows with effect from 1 january 201 1 
2011  
basic salary
2010  
basic salary
ayman asfari £582000 £485000
maroun semaan us567000 us472500
keith roberts £350000 £292000
cash allowances
in addition to basic salary and noncash benefits uk resident 
executive directors receive a cash allowance in place of benefits 
including but not limited to car allowances and pension contributions 
directors do not receive pension contributions from the company
in 2010 all ukbased executive directors received a cash allowance  
of £50000 as previously mentioned the committee made relatively 
modest adjustments to cash allowances to ukbased directors to 
£65000 with effect from 1 january 2011
the company pays a cash allowance in respect of housing and 
transport to maroun semaan in line with local market practice  
in 2010 maroun semaan received a cash allowance of us220000 
for the year no increase is proposed from 1 january 2011
the table below sets out cash allowances for executive directors  
from 1 january 2011 
2011 cash  
allowance
2010 cash  
allowance
ayman asfari £65000 £50000
maroun semaan us220000 us220000
keith roberts £65000 £50000
in addition maroun semaan as a uae resident executive director  
is required by local statute to receive a cash sum called an end  
of service indemnity from his employer on the termination of his 
employment within the uae accordingly the company accrues  
an amount each year
noncash benefits
executive directors receive certain benefitsinkind ukresident 
executive directors currently receive private health insurance life 
assurance and longterm disability insurance maroun semaan who 
as mentioned above is resident in the uae receives similar benefits 
as well as other typical expatriate senior executive benefits such as 
education and return flights to his permanent home
variable pay
■  annual cash bonus payments 
■  performance share plan
annual cash bonus payments
each january the committee decides whether to award each 
executive director a cash bonus for the previous year in doing so  
the committee considers two principal elements
the extent to which the group’s financial performance and as ■ ■
appropriate the business division for which the individual director  
is primarily responsible have achieved annually established  
budgets and targets
the extent to which the individual has met personal objectives ■ ■
which are agreed at the start of each year with the aim of achieving 
the group’s business strategy each executive director’s personal 
objectives include health and safety targets in addition some 
executive directors have targets in relation to succession planning 
risk management and the development and implementation of the 
group’s csr programme in this way the committee considers  
that it has an incentive structure for senior managers that promotes 
responsible behaviour
for 2010 in line with the stated policy the committee set the maximum 
bonus potential at 200 of basic annual salary for achievement of 
corporate and personal targets 
the committee awarded cash bonus awards of between 154 and 
200 of salary to ayman asfari keith roberts and maroun semaan 
in recognition of both the group’s outstanding financial results for 2010 
and their personal performances as shown on pages 28 and 29 
petrofac has displayed strong growth across its kpis including 
revenue earnings and backlog as well as the successful demerger  
of the uk continental shelf assets from our energy developments 
business in april 2010
the following table sets out the 2010 annual bonus awards made to 
executive directors
annual  
bonus in 
respect  
of 2010
as  of  
2010 salary
ayman asfari £970000 200
maroun semaan us945000 200
keith roberts £450000 154
performance share plan psp
executive directors and certain senior managers may receive 
performancerelated share awards on an annual basis participants 
are granted contingent awards to receive ordinary shares in the 
company which will in normal circumstances vest after three years 
subject to their continued employment and to the extent performance 
conditions are met
under the existing psp the maximum award level in any financial  
year is 200 of basic annual salary although an award of up to  
300 may be made under exceptional circumstances award levels 
are determined based on a participant’s individual contribution to  
the business
it is proposed that maroun semaan will receive a 2011 psp award  
of 194 of salary and keith roberts will receive a 2011 psp award  
of 143 of salary 
the committee considers that ayman asfari’s performance  
during 2010 has been exceptional taking into account his strong 
leadership the sustained growth in revenue profit and backlog  
and his continued focus on substantial shareholder value creation 
including the successful completion of the demerger of the uk 
continental shelf oil  gas assets in april 2010 additionally  
following the demerger he acted as interim chief executive of energy 
developments and production solutions for the remainder of 2010 
therefore the committee is proposing to make a psp award of 250 
of salary to ayman in march 2011
directors’ remuneration report
continued 89 petrofac annual report and accounts 2010
governance
the committee believes that psp performance conditions should balance 
alignment with shareholder returns and reward for delivery of strong 
underlying financial performance
tsr remains the best measure of the company’s ultimate delivery of 
shareholder returns and eps is the internal financial measure most closely 
linked to value creation in an oil  gas services business
the performance period is three years as this is considered to be an 
appropriate longterm time horizon for both performance measurement 
and retention
50 of award based on tsr performance relative to  
an index of sectoral comparators over the threeyear 
performance period
psp award  
paid in shares  
amount varying 
according to 
performance achieved
50 of award based on annual eps growth over the 
threeyear performance period
year 0 year 1 year 2 year 3
psp award
directors’ remuneration report
2008 award 2009 award 2010 award 2011 award
abbot group • – – –
aker solutions • • • •
amec • • • •
chicago bridge and iron co • • • •
entrepose contracting • • • –
expro international • – – –
fluor • • • •
foster wheeler • • • •
haliburton • • • •
helix energy solutions • • – –
jgc • • • •
maire tecnimont – – • •
saipem • • • •
schlumberger • • • •
snclavalin group • • • •
technip • • • •
tecnicas reunidas • • • •
wood group john • • • •
worleyparsons • • • •
tsr element 50 of award
for the 2011 psp grant the tsr performance measure and accompanying vesting schedule will remain the same as previous grants 
tsr is the percentage return to a purchaser of an ordinary share in the company arising from share price appreciation and reinvestment of 
dividends over a given period the tsr of the company is measured and then compared against the median tsr of an index of a number  
of international peer companies as detailed in the following table 
plan operation 90 petrofac annual report and accounts 2010
vesting is determined in line with the following
tsr relative to an unweighted  
comparator group index
percentage of tsr element  
of award vesting
12
less than index 0
equal to index 30
more than index by up to 25 straight line vesting between 30 
and 100
more than index by 25 or more 100
1  the committee is authorised under the rules of the psp to make retrospective 
adjustments to the comparator index for any year of award if one or more of  
the constituent companies are subject to delisting merger acquisition or other  
such event
2  it is assumed that a notional £100 is invested equally among all the companies 
making up the tsr index at the start of the performance period at the end of the 
vesting period the index will represent the value of what the initial notional investment 
of £100 would have returned over the period this will be representative of the 
average return made by the company’s competitors this is then compared to the 
return by an equivalent notional investment of £100 in petrofac over the same period
from 2010 vesting of the tsr element is subject to the achievement 
of strong underlying financial performance of petrofac for awards 
granted before then it was also necessary to achieve eps growth over 
the period of at least rpi plus 3 over the threeyear vesting period
eps element 50 of award
earnings per share represent the earnings excluding dividends  
in pence attributable to one ordinary share the company’s eps 
performance over a threeyear period is calculated and vesting is  
in line with the vesting schedule attached to a particular award as 
shown in the table below
awards made in  
2010 onwards
eps compound  
annual growth over  
threeyear period
awards made prior  
to 2010
eps compound  
annual growth over  
threeyear period
percentage of  
eps element of  
award vesting
10 or less 15 or less 0
more than 10 but  
less than 15
more than 15 but less  
than 20
straight line vesting  
between 0 and 30 
15 20 30
more than 15 but  
less than 20
more than 20 but less  
than 25
straight line vesting  
between 30 and 100 
20 or more 25 or more 100
the committee determines the eps targets immediately before the 
grant of each award it considers internal growth projections market 
consensus figures and general external conditions the committee 
believes the targets attached to existing psp awards are extremely 
stretching
other discretionary share plans
as part of its oversight role the committee considers the following 
discretionary share plans
deferred bonus share plan dbsp
under the dbsp selected employees are required or in some cases 
invited to defer a proportion of their annual cash bonus into company 
shares ‘invested shares’ the company will generally grant the 
participant an additional award over a number of shares being a 
specified ratio to the number of his or her invested shares ‘matching 
shares’ typically using a 11 ratio
subject to a participant’s continued employment invested and 
matching share awards may either vest 100 on the third anniversary 
of grant or alternatively vest one third on the first anniversary of the 
grant one third on the second anniversary and the final proportion  
on the third anniversary
the committee uses its discretion to determine whether a participant 
should be subject to either threeyear cliff or annual vesting or a 
mixture in doing so it takes management recommendations into 
consideration
in 2007  the committee decided that neither executive directors nor 
the most senior members of management should participate in the 
scheme as there are no performance conditions attached to matching 
awards if such individuals are considered for dbsp participation in 
future years the company undertakes not to make matching awards 
unless they are subject to suitably stretching performance conditions 
and a deferral period of at least three years
proposed changes
the committee is seeking shareholder approval to make minor 
administrative changes to the dbsp at the forthcoming agm  
as set out below
the committee wishes to extend eligibility to participate in the  ■ ■
dbsp to certain petrofac joint ventures jvs where it considers  
it appropriate
currently individuals are only eligible to participate in the dbsp  ■ ■
if petrofac holds a majority shareholding in their employing entity 
the committee wishes to have the flexibility to extend participation 
where it deems appropriate to employees of jvs where petrofac 
has a shareholding of at least 25
the committee believes that extending participation levels in the ■ ■
dbsp where appropriate will align the interests of key individuals  
in the company’s jv entities with those of petrofac shareholders
further details of the proposed resolution are included in the notice  
of agm
restricted share plan rsp
under the rsp selected employees are made grants of shares on  
an ad hoc basis throughout the year executive directors are not 
eligible to participate in the scheme 
the scheme is used primarily but not exclusively to make awards 
to individuals who join the group part way through the year having  
left accrued benefits with a previous employer the committee 
periodically monitors the level of awards
wider workforce remuneration
when determining remuneration arrangements for executive  
directors the committee takes into consideration the pay and 
conditions of employees throughout the group there is upward 
pressure on remuneration levels within our highly competitive sector 
the committee is aware that securing increasingly soughtafter key 
talent is critical to the continued success of petrofac
on an allemployee basis the company offers participation in an 
approved share incentive plan sip which the committee considers 
as part of its oversight role
under the sip  all uk employees including ukresident directors  
may invest up to £1500 per tax year of gross salary or if less  
10 of salary to purchase ordinary shares there is no holding  
period for these shares
directors’ remuneration report
continued 91 petrofac annual report and accounts 2010
governance
general share plan information
dividends and voting rights
participants in the psp dbsp and rsp have no dividend or voting 
rights in respect of their respective awards until their awards vest 
however when the company pays a dividend the shares under 
award will be increased by the number of shares that could have been 
acquired with the amount of dividend received had the participant 
been the owner of the award shares the vesting of the additional 
shares will be subject to the same performance conditions as the 
original award shares
participants in the sip receive dividends in respect of their shares  
in common with any other shareholder 
effect of the demerger on subsisting awards
unlike shareholders participants in the psp  dbsp and rsp were  
not entitled to receive enquest plc shares upon the successful 
completion of the demerger of petrofac’s uk continental shelf oil  
 gas assets in april 2010 the committee therefore agreed to make 
appropriate adjustments to subsisting awards to put participants in  
a similar economic position as shareholders applying an adjustment 
factor of 108 to subsisting awards
the committee also approved appropriate adjustments to tsr and 
eps performance conditions for subsisting awards to ensure that 
measurement is undertaken on a consistent basis
funding policy
in 2007  the board approved a funding policy in relation to the 
company’s employee benefit trust which holds shares to be  
used to satisfy awards under the company’s dbsp  psp and rsp 
the company reviews its contingent obligations under the above  
listed share incentive schemes on a quarterly basis to ensure that the 
employee benefit trust should purchase under a loan arrangement 
with the group and hold shares sufficient to cover between 80 to 
100 of its maximum liability at any time under the three schemes
other matters
the committee is delighted to report that at the ifsproshare awards  
in december 2010 petrofac received a commendation in the category  
of ‘best employee share plan outcome following a corporate 
transaction’ 
this award recognises petrofac’s detailed consideration of the  
impact of the demerger of its uk continental shelf oil  gas assets  
to enquest plc in april 2010 on subsisting awards under the 
company’s share incentive plans
directors’ remuneration report
performance graph
as mentioned the company’s total shareholder return is defined  
as our share price growth plus any dividends used to acquire further 
shares in petrofac for shareholders’ information the company’s  
tsr performance since 1 january 2006 is shown below compared 
with the performance of the ftse 100 index 
the committee believes the ftse 100 index is the most appropriate 
index given the company’s current positioning within it
graph showing tsr performance of petrofac measured against  
the ftse 100 over the fiveyear period to 31 december 2010 
threemonth average
0
petrofac
jan
06
may
06
sep
06
jan
07
may
07
sep
07
jan
08
may
08
sep
08
jan
09
may
09
sep
09
jan
10
may
10
sep
10
dec
10
100
200
300
400
500
600
700
800
900
tsr rebased to 100 on 1 january 2006
ftse 100 source datastream
executive directors’ service contracts
executive directors have 12month rolling service contracts with the 
company and are contractually restricted to a termination payment 
equal to 12 months’ salary and benefits none of the executive 
directors are subject to a contractual retirement date further details 
are shown below 
name of
executive 
director
date of 
service 
contract
date first 
appointed
number of
months’ notice
company director
ayman asfari 13 september 
2005 
11 january  
2002
12 12
maroun semaan 13 september  
2005 
11 january  
2002
12 12
keith roberts 13 september  
2005 
6 april  
2002
12 12
amjad bseisu
1
13 september  
2005 
11 may 
2007
12 12
1 amjad bseisu stood down from the board on 6 april 2010
amjad bseisu
on the successful demerger of the uk continental shelf oil  gas 
assets to enquest plc on 6 april 2010 amjad bseisu stepped down 
from the board with immediate effect and by mutual agreement  
to assume the role of chief executive of enquest plc as a result  
no compensation was payable to him 
the committee decided that his subsisting share awards should be 
scaled back proportionally to reflect the proportion of the relevant 
vesting period that had elapsed at 6 april 2010 these awards will be 
released on the original vesting dates to the extent that the original 
performance conditions attached to each award are met 92 petrofac annual report and accounts 2010
appointment of andy inglis
in january 2011 andy inglis joined petrofac as chief executive  
energy developments and production solutions he was appointed  
to the board on 1 march 2011
the committee considered andy inglis’ remuneration package in  
the light of his calibre and experience and the fact that he would be 
joining the board shortly after his appointment 
for the most part andy inglis has a standard remuneration package 
on a similar basis to those of other current petrofac executive 
directors his fixed remuneration will consist of basic salary £500000 
and a payment in lieu of pension contribution and company car 
allowance £65000 in common with other ukbased executive 
directors
andy inglis will be eligible to participate in the annual bonus and 
performance share plan on the same basis as other executive 
directors
to attract such a proven business leader with a strong technical 
background the committee agreed the following oneoff 
arrangements
for 2011 only an enhanced psp award of 300 of salary subject  ■ ■
to the same performance conditions as other executive directors 
this replaces any normal 2011 award
a oneoff retention share award with a value of £1 million which  ■ ■
will vest in equal annual tranches over three years in order  
to compensate him for foregone remuneration opportunities
a oneoff payment of £450000 to assist with his relocation to  ■ ■
the uk to perform his duties
nonexecutive directors – remuneration policy and practice
the board reviews and sets the fees of independent nonexecutive 
directors annually supported by independent professional advice
when deciding an appropriate fee level for each independent 
nonexecutive director the board takes into account the level of  
fees generally paid to nonexecutive directors serving on boards  
of similarlysized uklisted companies and the responsibility and  
time commitment required of the role
nonexecutive directors do not have service contracts and are  
not entitled to compensation on leaving the board however if the 
chairman or a nonexecutive director is requested to resign they  
are entitled to prior notice or fees in lieu of three months’ notice 
director
date of latest 
letter of 
appointment 
date first 
appointed
required 
notice from 
company  
in months
rodney chase 13 september  
2005 
21 june  
2005
3
kjell almskog 13 september  
2005 
23 march  
2005
3
thomas thune andersen 11 february  
2011
13 may  
2010
3
stefano cao 11 february  
2011
13 may  
2010
3
rijnhard van tets 2 february  
2007 
11 may  
2007
3
bernard de combret¹ 13 september  
2005
19 november  
2003
3
michael press¹ 13 september  
2005
30 april  
2002
3
 
1 bernard de combret and michael press stood down at the 2010 agm
 
fees for nonexecutive directors are as shown in the table below  
the board reviewed these fees in early 2011 and has made changes 
with effect from 1 january 2011 to position the fees close to midmarket 
taking account of the extensive time and travel demands of these roles
2011
£ 
2010
£
basic fees
nonexecutive director 60000 55000
additional fees 
committee chairman 14000 12000
senior independent director
1
14000 12000
1  there is no current intention to pay an additional fee payable for the role of senior 
independent director once kjell almskog steps down from the board on 13 may 201 1
 
the remuneration of the chairman of the board is set by the 
remuneration committee the fee level for rodney chase who will  
be stepping down from the board after the 2011 agm is £120000  
per year with effect from 21 june 2010 previously £100000
norman murray and roxanne decyk were appointed nonexecutive 
directors on 1 march 2011 subject to shareholder approval norman 
murray will assume the role of chairman at the conclusion of the agm 
from 13 may 2011 his annual fee as chairman will be £230000
the board as a whole is responsible for deciding nonexecutive 
directors’ fees unless such fees exceed £500000 per annum in 
aggregate in which case shareholder approval in a general meeting 
would be sought a resolution is proposed at the 2011 agm to amend 
the articles of association in order to increase the maximum non
executive director fees payable to £1 million per annum this increase 
is necessary to allow petrofac sufficient headroom to discharge its 
obligations without further shareholder approval
directors’ remuneration report
continued 93 petrofac annual report and accounts 2010
governance
audited information
amount of each director’s emoluments in the relevant financial year
the remuneration of each director in respect of 2010 with 2009 comparison comprised
salaries and 
fees 
us’000
cash 
allowances
us’000¹
benefits
us’000²
cash
bonus
us’000
2010
total
us’000
2009
total
us’000
executive directors
ayman asfari³ 747 77 46 1495 2365 1965
maroun semaan 472 260 52 945 1729 1394
keith roberts³ 449 77 1 694 1221 934
nonexecutive directors
rodney chase 170 – – – 170 158
kjell almskog 103 – – – 103 87
thomas thune andersen
4
66 – – – 66 –
stefano cao
4
66 – – – 66 –
rijnhard van tets 103 – – – 103 87
former directors
amjad bseisu
35
11 7 20 – – 137 924
bernard de combret
5
37 – – – 37 87
michael press
5
37 – – – 37 87
2367 434 99 3134 6034 5723
1  payment in lieu of pension allowance and other benefits for ukresident directors and end of service indemnity and various allowances for the uaeresident director as outlined 
on page 88 directors are not eligible to receive pension contributions from the company
2  ayman asfari’s benefits relate primarily to the employment of a personal assistant who spends part of her time in the administration of his philanthropic work maroun semaan 
receives inter alia benefits in relation to his children’s education and return flights to his permanent home details of other benefits are provided on page 88
3  ukbased directors are paid in sterling amounts have been translated to us dollars based on the prevailing rate at the date of payment or award with the exception of the 
bonus amounts which have been translated using the average exchange rate for the year
4  thomas thune andersen and stefano cao were appointed as directors on 13 may 2010 and their fees reflect the period from then to the end of the year
5  amjad bseisu stepped down as a director on 6 april 2010 upon the demerger of enquest plc and the table above shows his remuneration during the period up to his 
departure bernard de combret and michael press stepped down as directors on 13 may 2010 and their fees reflect the period up to then
directors’ remuneration report 94 petrofac annual report and accounts 2010
awards of shares under the psp
awards of shares during the year to executive directors under the psp are given below  
director and
date of grant
 of basic 
salary in 
year of 
grant
number of 
shares at 
311209¹
shares
granted in 
year under
 annual 
award 
cycle¹
dividend 
shares
 granted in
 the year
2
additional 
shares 
received 
upon
 adjustment
for the 
demerger
3
lapsed in 
year
vested in  
year
number of 
shares at
 31 1210¹
date from which 
shares vest
market 
price on 
date of 
grant
ayman asfari
19 march 2007 1000 95671 – – – – 95671 nil
4
19 march 2010 415p
19 march 2008 1227 104032 – 2490 8322 – – 114844
4
19 march 2011 522p
19 march 2009 1309 116539 – 2789 9323 – – 128651
5
19 march 2012 545p
14 may 2010 2000 – 88213 1954 – – – 90167
5
19 march 2013 1103p
maroun semaan
19 march 2007 1000 45204 – – – – 45204 nil
4
19 march 2010 415p
19 march 2008 1237 47 750 – 1142 3820 – – 52712
4
19 march 2011 522p
19 march 2009 1222 73267 – 1753 5861 – – 80881
5
19 march 2012 545p
14 may 2010
6
2250 – 66462 1472 – – – 67934
5
19 march 2013 1103p
keith roberts
19 march 2007 1000 58465 – – – – 58465 nil
4
19 march 2010 415p
19 march 2008 889 46236 – 1106 3698 – – 51040
4
19 march 2011 522p
19 march 2009 950 50852 – 1217 4068 – – 56137
5
19 march 2012 545p
14 may 2010 2000 – 53 1 10 11 76 – – – 54286
5
19 march 2013 1103p
former director
amjad bseisu
7
19 march 2007 1000 55807 – – – – 55807 nil
4
19 march 2010 415p
19 march 2008 923 46236 – – 3698 16647 – 33287 19 march 2011 522p
19 march 2009 909 48156 – – 3852 34673 – 17335 19 march 2012 545p
1   the award levels given are the maximum number that can vest subject to the performance conditions attached to awards the performance conditions are explained in detail 
on pages 88 to 90
2   dividends awarded on the shares granted under the psp are reinvested to buy further shares 
3    following the completion of the demerger of petrofac’s uk continental shelf oil  gas assets to enquest plc in april 2010 the company applied an adjustment factor of  
108 8 to unvested share awards held under the petrofac performance share plan ‘psp’ to compensate awardholders for not being entitled to enquest plc shares  
at the time of the demerger
4    the performance conditions for the april 2007 psp award were satisfied and the award vested in full during the year shares awarded on 19 march 2008 have satisfied their 
performance conditions in full and will vest 100 on 19 march 2011 based on a share price of 1378 pence which is the share price at 25 february 2011 being the latest 
practicable date prior to the adoption of this report by the remuneration committee the values of the awards delivered to current executive directors would be as follows 
ayman asfari £1582550 keith roberts £703331 and maroun semaan £726371
5   shares awarded on 19 march 2009 and 14 may 2010 are not due to vest until 19 march 2012 and 19 march 2013 respectively it is too early in the committee’s opinion 
to provide shareholders with a meaningful assessment to the extent that these shares will vest if at all
6    maroun semaan received an exceptional psp award of 225 of salary in 2010 due to his outstanding contribution to the group’s extremely strong performance in 2009
7   amjad bseisu stepped down from the board on 6 april 2010 his share awards have been scaled back proportionally to reflect the proportion of the relevant vesting period  
that had elapsed as at 6 april 2010 these awards will be released on the original vesting dates as outlined in the table above
directors’ remuneration report
continued 95 petrofac annual report and accounts 2010
governance
sums paid to third parties in respect of executive directors’ services
no sums were paid to third parties in respect of any executive director’s services 2009 nil
directors’ beneficial shareholdings at 31 december 2010
directors’ personal shareholdings which include family interests and which are not related to their remuneration have been disclosed under the 
requirements of the ukla listing rules and are as follows
number of shares as  
at 31 december 2010 
number of shares as 
at 31 december 2009 
or date of appointment 
if later
1
executive directors
ayman asfari 62782114 53782114
maroun semaan 28082676 30607 676
keith roberts 2120000 2120000
nonexecutive directors
rodney chase 815000 800000
kjell almskog 400000 400000
thomas thune andersen
1
4000 2000
rijnhard van tets 100000 100000
 the company’s share price at the end of the financial year was 1587 pence and the market price during the year was in the range of 9485 pence 
to 1601 pence
agm
the remuneration report will be submitted for approval to the agm to be held on friday 13 may 2011
on behalf of the board
thomas thune andersen
chairman of the remuneration committee
4 march 2011
directors’ remuneration report 96 petrofac annual report and accounts 2010
directors’ responsibilities
the directors are responsible for preparing the annual report and  
the financial statements in accordance with applicable law and 
regulations the directors have chosen to prepare the financial 
statements in accordance with international financial reporting 
standards ifrs the directors are also responsible for the 
preparation of the directors’ remuneration report which they  
have chosen to prepare being under no obligation to do so under 
jersey law the directors are also responsible for the preparation  
of the corporate governance report under the listing rules
jersey company law the ‘law’ requires the directors to prepare 
financial statements for each financial period in accordance with any 
generally accepted accounting principles the financial statements  
are required by law to give a true and fair view of the state of affairs of 
the company at the period end and the profit or loss of the company 
for the period then ended in preparing these financial statements  
the directors should
select suitable accounting policies and then apply them consistently ■ ■
make judgements and estimates that are reasonable and prudent ■ ■
specify which generally accepted accounting principles have been ■ ■
adopted in their preparation
prepare the financial statements on a going concern basis unless  ■ ■
it is inappropriate to presume that the company will continue  
in business
the directors are responsible for keeping proper accounting records 
which are sufficient to show and explain the company’s transactions 
and as such as to disclose with reasonable accuracy at any time the 
financial position of the company and enable them to ensure that  
the financial statements prepared by the company comply with the 
law they are also responsible for safeguarding the assets of the 
company and hence for taking reasonable steps for the prevention 
and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of  
the corporate and financial information included on the company’s 
website legislation in jersey governing the preparation and 
dissemination of financial statements may differ from legislation  
in other jurisdictions
directors’ approach
the board’s objective is to present a balanced and understandable 
assessment of the company’s position and prospects particularly  
in the annual report half year report formerly the interim report and 
other published documents and reports to regulators the board has 
established an audit committee to assist with this obligation 
going concern
the company’s business activities together with the factors likely  
to affect its future development performance and position are set  
out in the business review on pages 16 to 54 the financial position of 
the company its cash flows liquidity position and borrowing facilities 
are described in the financial review on pages 52 to 54 in addition 
note 33 to the financial statements include the company’s objectives 
policies and processes for managing its capital its financial risk 
management objectives details of its financial instruments and 
hedging activities and its exposures to credit risk and liquidity risk
directors’ statements
the company has considerable financial resources together with  
longterm contracts with a number of customers and suppliers across 
different geographic areas and industries as a consequence the 
directors believe that the company is well placed to manage its business 
risks successfully despite the current uncertain economic outlook
the directors have a reasonable expectation that the company  
has adequate resources to continue in operational existence for the 
foreseeable future thus they continue to adopt the going concern 
basis of accounting in preparing the annual financial statements
responsibility statement under the disclosure and 
transparency rules
each of the directors listed on pages 68 and 69 confirm that to the 
best of their knowledge
the financial statements prepared in accordance with ifrs give a ■ ■
true and fair view of the assets liabilities financial position and profit 
of the company and the undertakings included in the consolidation 
taken as a whole
the operating and financial review includes a fair view of the ■ ■
development and performance of the business and the position  
of the company and the undertakings included in the consolidation 
taken as a whole together with a description of the principal risks 
and uncertainties that they face
by order of the board 
keith roberts
chief financial officer
4 march 2011 97 petrofac annual report and accounts 2010
governance
we have audited the group financial statements of petrofac limited 
‘the company’ and its subsidiaries together ‘the group’ for the year 
ended 31 december 2010 which comprise the consolidated income 
statement the consolidated statement of comprehensive income  
the consolidated statement of financial position the consolidated  
cash flow statement the consolidated statement of changes in equity 
and the related notes 1 to 35 the financial reporting framework that 
has been applied in their preparation is applicable jersey law and 
international financial reporting standards
this report is made solely to the company’s members as a body  
in accordance with article 113a of the companies jersey law 1991 
and our engagement letter dated 15 february 2011 our audit work 
has been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an 
auditor’s report and for no other purpose to the fullest extent 
permitted by law we do not accept or assume responsibility to anyone 
other than the company and the company’s members as a body  
for our audit work for this report or for the opinions we have formed 
respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ responsibilities 
set out on page 96 the directors are responsible for the preparation  
of the group financial statements and for being satisfied that they  
give a true and fair view our responsibility is to audit and express  
an opinion on the group financial statements in accordance with 
applicable law and international standards on auditing uk and 
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors
in addition the company has also instructed us to
review the statement of directors’ responsibilities in relation to  ■ ■
going concern as set out on page 96 which for a premium listed 
uk incorporated company is specified for review by the listing 
rules of the financial services authority
report as to whether the information given in the corporate ■ ■
governance report with respect to internal control and risk 
management systems in relation to financial reporting processes 
and about share capital structures is consistent with the financial 
statements
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material 
misstatement whether caused by fraud or error this includes an 
assessment of whether the accounting policies are appropriate to  
the group’s circumstances and have been consistently applied and 
adequately disclosed the reasonableness of significant accounting 
estimates made by the directors and the overall presentation of the 
financial statements
independent auditors’ report to  
the members of petrofac limited
notes
1  the maintenance and integrity of the petrofac limited web site is the responsibility  
of the directors the work carried out by the auditors does not involve consideration 
of these matters and accordingly the auditors accept no responsibility for any 
changes that may have occurred to the financial statements since they were initially 
presented on the website
2  legislation in jersey governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions
opinion on financial statements
in our opinion the group financial statements
give a true and fair view of the state of the group’s affairs as  ■ ■
at 31 december 2010 and of its profit for the year then ended
have been properly prepared in accordance with international ■ ■
financial reporting standards
have been prepared in accordance with the requirements of the ■ ■
companies jersey law 1991
opinion on other matter
in our opinion the information given in the corporate governance 
report set out on pages 71 to 78 with respect to internal control and 
risk management systems in relation to financial reporting processes 
and about share capital structures is consistent with the financial 
statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters
where the companies jersey law 1991 requires us to report to  ■ ■
you if in our opinion
proper accounting records have not been kept or proper returns  –
adequate for our audit have not been received from branches not 
visited by us
the financial statements are not in agreement with the accounting  –
records and returns
we have not received all the information and explanations we  –
require for our audit
under the listing rules we are required to review the part of the ■ ■
corporate governance report relating to the company’s compliance 
with the nine provisions of the june 2008 combined code specified 
for our review
where the company instructed us to review the statement of ■ ■
directors’ responsibilities set out on page 96 in relation to going 
concern
other matter
we have reported separately on the parent company financial 
statements of petrofac limited for the year ended 31 december 2010 
and on the information in the remuneration report that is described 
as having been audited 
justine belton 
for and on behalf of ernst  young llp
london
4 march 2011
independent auditors’ report to the 
members of petrofac limited consolidated 
financial 
statements
98    petrofac annual report and accounts 2010 consolidated income statement
for the year ended 31 december 2010
notes
2010
us’000
restated 
2009
us’000
revenue 4a 4354217 3655426
cost of sales 4b 3595142 3038250
gross profit 759075 617  176
selling general and administration expenses 4c 221449 186293
gain on enquest demerger 11 124864 –
other income 4f 5013 4075
other expenses 4g 4053 2998
profit from operations before tax and finance incomecosts 663450 431960
finance costs 5 5131 5582
finance income 5 10209 11 942
share of loss of associate 14 131 –
profit before tax 668397 438320
income tax expense 6 110545 84515
profit for the year 557852 353805
attributable to
 petrofac limited shareholders 557817 353603
 noncontrolling interests 35 202
557852 353805
earnings per share us cents 7
– basic excluding gain on enquest demerger 12776 10478
– diluted excluding gain on enquest demerger 12609 10319
– basic including gain on enquest demerger 16461 10478
– diluted including gain on enquest demerger 16246 10319
the attached notes 1 to 35 form part of these consolidated financial statements
group financial statements
99    petrofac annual report and accounts 2010 consolidated statement of comprehensive income
for the year ended 31 december 2010
notes
2010
us’000
restated 
2009
us’000
profit for the year 557852 353805
foreign currency translation 25 908 15087
foreign currency translation recycled to income  
statement in the year on enquest demerger 11 45818 –
net gains on maturity of cash flow hedges recycled in the period 25 16612 4303
net changes in fair value of derivatives and  
financial assets designated as cash flow hedges 25 18958 29229
net changes in the fair value of availableforsale financial assets 25 70 –
disposal of availableforsale financial assets 25 74 –
other comprehensive income 9336 40013
total comprehensive income for the period 567188 393818
attributable to
 petrofac limited shareholders 567153 393616
 noncontrolling interests 35 202
567188 393818
the attached notes 1 to 35 form part of these consolidated financial statements
100    petrofac annual report and accounts 2010 consolidated statement of financial position
at 31 december 2010
notes
2010
us’000
restated 
2009
us’000
assets
noncurrent assets
property plant and equipment 9 287158 677996
goodwill 12 105832 97922
intangible assets 13 85837 73107
investment in associates 14 16349 –
availableforsale financial assets 16 101494 539
other financial assets 17 2223 12535
deferred income tax assets 6c 26301 49726
625194 911 825
current assets
inventories 18 7202 9798
work in progress 19 803986 333698
trade and other receivables 20 1056759 878670
due from related parties 32 327 18260
other financial assets 17 42350 30957
income tax receivable 2525 –
cash and shortterm deposits 21 1063005 1 4 1 7363
2976154 2688746
total assets 3601348 3600571
equity and liabilities
equity attributable to petrofac limited shareholders
share capital 22 6914 8638
share premium 992 69712
capital redemption reserve 10881 10881
shares to be issued 994 1988
treasury shares 23 65317 56285
other reserves 25 34728 25394
retained earnings 787270 834382
776462 894710
noncontrolling interests 2592 2819
total equity 779054 897529
noncurrent liabilities
interestbearing loans and borrowings 26 40226 59195
provisions 27 45441 92103
other financial liabilities 28 11453 27485
deferred income tax liabilities 6c 48086 42192
145206 220975
current liabilities
trade and other payables 29 1021436 97701 7
due to related parties 32 11710 57326
interestbearing loans and borrowings 26 47435 58071
other financial liabilities 28 37054 3634
income tax payable 105559 88219
billings in excess of cost and estimated earnings 19 178429 461 1 44
accrued contract expenses 30 1275465 836656
2677088 2482067
total liabilities 2822294 2703042
total equity and liabilities 3601348 3600571
the financial statements on pages 99 to 143 were approved by the board of directors on 4 march 2011 and signed on its behalf by  
keith roberts – chief financial officer
the attached notes 1 to 35 form part of these consolidated financial statements
101    petrofac annual report and accounts 2010
group financial statements consolidated statement of cash flows 
for the year ended 31 december 2010
notes
2010
us’000
restated 
2009
us’000
operating activities
profit before tax including gain on enquest demerger 668397 438320
gain on enquest demerger 124864 –
543533 438320
noncash adjustments to reconcile profit before tax to net cash flows
 depreciation amortisation impairment and write off 4b 4c 95903 1 1 7780
 sharebased payments 4d 14784 13263
 difference between other longterm employment benefits paid and  
amounts recognised in the income statement 6074 7905
 net finance income 5 5078 6360
 lossgain on disposal of property plant and equipment 4b4f4g 315 784
 gain on disposal of intangible assets 4f 2338 –
 other noncash items net 13319 3233
666512 566891
working capital adjustments
 trade and other receivables 266757 176773
 work in progress 470288 81003
 due from related parties 17933 15353
 inventories 2982 5721
 other current financial assets 12661 4775
 trade and other payables 167707 479902
 billings in excess of cost and estimated earnings 282715 175617
 accrued contract expenses 438809 284795
 due to related parties 45616 56767
 other current financial liabilities 6045 177
215987 1280524
other noncurrent items net 8720 4265
cash generated from operations 207267 1276259
interest paid 1948 3351
income taxes paid net 99030 8771 4
net cash flows from operating activities 106289 1 185194
investing activities
purchase of property plant and equipment 115345 317  17 4
acquisition of subsidiaries net of cash acquired 10 15110 –
purchase of other intangible assets 13 153 10375
purchase of intangible oil  gas assets 13 15644 29230
cash outflow on enquest demerger including transaction costs 17783 –
investment in associates 14 8459 –
purchase of availableforsale financial assets 16 101494 106
proceeds from disposal of property plant and equipment 3219 1333
proceeds from disposal of availableforsale financial assets 539 95
proceeds from sale of intangible assets 6018 –
interest received 10257 12158
net cash flows used in investing activities 253955 343299
financing activities
repayment of interestbearing loans and borrowings 32458 9958
proceeds from capital injection by noncontrolling interest – 2408
treasury shares purchased 23 36486 –
equity dividends paid 132244 98995
net cash flows used in financing activities 201188 106545
net decreaseincrease in cash and cash equivalents 348854 735350
net foreign exchange difference 7793 6235
cash and cash equivalents at 1 january 1390744 649159
cash and cash equivalents at 31 december 21 1034097 1390744
the attached notes 1 to 35 form part of these consolidated financial statements
102    petrofac annual report and accounts 2010 consolidated statement of changes in equity 
for the year ended 31 december 2010
 attributable to shareholders of petrofac limited
 
issued
share
capital
us’000
share 
premium
us’000
capital
redemption
reserve
us’000
shares to
 be issued
us’000
treasury
shares
us’000
note 23
other 
reserves
us’000
note 25
retained
earnings
us’000
total
us’000
non
controlling
interests
us’000
total
equity
us’000
balance at 1 january 2010  
as restated 8638 69712 10881 1988 56285 25394 834382 894710 2819 897529
net profit for the year – – – – – – 55781 7 55781 7 35 557852
other comprehensive income – – – – – 9336 – 9336 – 9336
total comprehensive income for 
the year – – – – – 9336 55781 7 567 1 53 35 567 188
shares issued as payment of 
consideration on acquisition 4 2452 – 994 – – – 1462 – 1462
sharebased payments charge 
note 24 – – – – – 14784 – 14784 – 14784
shares vested during the year 
note 23 – – – – 27 454 261 70 1284 – – –
transfer to reserve for share
based payments note 24 – – – – – 12750 – 12750 – 12750
treasury shares purchased  
note 23 – – – – 36486 – – 36486 – 36486
deferred tax on share based 
payments reserve – – – – – 1366 – 1366 – 1366
enquest demerger share split 
and redemption note 11 1728 – – – – – 1728 – – –
distribution on enquest 
demerger note 11 – 71 1 72 – – – – 473325 544497 – 544497
dividends note 8 – – – – – – 132048 132048 – 132048
movement in noncontrolling 
interests – – – – – – – – 262 262
balance at 31 december 2010 6914 992 10881 994 65317 34728 787270 776462 2592 779054
 attributable to shareholders of petrofac limited
 
issued
share
capital
us’000
share 
premium
us’000
capital
redemption
reserve
us’000
shares to
 be issued
us’000
treasury
shares
us’000
note 23
other 
reserves
us’000
note 25
retained
earnings
us’000
total
us’000
non
controlling
interests
us’000
total
equity
us’000
balance at 1 january 2009 8636 68203 10881 1988 69333 39292 577739 558822 209 559031
net profit for the year as reported – – – – – – 353603 353 603 9428 363031
other comprehensive income  
as reported – – – – – 35813 – 35813 4200 40013
total comprehensive income for 
the year as reported – – – – – 35813 353 603 389416 13628 403044
restatement – – – – – 4200 – 4200 13426 9226
total comprehensive income for 
the year as restated – – – – – 40013 353 603 393616 202 393818
shares issued on acquisition 2 1509 – – – – – 1 511 – 1 511
sharebased payments charge 
note 24 – – – – – 13263 – 13263 – 13263
shares vested during the year 
note 23 – – – – 13048 12617 431 – – –
transfer to reserve for share
based payments note 24 – – – – – 10942 – 10942 – 10942
deferred tax on share based 
payments reserve – – – – – 13085 – 13085 – 13085
capital injection by non
controlling interests – – – – – – – – 2408 2408
dividends note 8 – – – – – – 96529 96529 – 96529
balance at 31 december 2009  
as restated 8638 69712 10881 1988 56285 25394 834382 894710 2819 897529
shares held by petrofac employee benefit trust
the attached notes 1 to 35 form part of these consolidated financial statements
103    petrofac annual report and accounts 2010
group financial statements notes to the consolidated financial statements
for the year ended 31 december 2010
1 corporate information 
the consolidated financial statements of petrofac limited the 
‘company’ for the year ended 31 december 2010 were authorised for 
issue in accordance with a resolution of the directors on 4 march 2011
petrofac limited is a limited liability company registered and domiciled 
in jersey under the companies jersey law 1991 and is the holding 
company for the international group of petrofac subsidiaries together 
‘the group’ the company’s 31 december 2010 financial statements 
are shown on pages 146 to 158 the group’s principal activity is  
the provision of facilities solutions to the oil  gas production and 
processing industry
a full listing of all group companies and joint venture companies  
is contained in note 35 to these consolidated financial statements
2 summary of significant accounting policies
basis of preparation
the consolidated financial statements have been prepared on a 
historical cost basis except for derivative financial instruments and 
availableforsale financial assets which have been measured at  
fair value the presentation currency of the consolidated financial 
statements is united states dollars and all values in the financial 
statements are rounded to the nearest thousand us’000 except 
where otherwise stated the directors have reconsidered the nature 
of the contractual commitments to a joint venture on a lump sum 
construction contract in the engineering  construction reporting 
segment and as a result the amount of us9226000 shown as part 
of noncontrolling interest in december 2009 in the income statement 
has been reclassified to cost of sales similarly us4200000 shown 
within other comprehensive income has been shown as attributable 
to petrofac us9226000 in the statement of financial position has 
been reclassified as trade and other payables
statement of compliance
the consolidated financial statements of petrofac limited and its 
subsidiaries have been prepared in accordance with international 
financial reporting standards ifrs and applicable requirements  
of jersey law 
basis of consolidation
the consolidated financial statements comprise the financial 
statements of petrofac limited and its subsidiaries the financial 
statements of its subsidiaries are prepared for the same reporting  
year as the company and where necessary adjustments are made  
to the financial statements of the group’s subsidiaries to bring their 
accounting policies into line with those of the group
subsidiaries are consolidated from the date on which control is 
transferred to the group and cease to be consolidated from the  
date on which control is transferred out of the group control  
is achieved where the company has the power to govern the  
financial and operating policies of an investee entity so as to obtain  
benefits from its activities all intragroup balances and transactions 
including unrealised profits have been eliminated on consolidation 
noncontrolling interests in subsidiaries consolidated by the group are 
disclosed separately from the group’s equity and income statement 
prior to 1 january 2010 losses incurred by the group were attributed 
to noncontrolling interests until the balance is reduced to nil any 
further excess losses were attributed to the parent unless there was  
a binding obligation on the part of the noncontrolling interest to cover 
these losses prior to 1 january 2010 were not reallocated between 
noncontrolling interests and the parent shareholders
new standards and interpretations
the group has adopted new and revised standards and interpretations 
issued by the international accounting standards board iasb and the 
international financial reporting interpretations committee ifric of  
the iasb that are relevant to its operations and effective for accounting 
periods beginning on or after 1 january 2010 the principal effects of 
the adoption of these new and amended standards and interpretations 
are discussed below
ifrs 3 ‘business combinations revised’ the revised standard 
increases the number of transactions to which it must be applied 
including business combinations of mutual entities and combinations 
without consideration ifrs 3 revised introduces significant changes 
in the accounting for business combinations such as valuation of 
noncontrolling interest business combination achieved in stages  
the initial recognition and subsequent measurement of a contingent 
consideration and the accounting for transaction costs these 
changes will have a significant impact on profit or loss reported in  
the period of an acquisition the amount of goodwill recognised in  
a business combination and profit or loss reported in future periods
ias 27 ‘consolidated and separate financial statements 
amendments’ the amended standard requires that a change in the 
ownership interest of a subsidiary without loss of control is accounted 
for as a transaction with owners in their capacity as owners and these 
transactions will no longer give rise to goodwill or gains and losses 
the standard also specifies the accounting when control is lost and 
any retained interest is remeasured to fair value with gains or losses 
recognised in profit or loss
ifric 17 ‘distributions of noncash assets to owners’ this interpretation 
provides guidance in respect of accounting for noncash asset 
distributions to shareholders this interpretation is effective for periods 
beginning on or after 1 july 2009 see note 11 for distributions in 
respect of enquest demerger
ifrs 8 ‘operating segments’ the amendment clarifies that segment 
assets and liabilities need not be reported if they are not used as a 
measure by the chief operating decision maker as segment assets 
and liabilities are not reviewed by the chief operating decision maker 
for operational and financial decisions the group has opted not to 
disclose segment assets and liabilities in note 3
ias 36 ‘impairment of assets’ the amendment clarifies that operating 
segments as defined in ifrs 8 prior to aggregation for reporting 
purposes are the largest unit for allocating goodwill on acquisitions 
the amendment has no impact on the group as goodwill impairment 
testing is performed on cash generating units before aggregation
certain new standards amendments to and interpretations of  
existing standards have been issued and are effective for the group’s 
accounting periods beginning on or after 1 january 2011 or later 
periods which the group has not early adopted the following are 
applicable to the group for which the impact on the group’s operating 
results or financial position will be assessed on adoption of these 
standards and interpretations
i  ifrs 9 ‘financial instruments’ effective for annual periods beginning 
on or after 1 january 2013 reflects the first phase of the iasb’s 
work on the replacement of ias 39 and applies to the classification 
and measurement of financial assets it specifies that all financial 
assets should be initially measured at fair value and gives further 
guidance on the measurement of debt instruments and equity 
instruments in subsequent phases the iasb will address the 
classification and measurement of financial liabilities hedge 
accounting and derecognition the completion of this project is 
expected in early 2011 the management believes that this standard 
will not have a significant effect on the group’s financial position
104    petrofac annual report and accounts 2010 ii  ias 24 ‘related party disclosures revised’ effective for annual 
periods beginning on or after 1 january 2011 the revision simplifies 
the identification of related party relationships particularly in relation 
to significant influence and joint control the management believes 
that this standard will not have a significant effect on the group’s 
financial position
other amendments resulting from improvements to ifrs to the 
following standards and interpretations did not have any impact on  
the accounting policies financial position or performance of the group
 
ias 1 ‘presentation of financial statements’ 
ias 32   ‘financial instruments presentation – classification of  
rights issues amendment’ 
ifric 14  ‘prepayments of a minimum funding requirement 
amendment’ 
ifric 19 ‘extinguishing financial liabilities with equity instruments’
significant accounting judgements and estimates
judgements
in the process of applying the group’s accounting policies 
management has made the following judgements apart from those 
involving estimations which have the most significant effect on  
the amounts recognised in the consolidated financial statements
revenue recognition on fixedprice engineering procurement  ■ ■
and construction contracts the group recognises revenue on 
fixedprice engineering procurement and construction contracts 
using the percentageofcompletion method based on surveys  
of work performed the group has determined this basis of  
revenue recognition is the best available measure of progress  
on such contracts
estimation uncertainty
the key assumptions concerning the future and other key sources  
of estimation uncertainty at the statement of financial position date 
that have a significant risk of causing a material adjustment to the 
carrying amounts of assets and liabilities within the next financial year 
are discussed below
project cost to complete estimates at each statement of financial ■ ■
position date the group is required to estimate costs to complete  
on fixed price contracts estimating costs to complete on such 
contracts requires the group to make estimates of future costs to  
be incurred based on work to be performed beyond the statement 
of financial position date
onerous contract provisions the group provides for future losses  ■ ■
on longterm contracts where it is considered probable that the 
contract costs are likely to exceed revenues in future years 
estimating these future losses involves a number of assumptions 
about the achievement of contract performance targets and the 
likely levels of future cost escalation over time
impairment of goodwill the group determines whether goodwill is ■ ■
impaired at least on an annual basis this requires an estimation  
of the value in use of the cashgenerating units to which the  
goodwill is allocated estimating the value in use requires the group 
to make an estimate of the expected future cash flows from each  
cashgenerating unit and also to determine a suitable discount  
rate in order to calculate the present value of those cash flows  
the carrying amount of goodwill at 31 december 2010 was 
us105832000 2009 us97 922000 note 12
deferred tax assets the group recognises deferred tax assets  ■ ■
on all applicable temporary differences where it is probable that 
future taxable profits will be available for utilisation this requires 
management to make judgements and assumptions regarding  
the amount of deferred tax that can be recognised based on the 
magnitude and likelihood of future taxable profits the carrying 
amount of deferred tax assets at 31 december 2010 was 
us26301000 2009 us49726000
income tax the company and its subsidiaries are subject to routine ■ ■
tax audits and also a process whereby tax computations are 
discussed and agreed with the appropriate authorities whilst the 
ultimate outcome of such tax audits and discussions cannot be 
determined with certainty management estimates the level of 
provisions required for both current and deferred tax on the basis  
of professional advice and the nature of current discussions with  
the tax authority concerned
recoverable value of intangible oil  gas and other intangible assets ■ ■
the group determines at each statement of financial position date 
whether there is any evidence of indicators of impairment in the 
carrying value of its intangible oil  gas and other intangible assets 
where indicators exist an impairment test is undertaken which 
requires management to estimate the recoverable value of its 
intangible assets for example by reference to quoted market values 
similar arm’s length transactions involving these assets or value in 
use calculations
units of production depreciation estimated proven plus probable ■ ■
reserves are used in determining the depreciation of oil  gas assets 
such that the depreciation charge is proportional to the depletion of 
the remaining reserves over their life of production these calculations 
require the use of estimates including the amount of economically 
recoverable reserves and future oil  gas capital expenditure
interests in joint ventures 
the group has a number of contractual arrangements with other 
parties which represent joint ventures these take the form of 
agreements to share control over other entities ‘jointly controlled 
entities’ and commercial collaborations ‘jointly controlled operations’ 
the group’s interests in jointly controlled entities are accounted for by 
proportionate consolidation which involves recognising the group’s 
proportionate share of the joint venture’s assets liabilities income and 
expenses with similar items in the consolidated financial statements  
on a linebyline basis where the group collaborates with other entities 
in jointly controlled operations the expenses the group incurs and its 
share of the revenue earned is recognised in the consolidated income 
statement assets controlled by the group and liabilities incurred by it 
are recognised in the statement of financial position where necessary 
adjustments are made to the financial statements of the group’s jointly 
controlled entities and operations to bring their accounting policies into 
line with those of the group
investment in associates
the group’s investment in associates is accounted for using the equity 
method where the investment is initially carried at cost and adjusted 
for post acquisition changes in the group’s share of net assets of the 
associate goodwill on the initial investment forms a part of the carrying 
amount of the investment and is not individually tested for impairment
the group recognises its share of the net profits after tax and 
noncontrolling interest of the associates in its consolidated income 
statement share of associate’s changes in equity is also recognised in 
the group’s consolidated statement of changes in equity any unrealised 
gains and losses resulting from transactions between the group and 
the associate are eliminated to the extent of the interest in associates
the financial statements of the associate are prepared using the same 
accounting policies and reporting periods as that of the group 
the carried value of the investment is tested for impairment at each 
reporting date impairment if any is determined by the difference 
between the recoverable amount of the associate and its carried  
value and is reported within the share of income of an associate  
in the group’s consolidated income statement
notes to the consolidated financial statements 105    petrofac annual report and accounts 2010
group financial statements notes to the consolidated financial statements continued
for the year ended 31 december 2010
2 summary of significant accounting policies continued
foreign currency translation
the company’s functional and presentational currency is united 
states dollars in the financial statements of individual subsidiaries 
joint ventures and associates transactions in currencies other than  
a company’s functional currency are recorded at the prevailing rate  
of exchange at the date of the transaction at the year end monetary 
assets and liabilities denominated in foreign currencies are retranslated 
at the rates of exchange prevailing at the statement of financial position 
date nonmonetary assets and liabilities that are measured at 
historical cost in a foreign currency are translated using the rate of 
exchange as at the dates of the initial transactions nonmonetary 
assets and liabilities measured at fair value in a foreign currency are 
translated using the rate of exchange at the date the fair value was 
determined all foreign exchange gains and losses are taken to  
the consolidated income statement with the exception of exchange 
differences arising on monetary assets and liabilities that form  
part of the group’s net investment in subsidiaries these are taken 
directly to statement of changes in equity until the disposal of the  
net investment at which time they are recognised in the consolidated 
income statement 
the statement of financial positions of overseas subsidiaries joint 
ventures and associates are translated into us dollars using the 
closing rate method whereby assets and liabilities are translated at  
the rates of exchange prevailing at the statement of financial position 
date the income statements of overseas subsidiaries and joint 
ventures are translated at average exchange rates for the year 
exchange differences arising on the retranslation of net assets are 
taken directly to other reserves within statement of changes in equity
on the disposal of a foreign entity accumulated exchange differences 
are recognised in the consolidated income statement as a component 
of the gain or loss on disposal 
property plant and equipment 
property plant and equipment is stated at cost less accumulated 
depreciation and any impairment in value cost comprises the 
purchase price or construction cost and any costs directly attributable 
to making that asset capable of operating as intended the purchase 
price or construction cost is the aggregate amount paid and the  
fair value of any other consideration given to acquire the asset 
depreciation is provided on a straightline basis other than on  
oil  gas assets at the following rates
oil  gas facilities 10 – 125 
plant and equipment 4 – 33 
buildings and leasehold improvements 5 – 33 
   or lease term if shorter 
office furniture and equipment  25 – 100 
vehicles 20 – 33
tangible oil  gas assets are depreciated on a fieldbyfield basis 
using the unitofproduction method based on entitlement to  
proven and probable reserves taking account of estimated  
future development expenditure relating to those reserves 
each asset’s estimated useful life residual value and method  
of depreciation are reviewed and adjusted if appropriate at each 
financial year end
no depreciation is charged on land or assets under construction 
the carrying amount of an item of property plant and equipment is 
derecognised on disposal or when no future economic benefits are 
expected from its use or disposal the gain or loss arising from the 
derecognition of an item of property plant and equipment is included 
in profit or loss when the item is derecognised gains are not classified 
as revenue
noncurrent assets held for sale
noncurrent assets or disposal groups are classified as held for  
sale when it is expected that the carrying amount of an asset will  
be recovered principally through sale rather than continuing use 
assets are not depreciated when classified as held for sale
borrowing costs
borrowing costs directly attributable to the construction of qualifying 
assets which are assets that necessarily take a substantial period of 
time to prepare for their intended use are added to the cost of those 
assets until such time as the assets are substantially ready for their 
intended use all other borrowing costs are recognised as interest 
payable in the consolidated income statement in the period in which 
they are incurred
goodwill 
goodwill acquired in a business combination is initially measured at 
cost being the excess of the cost of the business combination over 
the net fair value of the identifiable assets liabilities and contingent 
liabilities of the entity at the date of acquisition following initial 
recognition goodwill is measured at cost less any accumulated 
impairment losses goodwill is reviewed for impairment annually or 
more frequently if events or changes in circumstances indicate that 
such carrying value may be impaired all transaction costs associated 
with business combinations post 1 january 2010 are charged to the 
consolidated income statement in the year of such combination
for the purpose of impairment testing goodwill acquired is allocated 
to the cashgenerating units that are expected to benefit from the 
synergies of the combination each unit or units to which goodwill  
is allocated represents the lowest level within the group at which the 
goodwill is monitored for internal management purposes and is not 
larger than an operating segment determined in accordance with 
ifrs8 ‘operating segments’
impairment is determined by assessing the recoverable amount of  
the cashgenerating units to which the goodwill relates where the 
recoverable amount of the cashgenerating units is less than the 
carrying amount of the cashgenerating units and related goodwill  
an impairment loss is recognised
where goodwill has been allocated to cashgenerating units and  
part of the operation within those units is disposed of the goodwill 
associated with the operation disposed of is included in the carrying 
amount of the operation when determining the gain or loss on  
disposal of the operation goodwill disposed of in this circumstance  
is measured based on the relative values of the operation disposed  
of and the portion of the cashgenerating units retained
deferred consideration payable on acquisition
when as part of a business combination the group defers a 
proportion of the total purchase consideration payable for an 
acquisition the amount provided for is the acquisition date fair  
value of the consideration the unwinding of the discount element is 
recognised as a finance cost in the income statement for business 
combinations prior to 1 january 2010 all changes in estimated 
deferred consideration payable on acquisition is adjusted against  
the carried goodwill for business combinations after 1 january 2010 
106    petrofac annual report and accounts 2010 changes in estimated deferred consideration payable on acquisition 
are recognised in the consolidated income statement unless they are 
measurement period adjustments which are as a result of additional 
information obtained after the acquisition date about the facts and 
circumstances existing at the acquisition date which are adjusted 
against carried goodwill
intangible assets – non oil  gas assets
intangible assets acquired in a business combination are initially 
measured at cost being their fair values at the date of acquisition and 
are recognised separately from goodwill where the asset is separable 
or arises from a contractual or other legal right and its fair value can  
be measured reliably after initial recognition intangible assets are 
carried at cost less accumulated amortisation and any accumulated 
impairment losses intangible assets with a finite life are amortised  
over their useful economic life using a straight line method unless  
a better method reflecting the pattern in which the asset’s future 
economic benefits are expected to be consumed can be determined 
the amortisation charge in respect of intangible assets is included  
in the selling general and administration expenses line of the 
consolidated income statement the expected useful lives of assets 
are reviewed on an annual basis any change in the useful life or 
pattern of consumption of the intangible asset is treated as a change 
in accounting estimate and is accounted for prospectively by changing 
the amortisation period or method intangible assets are tested  
for impairment whenever there is an indication that the asset may  
be impaired
oil  gas assets
capitalised costs
the group’s activities in relation to oil  gas assets are limited to  
assets in the evaluation development and production phases
oil  gas evaluation and development expenditure is accounted  
for using the successful efforts method of accounting
evaluation expenditures
expenditure directly associated with evaluation or appraisal activities 
is capitalised as an intangible asset such costs include the costs  
of acquiring an interest appraisal well drilling costs payments to 
contractors and an appropriate share of directly attributable overheads 
incurred during the evaluation phase for such appraisal activity  
which may require drilling of further wells costs continue to be carried 
as an asset whilst related hydrocarbons are considered capable  
of commercial development such costs are subject to technical 
commercial and management review to confirm the continued intent 
to develop or otherwise extract value when this is no longer the case 
the costs are writtenoff in the income statement when such assets 
are declared part of a commercial development related costs are 
transferred to tangible oil  gas assets all intangible oil  gas assets 
are assessed for any impairment prior to transfer and any impairment 
loss is recognised in the consolidated income statement
development expenditures
expenditure relating to development of assets which include the 
construction installation and completion of infrastructure facilities  
such as platforms pipelines and development wells is capitalised 
within property plant and equipment
changes in unitofproduction factors
changes in factors which affect unitofproduction calculations  
are dealt with prospectively not by immediate adjustment of prior 
years’ amounts
 
decommissioning
provision for future decommissioning costs is made in full when  
the group has an obligation to dismantle and remove a facility or an 
item of plant and to restore the site on which it is located and when  
a reasonable estimate of that liability can be made the amount 
recognised is the present value of the estimated future expenditure  
an amount equivalent to the discounted initial provision for 
decommissioning costs is capitalised and amortised over the life  
of the underlying asset on a unitofproduction basis over proven and 
probable reserves any change in the present value of the estimated 
expenditure is reflected as an adjustment to the provision and the  
oil  gas asset 
the unwinding of the discount applied to future decommissioning 
provisions is included under finance costs in the income statement
availableforsale financial assets
investments classified as availableforsale are initially stated at fair 
value including acquisition charges associated with the investment
after initial recognition availableforsale financial assets are measured 
at their fair value using quoted market rates or in the absence of 
market data other fair value calculation methodologies gains and 
losses are recognised as a separate component of equity until the 
investment is sold or impaired at which time the cumulative gain  
or loss previously reported in equity is included in the consolidated 
income statement
impairment of assets excluding goodwill
at each statement of financial position date the group reviews  
the carrying amounts of its tangible and intangible assets to assess 
whether there is an indication that those assets may be impaired  
if any such indication exists the group makes an estimate of the 
asset’s recoverable amount an asset’s recoverable amount is the 
higher of an asset’s fair value less costs to sell and its value in use  
in assessing value in use the estimated future cash flows attributable 
to the asset are discounted to their present value using a pretax 
discount rate that reflects current market assessments of the time 
value of money and the risks specific to the asset 
if the recoverable amount of an asset is estimated to be less than its 
carrying amount the carrying amount of the asset is reduced to its 
recoverable amount an impairment loss is recognised immediately  
in the consolidated income statement unless the relevant asset is 
carried at a revalued amount in which case the impairment loss is 
treated as a revaluation decrease
where an impairment loss subsequently reverses the carrying  
amount of the asset is increased to the revised estimate of its 
recoverable amount but so that the increased carrying amount does 
not exceed the carrying amount that would have been determined  
had no impairment loss been recognised for the asset in prior years  
a reversal of an impairment loss is recognised immediately in the 
consolidated income statement unless the relevant asset is carried  
at a revalued amount in which case the reversal of the impairment  
is treated as a revaluation increase 
inventories
inventories are valued at the lower of cost and net realisable value  
net realisable value is the estimated selling price in the ordinary  
course of business less estimated costs of completion and the 
estimated costs necessary to make the sale cost comprises 
purchase price cost of production transportation and other directly 
allocable expenses costs of inventories other than raw materials  
are determined using the firstinfirstout method costs of raw 
materials are determined using the weighted average method
notes to the consolidated financial statements 107    petrofac annual report and accounts 2010
group financial statements 2 summary of significant accounting policies continued
work in progress and billings in excess of cost and  
estimated earnings
fixed price lump sum engineering procurement and construction 
contracts are presented in the statement of financial position as follows
for each contract the accumulated cost incurred as well as the ■ ■
estimated earnings recognised at the contract’s percentage of 
completion less provision for any anticipated losses after deducting 
the progress payments received or receivable from the customers 
are shown in current assets in the statement of financial position 
under ‘work in progress’
where the payments received or receivable for any contract exceed ■ ■
the cost and estimated earnings less provision for any anticipated 
losses the excess is shown as ‘billings in excess of cost and 
estimated earnings’ within current liabilities
trade and other receivables 
trade receivables are recognised and carried at original invoice 
amount less an allowance for any amounts estimated to be 
uncollectable an estimate for doubtful debts is made when there  
is objective evidence that the collection of the full amount is no longer 
probable under the terms of the original invoice impaired debts are 
derecognised when they are assessed as uncollectable 
cash and cash equivalents
cash and cash equivalents consist of cash at bank and in hand  
and shortterm deposits with an original maturity of three months  
or less for the purpose of the cash flow statement cash and cash 
equivalents consists of cash and cash equivalents as defined above 
net of outstanding bank overdrafts
interestbearing loans and borrowings
all interestbearing loans and borrowings are initially recognised at  
the fair value of the consideration received net of issue costs directly  
attributable to the borrowing
after initial recognition interestbearing loans and borrowings are 
subsequently measured at amortised cost using the effective interest 
rate method amortised cost is calculated by taking into account  
any issue costs and any discount or premium on settlement
provisions
provisions are recognised when the group has a present legal or 
constructive obligation as a result of past events it is probable that  
an outflow of resources will be required to settle the obligation and a 
reliable estimate can be made of the amount of the obligation if the 
time value of money is material provisions are discounted using a 
current pretax rate that reflects where appropriate the risks specific 
to the liability where discounting is used the increase in the provision 
due to the passage of time is recognised in the consolidated income 
statement as a finance cost
derecognition of financial assets and liabilities
financial assets
a financial asset or where applicable a part of a financial asset  
is derecognised where
the rights to receive cash flows from the asset have expired ■ ■
the group retains the right to receive cash flows from the asset  ■ ■
but has assumed an obligation to pay them in full without material 
delay to a third party under a ‘passthrough’ arrangement or
the group has transferred its rights to receive cash flows from the ■ ■
asset and either a has transferred substantially all the risks and 
rewards of the asset or b has neither transferred nor retained 
substantially all the risks and rewards of the asset but has 
transferred control of the asset
financial liabilities
a financial liability is derecognised when the obligation under the 
liability is discharged or cancelled or expires
if an existing financial liability is replaced by another from the same 
lender on substantially different terms or the terms of an existing 
liability are substantially modified such an exchange or modification  
is treated as a derecognition of the original liability and the recognition 
of a new liability such that the difference in the respective carrying 
amounts together with any costs or fees incurred are recognised in  
the consolidated income statement
pensions and other longterm employment benefits
the group has various defined contribution pension schemes in 
accordance with the local conditions and practices in the countries  
in which it operates the amount charged to the consolidated income 
statement in respect of pension costs reflects the contributions 
payable in the year differences between contributions payable during 
the year and contributions actually paid are shown as either accrued 
liabilities or prepaid assets in the statement of financial position
the group’s other longterm employment benefits are provided  
in accordance with the labour laws of the countries in which the  
group operates further details of which are given in note 27 
sharebased payment transactions
employees including directors of the group receive remuneration  
in the form of sharebased payment transactions whereby  
employees render services in exchange for shares or rights  
over shares ‘equitysettled transactions’ 
equitysettled transactions
the cost of equitysettled transactions with employees is measured  
by reference to the fair value at the date on which they are granted  
in valuing equitysettled transactions no account is taken of any 
service or performance conditions other than conditions linked to the 
price of the shares of petrofac limited ‘market conditions’ if applicable
the cost of equitysettled transactions is recognised together with a 
corresponding increase in equity over the period in which the relevant 
employees become fully entitled to the award the ‘vesting period’  
the cumulative expense recognised for equitysettled transactions at 
each reporting date until the vesting date reflects the extent to which the 
vesting period has expired and the group’s best estimate of the number 
of equity instruments that will ultimately vest the income statement 
charge or credit for a period represents the movement in cumulative 
expense recognised as at the beginning and end of that period
no expense is recognised for awards that do not ultimately vest 
except for awards where vesting is conditional upon a market or 
nonvesting condition which are treated as vesting irrespective  
of whether or not the market or nonvesting condition is satisfied 
provided that all other performance conditions are satisfied equity 
awards cancelled are treated as vesting immediately on the date of 
cancellation and any expense not recognised for the award at that 
date is recognised in the income statement
petrofac employee benefit trust
the petrofac employee benefit trust was established on 7 march 
2007 to warehouse ordinary shares purchased to satisfy various new 
share scheme awards made to the employees of the company which 
will be transferred to the members of the scheme on their respective 
vesting dates subject to satisfying the performance conditions of each 
scheme the trust has been presented as part of both the company 
and group financial statements in accordance with sic 12 ‘special 
purpose entities’ the cost of shares temporarily held by petrofac 
employee benefit trust is reflected as treasury shares and deducted 
from equity
notes to the consolidated financial statements continued
for the year ended 31 december 2010
108    petrofac annual report and accounts 2010 leases
the determination of whether an arrangement is or contains a lease is 
based on the substance of the arrangement at inception date of whether 
the fulfilment of the arrangement is dependent on the use of a specific 
asset or assets or the arrangement conveys the right to use the asset
the group has entered into various operating leases the payments  
for which are recognised as an expense in the consolidated income 
statement on a straightline basis over the lease terms
revenue recognition
revenue is recognised to the extent that it is probable economic 
benefits will flow to the group and the revenue can be reliably 
measured the following specific recognition criteria also apply
engineering procurement and construction services  
engineering  construction
revenues from fixedprice lumpsum contracts are recognised on  
the percentageofcompletion method based on surveys of work 
performed once the outcome of a contract can be estimated reliably 
in the early stages of contract completion when the outcome of  
a contract cannot be estimated reliably contract revenues are 
recognised only to the extent of costs incurred that are expected  
to be recoverable 
revenues from costplusfee contracts are recognised on the basis  
of costs incurred during the year plus the fee earned measured by  
the costtocost method
revenues from reimbursable contracts are recognised in the period  
in which the services are provided based on the agreed contract 
schedule of rates
provision is made for all losses expected to arise on completion  
of contracts entered into at the statement of financial position date 
whether or not work has commenced on these contracts
incentive payments are included in revenue when the contract is 
sufficiently advanced that it is probable that the specified performance 
standards will be met or exceeded and the amount of the incentive 
payments can be measured reliably claims and variation orders  
are only included in revenue when negotiations have reached an 
advanced stage such that it is probable the claimvariation orders  
will be accepted and can be measured reliably
facilities management engineering and training services offshore 
engineering  operations engineering training services and 
production solutions
revenues from reimbursable contracts are recognised in the period  
in which the services are provided based on the agreed contract 
schedule of rates 
revenues from fixedprice contracts are recognised on the 
percentageofcompletion method measured by milestones 
completed or earned value once the outcome of a contract can be 
estimated reliably in the early stages of contract completion when the 
outcome of a contract cannot be estimated reliably contract revenues 
are recognised only to the extent of costs incurred that are expected 
to be recoverable
incentive payments are included in revenue when the contract is 
sufficiently advanced that it is probable that the specified performance 
standards will be met or exceeded and the amount of the incentive 
payments can be measured reliably claims are only included in 
revenue when negotiations have reached an advanced stage such that 
it is probable the claim will be accepted and can be measured reliably
oil  gas activities energy developments
oil  gas revenues comprise the group’s share of sales from the 
processing or sale of hydrocarbons on an entitlement basis when  
the significant risks and rewards of ownership have been passed to 
the buyer
precontractbid costs
precontractbid costs incurred are recognised as an expense until 
there is a high probability that the contract will be awarded after which 
all further costs are recognised as assets and expensed out over the 
life of the contract 
income taxes
income tax expense represents the sum of current income tax and 
deferred tax 
current income tax assets and liabilities for the current and prior 
periods are measured at the amount expected to be recovered from 
or paid to the taxation authorities taxable profit differs from profit  
as reported in the consolidated income statement because it  
excludes items of income or expense that are taxable or deductible  
in other years and it further excludes items that are never taxable  
or deductible the group’s liability for current tax is calculated using  
tax rates that have been enacted or substantively enacted by the 
statement of financial position date
deferred income tax is recognised on all temporary differences at the 
statement of financial position date between the carrying amounts of 
assets and liabilities in the financial statements and the corresponding 
tax bases used in the computation of taxable profit with the following 
exceptions
where the temporary difference arises from the initial recognition  ■ ■
of goodwill or of an asset or liability in a transaction that is not a 
business combination that at the time of the transaction affects 
neither accounting nor taxable profit or loss
in respect of taxable temporary differences associated with ■ ■
investments in subsidiaries associates and joint ventures where  
the timing of reversal of the temporary differences can be controlled 
and it is probable that the temporary differences will not reverse in 
the foreseeable future and
deferred income tax assets are recognised only to the extent that  ■ ■
it is probable that a taxable profit will be available against which the 
deductible temporary differences carried forward tax credits or tax 
losses can be utilised
the carrying amount of deferred income tax assets is reviewed at 
each statement of financial position date and reduced to the extent 
that it is no longer probable that sufficient taxable profit will be 
available to allow all or part of the deferred income tax assets to be 
utilised unrecognised deferred income tax assets are reassessed  
at each statement of financial position date and are recognised to the 
extent that it has become probable that future taxable profit will allow 
the deferred tax asset to be recovered
deferred income tax assets and liabilities are measured on an 
undiscounted basis at the tax rates that are expected to apply when 
the asset is realised or the liability is settled based on tax rates and 
tax laws enacted or substantively enacted at the statement of financial 
position date
current and deferred income tax is charged or credited directly to 
other comprehensive income or equity if it relates to items that are 
credited or charged to respectively other comprehensive income  
or equity otherwise income tax is recognised in the consolidated 
income statement
notes to the consolidated financial statements 109    petrofac annual report and accounts 2010
group financial statements 2 summary of significant accounting policies continued
derivative financial instruments and hedging 
the group uses derivative financial instruments such as forward 
currency contracts interest rate collars and swaps and oil price  
collars and forward contracts to hedge its risks associated with  
foreign currency interest rate and oil price fluctuations such derivative 
financial instruments are initially recognised at fair value on the date  
on which a derivative contract is entered into and are subsequently 
remeasured at fair value derivatives are carried as assets when the 
fair value is positive and as liabilities when the fair value is negative
any gains or losses arising from changes in the fair value of derivatives 
that do not qualify for hedge accounting are taken to the consolidated 
income statement 
the fair value of forward currency contracts is calculated by reference 
to current forward exchange rates for contracts with similar maturity 
profiles the fair value of interest rate cap swap and oil price collar 
contracts is determined by reference to market values for similar 
instruments
for the purposes of hedge accounting hedges are classified as
fair value hedges when hedging the exposure to changes in the  ■ ■
fair value of a recognised asset or liability or
cash flow hedges when hedging exposure to variability in cash ■ ■
flows that is either attributable to a particular risk associated with a ■ ■
recognised asset or liability or a highly probable forecast transaction
the group formally designates and documents the relationship 
between the hedging instrument and the hedged item at the  
inception of the transaction as well as its risk management objectives  
and strategy for undertaking various hedge transactions the 
documentation also includes identification of the hedging instrument 
the hedged item or transaction the nature of risk being hedged and 
how the group will assess the hedging instrument’s effectiveness in 
offsetting the exposure to changes in the hedged item’s fair value or 
cash flows attributable to the hedged risk the group also documents 
its assessment both at hedge inception and on an ongoing basis  
of whether the derivatives that are used in the hedging transactions 
are highly effective in offsetting changes in fair values or cash flows  
of the hedged items
the treatment of gains and losses arising from revaluing derivatives 
designated as hedging instruments depends on the nature of the 
hedging relationship as follows
cash flow hedges
for cash flow hedges the effective portion of the gain or loss on the 
hedging instrument is recognised directly in statement of changes  
in equity while the ineffective portion is recognised in the income 
statement amounts taken to equity are transferred to the income 
statement when the hedged transaction affects the consolidated 
income statement
if the hedging instrument expires or is sold terminated or exercised 
without replacement or rollover or if its designation as a hedge is 
revoked any cumulative gain or loss existing in equity at that time 
remains in equity and is recognised when the forecast transaction  
is ultimately recognised in the consolidated income statement when  
a forecast transaction is no longer expected to occur the cumulative 
gain or loss that was reported in statement of changes in equity  
is immediately transferred to the consolidated income statement
embedded derivatives
contracts are assessed for the existence of embedded derivatives  
at the date that the group first becomes party to the contract with 
reassessment only if there is a change to the contract that significantly 
modifies the cash flows embedded derivatives which are not clearly 
and closely related to the underlying asset liability or transaction are 
separated and accounted for as standalone derivatives
 
notes to the consolidated financial statements continued
for the year ended 31 december 2010
110    petrofac annual report and accounts 2010 3 segment information 
for management purposes petrofac is organised into seven main types of business unit activities which have been split into four reportable 
segments below whilst engineering training services and production solutions are three fairly diverse businesses none have ever met the 
quantitative thresholds set by ifrs 8 ‘operating segments’ for determining reportable segments
the four reportable segments shown below consist of
engineering  construction which provides engineering procurement and construction project execution services to the onshore  ■ ■
oil  gas industry
offshore engineering  operations which provides operations management services to the offshore oil  gas industry ■ ■
energy developments which coinvests with partners in oil  gas production processing and transportation assets ■ ■
engineering training services and production solutions activities consist of the provision of early stage engineering services such as ■ ■
conceptual feed studies oil  gas related technical competency training and consultancy services and production improvement services 
under value aligned commercial structures
management separately monitors the trading results of its seven business units for the purpose of making an assessment of their performance 
and making decisions about how resources are allocated to them each business unitsegment performance is measured based on its 
profitability which is reflected in a manner consistent with the results shown below however certain shareholder services related overheads 
group financing and consolidation adjustments are managed at a corporate level and are not allocated to operating segments 
the following tables represent revenue and profit information relating to the group’s reporting segments for the year ended 31 december 2010
year ended 31 december 2010
engineering  
construction
us’000
offshore
engineering 
operations
us’000
engineering
training services
 production 
solutions
us’000
energy
developments
us’000
corporate
 others
us’000
consolidation
adjustments  
eliminations
us’000
total
us’000
revenue
external sales 32321 7 4 710080 223748 188215 – – 4354217
intersegment sales 21732 11 821 131538 – – 165091 –
total revenue 3253906 721901 355286 188215 – 165091 4354217
segment results 438867 24506 26590 66290 900 3362 551991
gain on enquest demerger – – – 124864 – – 124864
unallocated corporate costs – – – – 13405 – 13405
profitloss before tax and finance  
incomecosts 438867 24506 26590 191 154 14305 3362 663450
share of loss of associate – – – 131 – – 131
finance costs – 968 696 3121 3659 3313 5131
finance income 974 1 209 525 348 2699 3313 10209
profitloss before income tax 448608 23747 26419 188250 15265 3362 668397
income tax expenseincome 75550 6519 1 1 44 31895 2275 – 110545
noncontrolling interests 35 – – – – – 35
profitloss for the year attributable to 
petrofac limited shareholders 373023 17228 27563 156355 12990 3362 557817
other segment information
capital expenditures
property plant and equipment 62088 2785 6857 4 1  112 4575 1 1 78 116239
intangible oil  gas assets – – – 15644 – – 15644
charges
depreciation 34340 2238 7206 49816 367 575 93392
amortisation 1044 597 870 – – – 2511
other longterm employment benefits 10435 613 1581 54 87 – 12770
sharebased payments 7693 1 167 1896 1 121 2907 – 14784
notes to the consolidated financial statements 111    petrofac annual report and accounts 2010
group financial statements 3 segment information continued
year ended 31 december 2009 restated
restated 
engineering 
construction
us’000
offshore
engineering 
operations
us’000
engineering
training services
 production 
solutions
us’000
energy
developments
us’000
corporate
 others
us’000
consolidation
adjustments  
eliminations
us’000
restated 
total
us’000
revenue
external sales 2508951 616542 281225 248708 – – 3655426
intersegment sales – 101 78 68431 – – 78609 –
total revenue 2508951 626720 349656 248708 – 78609 3655426
segment results 312374 1 7830 34483 77395 1615 326 440 141
unallocated corporate costs – – – – 8181 – 8181
profitloss before tax and finance  
incomecosts 312374 1 7830 34483 77395 9796 326 431960
finance costs – 258 1582 10702 5705 12665 5582
finance income 14087 94 313 64 10049 12665 11 942
profitloss before income tax 326461 17666 33214 66757 5452 326 438320
income tax expenseincome 61328 4853 672 20566 3095 191 84515
minority interests 14 – 188 – – – 202
profitloss for the year attributable  
to petrofac limited shareholders 265 119 12813 32354 46191 2357 517 353603
other segment information
capital expenditures
property plant and equipment 51821 3400 6682 309824 4686 1014 375399
intangible oil  gas assets – – – 29230 – – 29230
charges
depreciation 24525 1887 7482 78677 251 918 111 904
amortisation 415 – 668 – – – 1083
impairment – – – 4793 – – 4793
other longterm employment benefits 7779 833 1736 52 38 – 10438
sharebased payments 6213 1263 2258 1337 2192 – 13263
geographical segments
the following tables present revenue from external customers based on their location and noncurrent assets by geographical segments for the 
years ended 31 december 2010 and 2009
year ended 31 december 2010
algeria
us’000
united arab
emirates
us’000
united
kingdom 
us’000
kuwait
us’000
oman
us’000
syria
us’000
saudi
arabia
us’000
other
countries
us’000
consolidated
us’000
revenues from  
external customers 1037966 798328 753842 360624 350313 277196 235936 540012 4354217
united
kingdom 
us’000
united arab
emirates
us’000
tunisia
us’000
algeria
us’000
malaysia
us’000
indonesia
us’000
other
countries
us’000
consolidated
us’000
noncurrent assets
property plant and equipment 54326 94292 52031 30737 14836 1555 39381 287 1 58
intangible oil  gas assets – – – – 69532 – – 69532
other intangible assets 9365 – – – – 6940 – 16305
goodwill 90093 15240 – – – – 499 105832
notes to the consolidated financial statements continued
for the year ended 31 december 2010
112    petrofac annual report and accounts 2010 year ended 31 december 2009
united 
kingdom
us’000
united arab
emirates
us’000
syria 
us’000
algeria
us’000
oman
us’000
kuwait
us’000
kazakhstan
us’000
other
countries
us’000
consolidated
us’000
revenues from  
external customers 705281 695 118 530269 492378 380601 203577 184305 463897 3655426
united
kingdom 
us’000
tunisia
us’000
united arab
emirates
us’000
algeria
us’000
malaysia
us’000
other
countries
us’000
consolidated
us’000
noncurrent assets
property plant and equipment 447 591 57078 74093 55229 25279 18726 677996
intangible oil  gas assets – – – – 53888 – 53888
other intangible assets 11 654 – – – – 7565 19219
goodwill 85155 – 12099 – – 668 97922
revenues disclosed in the above tables are based on where the project is located revenue from two customers amounted to s1422410000 
2009 us801723000 in the engineering  construction segment 
4 revenues and expenses
a revenue
2010 
us’000
2009 
us’000
rendering of services 4202371 3446037
sale of crude oil  gas 146075 202770
sale of processed hydrocarbons 5771 6619
4354217 3655426
included in revenues from rendering of services are offshore engineering  operations engineering training services and production solutions 
revenues of a ‘passthrough’ nature with zero or low margins amounting to us227 974000 2009 us230262000
b cost of sales
included in cost of sales for the year ended 31 december 2010 is us154000 2009 us908000 gain gain on disposal of property  
plant and equipment used to undertake various engineering and construction contracts in addition depreciation charged on property  
plant and equipment of us85186000 during 2010 2009 us104997 000 is included in cost of sales note 9
also included in cost of sales are forward points and ineffective portions on derivatives designated as cash flow hedges and loss on maturity  
of undesignated derivatives of us3409000 2009 us19508000 gain these amounts are an economic hedge but do not meet the criteria 
within ias39 and are most appropriately recorded in cost of sales
c selling general and administration expenses 
2010 
us’000
2009 
us’000
staff costs 126475 94583
depreciation 8206 6907
amortisation note 13 2511 1083
impairment – 4793
other operating expenses 84257 78927
221449 186293
other operating expenses consist mainly of office travel legal and professional and contracting staff costs
d staff costs 
2010 
us’000
2009 
us’000
total staff costs
wages and salaries 828439 708684
social security costs 31809 27877
defined contribution pension costs 12621 11  155
other longterm employee benefit costs note 27 12770 10438
expense of sharebased payments note 24 14784 13263
900423 771417
notes to the consolidated financial statements 113    petrofac annual report and accounts 2010
group financial statements 4 revenues and expenses continued
of the us900423000 2009 us771417 000 of staff costs shown above us773948000 2009 us676834000 are included in cost  
of sales with the remainder in selling general and administration expenses
the average number of persons employed by the group during the year was 12807 2009 11628
e auditors’ remuneration 
the group paid the following amounts to its auditors in respect of the audit of the financial statements and for other services provided to  
the group
2010 
us’000
2009 
us’000
audit of the group financial statements 1209 1369
other fees to auditors
local statutory audits of subsidiaries 812 546
tax services 520 178
all other services 93 15
2634 2108
f other income
2010 
us’000
2009 
us’000
foreign exchange gains 720 2342
gain on sale of property plant and equipment 8 –
gain on sale of intangible assets 2338 –
other income 1947 1733
5013 4075
g other expenses
2010 
us’000
2009 
us’000
foreign exchange losses 3452 2675
loss on sale of property plant and equipment 477 124
other expenses 124 199
4053 2998
5 finance costsincome
2010 
us’000
2009 
us’000
interest payable
longterm borrowings 2908 31 71
other interest including shortterm loans and overdrafts 581 310
unwinding of discount on deferred consideration and decommissioning provisions 1642 2101
total finance cost 5131 5582
interest receivable
bank interest receivable 9945 11 487
other interest receivable 264 455
total finance income 10209 11 942
6 income tax
a tax on ordinary activities
the major components of income tax expense are as follows
2010 
us’000
2009 
us’000
current income tax
current income tax charge 115199 100985
adjustments in respect of current income tax of previous years 2843 31448
deferred income tax
relating to origination and reversal of temporary differences 907 5570
adjustments in respect of deferred income tax of previous years 2718 9408
income tax expense reported in the income statement 110545 84515
notes to the consolidated financial statements continued
for the year ended 31 december 2010
114    petrofac annual report and accounts 2010 b reconciliation of total tax charge
a reconciliation between the income tax expense and the product of accounting profit multiplied by the company’s domestic tax rate is  
as follows
2010 
us’000
2009 
us’000
accounting profit before tax including gain on enquest demerger 668397 438320
at jersey’s domestic income tax rate of 0 2009 0 – –
expected tax charge in higher rate jurisdictions 116199 107320
expenditure not allowable for income tax purposes 1073 14706
income not taxable – 396
adjustments in respect of previous years 5561 22040
tax effect of utilisation of tax losses not previously recognised 568 252
unrecognised tax losses 1634 618
other permanent differences 2157 15441
effect of change in tax rates 75 –
at the effective income tax rate of 165 2009 193 110545 84515
the group’s effective tax rate for the year ended 31 december 2010 including the us124864000 gain on the demerger of energy development’s 
ukcs business is 165 and excluding this gain the effective tax rate is 203 2009 193 
on 5 april 2010 the group completed the demerger of its ukcs business to enquest plc an independent company which is listed on the 
london and stockholm stock exchanges no chargeable gain arose on the transaction for uk corporate tax purposes this decreased the 
group’s effective tax rate for the period
excluding the gain from the demerger there has been a small increase in the group’s effective tax rate factors contributing to this increase 
compared to 2009 include ring fence expenditure supplement no longer being available for claim following the demerger of petrofac energy 
developments limited no additional adjustments being made in respect of the applicability of the lower tax rate to the group’s project in oman 
material changes in jurisdictions in which profits are expected to be earned by the engineering  construction reporting segment and due  
to recent acquisitions there has also been an increase in reportable profit within taxable jurisdictions in june 2010 the uk government 
announced its intention to propose to parliament to reduce the uk corporation tax rate from 28 to 24 over the course of four years  
from 1 april 2011 the uk corporate rate is 27 and will impact the reversal of the temporary difference from this date onwards reducing  
the uk tax assets and liabilities this uk tax rate change has been substantively enacted at the statement of financial position date
c deferred income tax
deferred income tax relates to the following
consolidated statement  
of financial position consolidated income statement
2010
us’000
2009
us’000
2010
us’000
2009
us’000
deferred income tax liabilities
fair value adjustment on acquisitions 1412 2599 597 139
accelerated depreciation 36580 275 1 5 14630 15472
other temporary differences 10094 12078 4336 1441
gross deferred income tax liabilities 48086 42192
deferred income tax assets
losses available for offset 2259 18413 14135 11  130
decelerated depreciation for tax purposes 2404 7 596 327 9409
share scheme 15721 18636 230 1142
other temporary differences 5917 5081 2530 3949
gross deferred income tax assets 26301 49726
deferred income tax creditcharge 1811 14978
notes to the consolidated financial statements 115    petrofac annual report and accounts 2010
group financial statements 6 income tax continued
d unrecognised tax losses and tax credits
deferred income tax assets are recognised for tax loss carryforwards and tax credits to the extent that the realisation of the related tax benefit 
through future taxable profits is probable the group did not recognise deferred income tax assets of us18366000 2009 us15452000
2010 
us’000
2009 
us’000
expiration dates for tax losses
no earlier than 2022 9466 11 451
no expiration date 6384 3360
15850 1 4811
tax credits no expiration date 2516 641
18366 15452
7 earnings per share 
basic earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted 
average number of ordinary shares outstanding during the year
diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders after adjusting for any dilutive 
effect by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of ordinary shares granted under 
the employee share award schemes which are held in trust 
the following reflects the income and share data used in calculating basic and diluted earnings per share
2010 
us’000
2009 
us’000
net profit attributable to ordinary shareholders for basic and diluted earnings  
per share excluding gain on enquest demerger 432953 353603
net profit attributable to ordinary shareholders for basic and diluted earnings  
per share including gain on enquest demerger 557817 353603
2010
number
’000
2009
number
’000
weighted average number of ordinary shares for basic earnings per share 338867 337473
effect of diluted potential ordinary shares granted under sharebased payment schemes 4493 5187
adjusted weighted average number of ordinary shares for diluted earnings per share 343360 342660
8 dividends paid and proposed
2010 
us’000
2009 
us’000
declared and paid during the year
equity dividends on ordinary shares
final dividend for 2008 17 90 cents per share – 60332
interim dividend 2009 1070 cents per share – 36197
final dividend for 2009 2510 cents per share 85291 –
interim dividend 2010 1380 cents per share 46757 –
132048 96529
2010 
us’000
2009 
us’000
proposed for approval at agm 
not recognised as a liability as at 31 december
equity dividends on ordinary shares
final dividend for 2010 3000 cents per share 2009 2510 cents per share 103715 86729
notes to the consolidated financial statements continued
for the year ended 31 december 2010
116    petrofac annual report and accounts 2010 9 property plant and equipment
oil  gas
assets
us’000
oil  gas
facilities
us’000
land
buildings
and
 leasehold
improvements
us’000
plant and
equipment
us’000
vehicles
us’000
office
furniture
and
equipment
us’000
assets
under 
construction
us’000
total
us’000
cost
at 1 january 2009 279103 125371 83088 22235 6574 69047 – 585418
additions 276798 32612 32632 4273 4907 1 7663 6514 375399
disposals – – 1474 4631 789 3366 – 10260
exchange difference – – 1296 1 103 204 3745 165 6513
at 1 january 2010 555901 1 57983 115542 22980 10896 87089 6679 957070
additions 32252 7602 44 11 4 1445 4755 19238 6833 116239
acquisition of subsidiaries – – – 2081 46 43 – 21 70
disposals 470447 – 1847 2344 854 1 7268 – 492760
transfers – – 881 4 – 885 – –
exchange difference – – 462 712 158 809 132 2273
at 31 december 2010 117706 165585 158228 23454 14685 87408 13380 580446
depreciation
at 1 january 2009 16187 87026 7983 16512 4235 404 11 – 172354
charge for the year 60984 15254 14998 3571 2254 14843 – 111 904
disposals – – 1330 4516 740 3150 – 9736
exchange difference – – 379 1051 37 3085 – 4552
at 1 january 2010 77 1 71  102280 22030 16618 5786 55189 – 279074
charge for the year 32204 15993 23981 2734 3462 15018 – 93392
disposals 59592 – 1400 538 769 16072 – 78371
transfers – – 83 – – 83 – –
exchange difference – – 71 327 28 381 – 807
at 31 december 2010 49783 118273 44623 18487 8451 53671 – 293288
net carrying amount
at 31 december 2010 67923 47312 113605 4967 6234 33737 13380 287158
at 31 december 2009 478730 55703 93512 6362 5 110 31900 6679 677996
no interest has been capitalised within oil  gas facilities during the year 2009 nil and the accumulated capitalised interest net of depreciation 
at 31 december 2010 was us432000 2009 us931000 
additions to oil  gas assets in 2009 mainly comprise development expenses capitalised on the group’s interest in the don area assets of 
us274114000 during the year the don assets were demerged and as a result oil  gas assets with a net book value of us410855000  
were disposed of note 11
included in oil  gas assets are us2196000 2009 us50726000 of capitalised decommissioning costs net of depreciation provided on  
the pm304 asset in malaysia and the chergui asset in tunisia the decrease in the 31 december 2010 oil  gas asset’s balance is due to the 
demerger of the don area assets in the united kingdom note 11
of the total charge for depreciation in the income statement us85186000 2009 us104997 000 is included in cost of sales and 
us8206000 2009 us6907000 in selling general and administration expenses
assets under construction comprises of expenditures incurred in relation to the group erp project
notes to the consolidated financial statements 117    petrofac annual report and accounts 2010
group financial statements 10 business combinations
scotvalve services limited
on 14 january 2010 the group acquired a 100 interest in the share capital of scotvalve services limited scotvalve a united kingdom  
based company involved in the servicing and repair of oilfield pressure control equipment the scotvalve acquisition will enhance the group’s 
mechanical services offering and expand its geographical footprint the consideration for the acquisition was sterling 4630000 equivalent 
us7 512000 comprising of sterling 2801000 equivalent us4545000 as an initial cash payment sterling 150000 equivalent us243000 
to be settled in cash during the year and the balance being the discounted value of deferred consideration amounting to sterling 1679000 
equivalent us2724000 payable based on the estimated future profitability of scotvalve the range of deferred consideration payable is  
from zero to a maximum of sterling 2000000 equivalent us3122000 over a three year period
the fair values of the identifiable assets and liabilities of scotvalve on completion of the acquisition are analysed below
recognised on 
acquisition
us’000
carrying
value
us’000
property plant and equipment 1891 1978
investments in associates note 14 777 777
intangible assets note 13 1 107 –
trade and other receivables 2606 2606
cash and shortterm deposits 410 410
total assets 6791 5771
less
deferred tax liability 325 16
income tax liability 279 279
trade and other payables 1220 1220
total liabilities 1824 1515
fair value of net assets acquired 4967 4256
goodwill arising on acquisition 2545
consideration at acquisition 75 1 2
us’000
cash outflow on acquisition
cash acquired with subsidiary 410
cash paid on acquisition 4545
net cash outflow on the acquisition of subsidiary 4135
intangible assets recognised on acquisition comprise equipment manufacturer warranty repair licenses which are being amortised over their 
remaining economic useful lives of five years on a straightline basis
the residual goodwill above comprises the fair value of expected future synergies and business opportunities arising from the integration  
of the business in to the group
from the date of acquisition scotvalve has contributed revenues of us6903000 and net income of us1020000 to the net profit of the 
group if the above combination had taken place at the beginning of the year net profit of scotvalve would have been us1020000 and 
revenue would have been us6903000
the transaction costs of sterling 102000 equivalent us154000 relating to the acquisition have been expensed in the year and are included 
within selling general and administration and are included as cash flows from operating activities in the consolidated cash flow statement
the deferred consideration payable was reassessed at year end in light of latest financial projections for the business and the current carried 
amount was reduced by sterling 135000 equivalent us208000 with a corresponding increase in other income within the consolidated 
income statement 
notes to the consolidated financial statements continued
for the year ended 31 december 2010
118    petrofac annual report and accounts 2010 stephen gillespie consultants limited
on 1 april 2010 the group acquired a 100 interest in the share capital of stephen gillespie consultants limited sgc a united kingdom 
based provider of software consultancy to flow metering control system manufacturers for a consideration of sterling 4523000 equivalent 
us6853000 comprising of sterling 3178000 equivalent us4815000 paid upfront in cash and the balance being the discounted value  
of deferred consideration amounting to sterling 1345000 equivalent us2038000 payable based on the estimated future revenue of the 
company this acquisition will enhance the group’s existing metering service offering and also its ability to provide turnkey metering solutions to 
both brownfield and greenfield international oil  gas projects the range of deferred consideration payable is from sterling 600000 equivalent 
us937 000 to a maximum of sterling 1200000 equivalent us1873000 based on future revenue of sgc over a two year period
the fair values of the identifiable assets and liabilities of sgc on completion of the acquisition are analysed below
recognised on 
acquisition
us’000
carrying
value
us’000
property plant and equipment 61 61
intangible assets note 13 2065 –
trade and other receivables 1424 1424
cash and shortterm deposits 1920 1920
total assets 5470 3405
less
deferred tax liability 579 –
income tax liability 383 383
trade and other payables 1 126 1254
total liabilities 2088 1637
fair value of net assets acquired 3382 1768
goodwill arising on acquisition 3471
consideration at acquisition 6853
us’000
cash outflow on acquisition
cash acquired with subsidiary 1920
cash paid on acquisition 4815
net cash outflow on the acquisition of subsidiary 2895
intangible assets recognised on acquisition comprise of software related to metering technology which is being amortised over its remaining 
economic useful lives of five years on a straightline basis
the residual goodwill above comprises the fair value of expected future synergies and business opportunities arising from the integration of  
the business in to the group
from the date of acquisition sgc has contributed revenues of us6549000 and net income of us165000 to the net profit of the group  
if the above combination had taken place at the beginning of the year net profit of sgc would have been us205000 and revenue would  
have been us7 412000
the transaction costs of sterling 65000 equivalent us99000 relating to the acquisition have been expensed in the year and are included 
within selling general and administration and are included as cash flows from operating activities in the consolidated cash flow statement
the deferred consideration payable was reassessed at year end in light of latest financial projections for the business and the current carried 
amount was reduced by sterling 188000 equivalent us293000 with a corresponding increase in other income within the consolidated 
income statement
notes to the consolidated financial statements 119    petrofac annual report and accounts 2010
group financial statements 10 business combinations continued
co2deepstore limited
on 27 april 2010 the group acquired a 100 interest in the share capital of co2deepstore limited co2deepstore a united kingdom based 
company focused on the co2 geological storage sector of the carbon capture and storage market for a cash consideration of sterling 220000 
equivalent us340000 this acquisition represents the group’s first step into the strategically important emerging low carbon energy sector
 the fair values of the identifiable assets and liabilities of co2deepstore on completion of the acquisition are analysed below
recognised on 
acquisition
us’000
carrying
value
us’000
property plant and equipment 3 3
trade and other receivables 134 134
cash and shortterm deposits 263 263
total assets 400 400
less
income tax liability 31 31
trade and other payables 29 29
total liabilities 60 60
fair value of net assets acquired 340 340
goodwill arising on acquisition –
consideration at acquisition 340
us’000
cash outflow on acquisition
cash acquired with subsidiary 263
cash paid on acquisition 340
net cash outflow on the acquisition of subsidiary 77
from the date of acquisition co2deepstore has contributed revenues of us88000 and a net loss of us823000 to the net profit of the group 
if the above combination had taken place at the beginning of the year net profit of co2deepstore would have been us573000 and revenue 
would have been us905000
the transaction costs of sterling 17 000 equivalent us26000 relating to the acquisition have been expensed in the year and are included 
within selling general and administration and are included as cash flows from operating activities in the consolidated cash flow statement
under the terms of the acquisition agreement costs of up to sterling 200000 equivalent us312000 will be payable to the former owners  
of co2deepstore three years from the date of completion based on the estimated future profitability of the company and will be recognised  
as an expense in the income statement over this period the charge for the current year is sterling 44000 equivalent us68000
notes to the consolidated financial statements continued
for the year ended 31 december 2010
120    petrofac annual report and accounts 2010 tnei services limited
on 14 june 2010 the group acquired a 100 interest in the share capital of tnei services limited tnei through the acquisition of its holding 
company new energy industries limited for a cash consideration of sterling 6123000 equivalent us8913000 tnei provides services in  
the areas of power transmission and distribution planning and environmental consent and energy management the acquisition of tnei further 
broadens the group’s technical consulting services offering in the rapidly developing power and renewable energy markets
the fair values of the identifiable assets and liabilities of tnei on completion of the acquisition are analysed below
recognised on 
acquisition
us’000
carrying
value
us’000
property plant and equipment 215 215
acquired goodwill 881 881
trade and other receivables 1779 1779
cash and shortterm deposits 910 910
total assets 3785 3785
less
trade and other payables 1 198 1 198
total liabilities 1 198 1 198
fair value of net assets acquired 2587 2587
goodwill arising on acquisition 6326
consideration at acquisition 8913
us’000
cash outflow on acquisition
cash acquired with subsidiary 910
cash paid on acquisition 8913
net cash outflow on the acquisition of subsidiary 8003
the residual goodwill above comprises the fair value of expected future synergies and business opportunities arising from the integration of the 
business into the group
from the date of acquisition tnei has contributed revenue of us3898000 and a net loss of us5000 to the group if the above combination 
had taken place at the beginning of the year net profit of tnei would have been us301000 and revenue would have been us6296000 
the transaction costs of sterling 38000 equivalent us58000 relating to the acquisition have been expensed in the year and are included 
within selling general and administration and are included as cash flows from operating activities in the consolidated cash flow statement
under the terms of the acquisition agreement sterling 1538000 equivalent us2370000 will be payable 50 in petrofac shares and 50  
in cash to the former owners of tnei who remain as employees of the petrofac group in three equal tranches over three years from the date  
of completion which will be recognised as an expense in the income statement on a straight line basis over the three years the charge for the 
current year is sterling 278000 equivalent us428000
notes to the consolidated financial statements 121    petrofac annual report and accounts 2010
group financial statements 11 gain on enquest demerger
on 5 april 2010 the group’s interests in the don area oil assets were demerged via a transfer of three of its subsidiaries petrofac energy 
developments limited pedl petrofac energy developments oceania limited pedol and pedl limited pedll to enquest plc for  
a deemed consideration for accounting purposes of us553300000 which was settled by the issue of enquest plc shares directly to  
petrofac limited shareholders the gain on the demerger transaction has been computed as follows
us’000
fair value of consideration 553300
less 
property plant and equipment 410855
deferred tax asset 27 394
inventories 5578
trade and other receivables 107039
cash and bank 161 47
total book value of assets transferred 567013
provision for decommissioning 55967
trade and other payables 130348
translation reserve 3308
total book value of liabilities transferred 183007
net assets transferred 384006
transaction costs 1636
release of foreign currency translation reserve 45818
allocated goodwill written off note 12 1 1 46
other consolidation adjustments 41 70
gain on demerger 124864
 in order to effect the demerger of the pedl sub group to enquest the existing issued ordinary share capital of petrofac limited was subdivided and converted into new ordinary
  petrofac shares with a nominal value of us002 each and petrofac b shares of us0005 each and subsequent to this share split the b shares were purchased and cancelled in 
exchange for an allotment and issue of enquest ordinary shares directly to holders of petrofac b shares
as a result of this capital reorganisation and purchase of petrofac b shares us1728000 of petrofac issued ordinary share capital was 
extinguished and transferred to retained earnings and the noncash distribution to petrofac shareholders for accounting purposes of 
us553300000 was made via the utilisation of the existing share premium account balance of us71172000 with the remaining amount of 
us482128000 being transferred out of retained earnings in addition us8803000 of proceeds generated by the petrofac employee benefit 
trust selling its holding of enquest shares arising from the demerger have been credited to retained earnings leaving a net impact on retained 
earnings of us473325000
12 goodwill
a summary of the movements in goodwill is presented below
2010 
us’000
2009 
us’000
at 1 january 97922 97534
acquisitions during the year note 10 13223 –
reassessment of deferred consideration payable 1313 8992
write off on enquest demerger note 11 1146 –
exchange difference 2854 9380
at 31 december 105832 97922
reassessment of deferred consideration payable mainly comprises of the reduction in deferred consideration payable on caltec limited of 
us4285000 2009 us2929000 decrease and an increase in deferred consideration payable on spd group limited of us3141000 
2009 us4351000 decrease 
goodwill acquired through business combinations has been allocated to five groups of cashgenerating units which are operating segments  
for impairment testing as follows
offshore engineering  operations ■ ■
engineering services ■ ■
production solutions ■ ■
training services ■ ■
energy developments ■ ■
these represent the lowest level within the group at which the goodwill is monitored for internal management purposes
notes to the consolidated financial statements continued
for the year ended 31 december 2010
122    petrofac annual report and accounts 2010 offshore engineering  operations engineering services production solutions and training cashgenerating units
the recoverable amounts for the offshore engineering  operations engineering services production solutions and training units have been 
determined based on value in use calculations using discounted pretax cash flow projections management has adopted a tenyear projection 
period to assess each unit’s value in use as it is confident based on past experience of the accuracy of longterm cash flow forecasts that  
these projections are reliable the cash flow projections are based on financial budgets approved by senior management covering a five year 
period extrapolated for a further five years at a growth rate of 5 for offshore engineering  operations engineering services and training 
cashgenerating units and 25 per annum for production solutions cashgenerating unit since it includes newly acquired businesses where 
there is less historic track record of achieving financial projections 
energy developments cashgenerating unit
the recoverable amount of the energy developments unit is also determined on a value in use calculation using discounted pretax cash flow 
projections based on financial budgets and economic assumptions for the unit approved by senior management and covering a fiveyear period 
as referred to in ias 36
carrying amount of goodwill allocated to each group of cashgenerating units
2010 
us’000
2009 
us’000
offshore engineering  operations unit 27992 22975
engineering services 7728 –
production solutions unit 49739 52496
training services unit 19302 20234
energy developments unit 1071 2217
105832 97922
key assumptions used in value in use calculations
the calculation of value in use for the offshore engineering  operations engineering services production solutions and training services  
units is most sensitive to the following assumptions
market share the assumption relating to market share for the offshore engineering  operations unit is based on the unit resecuring those 
existing customer contracts in the uk which are due to expire during the projection period for the training services unit the key assumptions 
relate to management’s assessment of maintaining the unit’s market share in the uk and developing further the business in international 
markets
growth rate estimates are based on management’s assessment of market share having regard to macroeconomic factors and the growth 
rates experienced in the recent past by each unit a growth rate of 5 per annum has been applied for offshore engineering  operations 
engineering services and training services cashgenerating units for the remaining five years of the tenyear projection period and 25 per 
annum for production solutions cashgenerating unit since it includes newly acquired businesses where there is less historic track record of 
achieving financial projections
net profit margins estimates are based on management’s assumption of achieving a level of performance at least in line with the recent past 
performance of each of the units
discount rate management has used a pretax discount rate of 146 per annum for each of offshore engineering  operations 2009 145 
engineering services 2009 na production solutions 2009 145 and training 2009 145 cashgenerating units which are derived from 
the estimated weighted average cost of capital of the group this discount rate has been calculated using an estimated risk free rate of return 
adjusted for the group’s estimated equity market risk premium and the group’s cost of debt 
the calculation of value in use for the energy developments unit is most sensitive to the following assumptions
discount rate management has used an estimate of the pretax weighted average cost of capital of the group plus a risk premium to reflect  
the particular risk characteristics of each individual asset the discount rate used for 2010 was 134 for each asset 2009 105
oil  gas prices management has used an oil price assumption of us7500 2009 us7000 per barrel and a gas price of us873 2009 
us830 per mcf for the impairment testing of its individual oil  gas investments
reserve volumes and production profiles management has used its internally developed economic models of reserves and production as  
a basis of calculating value in use
sensitivity to changes in assumptions
other than the assumed success of the ticleni contract in production solutions with regard to the assessment of value in use of the cash 
generating units management believes that no reasonably possible change in any of the above key assumptions would cause the carrying  
value of the relevant unit to exceed its recoverable amount after giving due consideration to the macroeconomic outlook for the oil  gas 
industry and the commercial arrangements with customers underpinning the cash flow forecasts for each of the units
notes to the consolidated financial statements 123    petrofac annual report and accounts 2010
group financial statements 13 intangible assets
2010 
us’000
2009 
us’000
intangible oil  gas assets
cost
at 1 january 53888 43137
additions 15644 29230
disposal – 18479
at 31 december 69532 53888
accumulated impairment
at 1 january – 13686
impairment – 4793
disposal – 18479
at 31 december – –
net book value of intangible oil  gas assets at 31 december 69532 53888
other intangible assets
cost
at 1 january 25476 13892
additions on acquisition note 10 3172 –
additions 153 10375
disposal 4220 –
exchange difference 43 1209
at 31 december 24538 25476
accumulated amortisation
at 1 january 6257 4990
amortisation 2511 1083
disposal 540 –
exchange difference 5 184
at 31 december 8233 6257
net book value of other intangible assets at 31 december 16305 19219
total intangible assets 85837 73107
intangible oil  gas assets
oil  gas asset part of the energy development segment additions above comprise of us15644000 2009 us29230000 of capitalised 
expenditure on the group’s assets in malaysia
there were investing cash outflows relating to capitalised intangible oil  gas assets of us15644000 2009 us29230000 in the current 
period arising from predevelopment activities 
other intangible assets
other intangible assets comprising customer contracts proprietary software lng intellectual property and patent technology are being 
amortised over their remaining estimated economic useful life of three six eight and ten years respectively on a straightline basis and the 
related amortisation charges included in selling general and administrative expenses note 4c during the year proprietary software was 
disposed of with a resulting gain disclosed in other income note 4f
14 investment in associates
2010 
us’000
2009 
us’000
investment in gateway storage company limited 15795 –
associates acquired through acquisition of scotvalve note 10 777 –
share of associate loss 131 –
exchange difference 92 –
16349 –
notes to the consolidated financial statements continued
for the year ended 31 december 2010
124    petrofac annual report and accounts 2010 gateway storage company limited
on 6 december 2010 the group acquired a 20 equity interest in gateway storage company limited gateway an unlisted entity to progress 
and develop the gateway gas storage project in the east irish sea the initial cost of the investment was sterling 5000000 equivalent 
us7795000 together with transaction costs of us664000 and contracted value of free services to be provided by the group of sterling 
500000 equivalent us780000 additional contingent payments may become payable under the terms of the investment subject to key 
project development milestones being achieved including the outcome of further successful equity sales deferred consideration of sterling 
4160000 equivalent us6556000 has been estimated as payable using a discounted storage project cash flow model assuming certain 
project scenarios to which estimated probabilities were assigned by management the deferred consideration in no event will exceed an 
additional amount of sterling 28000000 equivalent us43705000 the share of the associate’s statement of financial position is as follows
2010 
us’000
noncurrent assets 123
current assets 3050
current liabilities 795
equity 2378
transaction costs incurred 664
fair value of free services to be provided 780
deferred consideration payable 6556
exchange on deferred consideration payable 63
residual goodwill 5417
share of loss 131
carrying value of investment 15601
share of associates revenues and net loss
revenue –
net loss 131
15 interest in joint ventures 
in the normal course of business the group establishes jointly controlled entities for the execution of certain of its operations and contracts  
a list of these joint ventures is disclosed in note 35 the group’s share of assets liabilities revenues and expenses relating to jointly controlled 
entities is as follows
2010 
us’000
2009 
us’000
revenue 194848 31573
cost of sales 171233 28293
gross profit 23615 3280
selling general and administration expenses 14286 16374
other expenseincome net 6553 47
finance income net 643 5
profitloss before income tax 3419 13042
income tax 263 268
net profitloss 3156 13310
current assets 94935 61677
noncurrent assets 27634 4830
total assets 122569 66507
current liabilities 120892 64619
noncurrent liabilities 1658 3686
total liabilities 122550 68305
net assetsliabilities 19 1798
notes to the consolidated financial statements 125    petrofac annual report and accounts 2010
group financial statements 16 availableforsale financial assets
2010 
us’000
2009 
us’000
seven energy international limited 101251 –
shares – listed 243 –
units in a mutual fund – 539
101494 539
on 25 november 2010 the group paid us101251000 for 15 126 on a fully diluted basis of the share capital of seven energy international 
limited seven energy a leading nigerian gas development and production company the group also has the option to subscribe for 148571  
of additional warrants in seven energy at a cost of a further us52000000 subject to the satisfaction of certain performance conditions and 
milestones in relation to project execution these warrants have been fair valued as derivative financial instruments under ias 39 using a black 
scholes model and are included in other financial assets note 17 with a corresponding entry in trade and other payables representing deferred 
revenue relating to the performance conditions this will be recognised as a gain once the warrants become exercisable
17 other financial assets
2010 
us’000
2009 
us’000
other financial assets – noncurrent
fair value of derivative instruments note 33 12 9655
restricted cash 266 2880
other 1945 –
2223 12535
other financial assets – current
seven energy warrants note 16 11969 –
fair value of derivative instruments note 33 9183 22306
interest receivable 731 845
restricted cash 19196 7431
other 1271 375
42350 30957
restricted cash comprises deposits with financial institutions securing various guarantees and performance bonds associated with the group’s 
trading activities note 31 this cash will be released on the maturity of these guarantees and performance bonds
18 inventories
2010 
us’000
2009 
us’000
crude oil 2119 5272
processed hydrocarbons 90 31
stores and spares 4083 2943
raw materials 910 1552
7202 9798
included in the consolidated income statement are costs of inventories expensed of us28840000 2009 us37 306000
19 work in progress and billings in excess of cost and estimated earnings
2010 
us’000
2009 
us’000
cost and estimated earnings 7812897 3918368
less billings 7008911 3584670
work in progress 803986 333698
billings 2144252 3406412
less cost and estimated earnings 1965823 2945268
billings in excess of cost and estimated earnings 178429 461 1 44
total cost and estimated earnings 9778720 6863636
total billings 9153163 6991082
notes to the consolidated financial statements continued
for the year ended 31 december 2010
126    petrofac annual report and accounts 2010 20 trade and other receivables
2010 
us’000
2009 
us’000
trade receivables 785383 614837
retentions receivable 26297 8772
advances 179101 139550
prepayments and deposits 34059 351 43
other receivables 31919 80368
1056759 878670
trade receivables are noninterest bearing and are generally on 30 to 60 days’ terms trade receivables are reported net of provision for 
impairment the movements in the provision for impairment against trade receivables totalling us785383000 2009 us614837 000  
are as follows
2010 2009 
specific
impairment
us’000
general
impairment
us’000
total
us’000
specific
impairment
us’000
general
impairment
us’000
total
us’000
at 1 january 4875 1754 6629 3698 1296 4994
charge for the year 2189 1796 3985 6309 1320 7629
amounts written off 2197 67 2264 343 198 541
unused amounts reversed 1738 893 2631 4798 661 5459
transfers 326 326 – – – –
exchange difference 13 19 6 9 3 6
at 31 december 2790 2935 5725 4875 1754 6629
at 31 december the analysis of trade receivables is as follows
number of days past due
neither past 
due nor
impaired 
us’000
 30
days
us’000
3160
days
us’000
6190
days
us’000
91120
days
us’000
121360
days
us’000
 360
days
us’000
total
us’000
unimpaired 599661 125821 34562 10897 7324 834 164 779263
impaired – 3230 1085 157 1633 4023 1717 11 845
599661 129051 35647 11 054 8957 4857 1881 791 108
less impairment provision – 1 211 391 244 774 2295 810 5725
net trade receivables 2010 599661 127840 35256 10810 8183 2562 1071 785383
unimpaired 434159 116 197 28835 13365 3431 5977 2138 604102
impaired – 31 77 21 48 386 2510 6220 2923 1 7364
434159 11937 4 30983 13751 5941 12197 5061 621466
less impairment provision – 585 243 332 305 3421 1743 6629
net trade receivables 2009 434159 118789 30740 13419 5636 8776 3318 614837
the credit quality of trade receivables that are neither past due nor impaired is assessed by management with reference to externally prepared 
customer credit reports and the historic payment track records of the counterparties
advances represent payments made to certain of the group’s subcontractors for projects in progress on which the related work had not been 
performed at the statement of financial position date the increase in advances during 2010 relates to new contract awards in the engineering  
construction business partly offset by the unwinding of advances on more mature contracts
included in other receivables are us nil 2009 us46697 000 recoverable from venture partners on the don assets being their share of 
accrued expenses 
 all trade and other receivables are expected to be settled in cash
certain trade and other receivables will be settled in cash using currencies other than the reporting currency of the group and will be largely  
paid in sterling and kuwaiti dinars
notes to the consolidated financial statements 127    petrofac annual report and accounts 2010
group financial statements 21 cash and shortterm deposits
2010 
us’000
2009 
us’000
cash at bank and in hand 244018 203105
shortterm deposits 818987 1214258
total cash and bank balances 1063005 1 4 1 7363
shortterm deposits are made for varying periods of between one day and three months depending on the immediate cash requirements  
of the group and earn interest at respective shortterm deposit rates the fair value of cash and bank balances is us1063005000 2009 
us1417363000
for the purposes of the consolidated cash flow statement cash and cash equivalents comprise the following
2010 
us’000
2009 
us’000
cash at bank and in hand 244018 203105
shortterm deposits 818987 1214258
bank overdrafts note 26 28908 26619
1034097 1390744
22 share capital
the share capital of the company as at 31 december was as follows
2010 
us’000
2009 
us’000
authorised
750000000 ordinary shares of us0020 each 2009 750000000 ordinary shares of us0025 each 15000 18750
issued and fully paid
345715053 ordinary shares of us0020 each 2009 345532388 ordinary shares of us0025 each 6914 8638
the movement in the number of issued and fully paid ordinary shares is as follows
number
ordinary shares
ordinary shares of us0025 each at 1 january 2009 345434858
issued during the year as further deferred consideration payable for the acquisition of a subsidiary 97530
ordinary shares of us0025 each at 1 january 2010 345532388
issued during the year as further deferred consideration payable for the acquisition of subsidiaries 182665
ordinary shares of us0020 each at 31 december 2010 345715053
the share capital comprises only one class of ordinary shares the ordinary shares carry a voting right and the right to a dividend
in order to effect the demerger of the pedl sub group to enquest the existing issued ordinary share capital of petrofac limited was subdivided and converted into new ordinary 
petrofac shares with a nominal value of us002 each and petrofac b shares of us0005 each and subsequent to this share split the b shares were purchased and cancelled in 
exchange for an allotment and issue of enquest ordinary shares directly to holders of petrofac b shares
23 treasury shares
for the purpose of making awards under its employee share schemes the company acquires its own shares which are held by the  
petrofac employee benefit trust all these shares have been classified in the statement of financial position as treasury shares within equity
the movements in total treasury shares are shown below
2010 2009
number us’000 number us’000
at 1 january 7210965 56285 9540306 69333
acquired during the year 2122960 36486 – –
vested during the year 2576586 27454 2329341 13048
at 31 december 6757339 65317 7210965 56285
during the year 5467852 petrofac shares previously held in a lehman brothers custody account pending the finalisation of their legal 
administration were released to the employee benefit trust
shares vested during the year include dividend shares of 120504 2009 76931 with a cost of us1284000 2009 us431000
notes to the consolidated financial statements continued
for the year ended 31 december 2010
128    petrofac annual report and accounts 2010 24 sharebased payment plans
performance share plan psp
under the performance share plan of the company share awards are granted to executive directors and a restricted number of other senior 
executives of the group the shares cliff vest at the end of three years subject to continued employment and the achievement of certain 
predefined nonmarket and marketbased performance conditions the nonmarketbased condition governing the vesting of 50 of the  
total award is subject to achieving between 10 and 20 earning per share eps growth targets over a threeyear period the fair values of  
the equitysettled award relating to the eps part of the scheme are estimated based on the quoted closing market price per company share  
at the date of grant with an assumed vesting rate per annum built into the calculation subsequently trued up at year end based on the actual 
leaver rate during the period from award date to year end over the threeyear vesting period of the plan the fair value and assumed vesting  
rates of the eps part of the scheme are shown below 
fair value
 per share
assumed 
vesting rate
2010 awards 1103p 950
2009 awards 545p 936
2008 awards 522p 891 
2007 awards 415p 943
the remaining 50 market performance based part of these awards is dependent on the total shareholder return tsr of the group compared 
to an index composed of selected relevant companies the fair value of the shares vesting under this portion of the award is determined by an 
independent valuer using a monte carlo simulation model taking into account the terms and conditions of the plan rules and using the following 
assumptions at the date of grant
2010 awards 2009 awards 2008 awards 2007 awards
expected share price volatility based on median of  
comparator group’s threeyear volatilities 500 490 320 290
share price correlation with comparator group 390 360 220 1 70
riskfree interest rate 150 210 379 520
expected life of share award 3 years 3 years 3 years 3 years
fair value of tsr portion 743p 456p 287p 245p
the following shows the movement in the number of shares held under the psp scheme outstanding but not exercisable
2010 
number
2009 
number
outstanding at 1 january 1432680 1298809
granted during the year 390278 576780
vested during the year 407316 4 18153
forfeited during the year 65453 24756
outstanding at 31 december 1350189 1432680
the number of outstanding shares exclude the 8 uplift adjustment made in respect of the enquest demerger 82594 shares and any rolled up 
declared dividends 64264 shares 2009 60830 the 8 uplift adjustment compensated the existing share plan holders for the loss in market 
value of petrofac shares on flotation of enquest and employees have no legal right to receive dividend shares until the shares ultimately vest
the number of awards still outstanding but not exercisable at 31 december 2010 is made up of 390278 in respect of 2010 awards 2009 nil 
538602 in respect of 2009 awards 2009 576780 421309 in respect of 2008 awards 2009 431843 and nil in respect of 2007 awards 
2009 424057
the charge recognised in the current year amounted to us3208000 2009 us2727 000
deferred bonus share plan dbsp
executive directors and selected employees were originally eligible to participate in this scheme although the remuneration committee  
decided in 2007 that executive directors should no longer continue to participate participants are required or in some cases invited to receive  
a proportion of any bonus in ordinary shares of the company ‘invested awards’ following such an award the company will generally grant the 
participant an additional award of a number of shares bearing a specified ratio to the number of his or her invested shares ‘matching shares’ 
a change in the rules of the dbsp scheme was approved by shareholders at the annual general meeting of the company on 11 may 2007 such 
that the 2007 share awards and for any awards made thereafter the invested and matching shares would unless the remuneration committee 
of the board of directors determined otherwise vest 3333 on the first anniversary of the date of grant a further 3333 on the second 
anniversary of the date of grant and the final 3334 of the award on the third anniversary of the date of grant 
notes to the consolidated financial statements 129    petrofac annual report and accounts 2010
group financial statements 24 sharebased payment plans continued
deferred bonus share plan dbsp continued
at the year end the values of the bonuses settled by shares cannot be determined until all employees have confirmed the voluntary portion of 
their bonus they wish to be settled by shares rather than cash and until the remuneration committee has approved the mandatory portion of  
the employee bonuses to be settled in shares once the voluntary and mandatory portions of the bonus to be settled in shares are determined 
the final bonus liability to be settled in shares is transferred to the reserve for sharebased payments the costs relating to the matching shares 
are recognised over the relevant vesting period and the fair values of the equitysettled matching shares granted to employees are based on the 
quoted closing market price at the date of grant adjusted for the trued up percentage vesting rate of the plan the details of the fair values and 
assumed vesting rates of the dbsp scheme are below
fair value
 per share
assumed 
vesting rate
2010 awards 1185p 944
2009 awards 545p 939
2008 awards 522p 909
2007 awards 415p 896
the following shows the movement in the number of shares held under the dbsp scheme outstanding but not exercisable
2010 
number
2009 
number
outstanding at 1 january 4694191 3755383
granted during the year 1397094 2773020
vested during the year 1792895 1743372
forfeited during the year 216079 90840
outstanding at 31 december 4082311 4694191
includes invested and matching shares
the number of outstanding shares exclude the 8 uplift adjustment made in respect of the enquest demerger 327 058 shares and rolled up 
declared dividends of 184599 2009 169836
the number of awards still outstanding but not exercisable at 31 december 2010 is made up of 1313894 in respect of 2010 awards 2009 nil 
1948340 in respect of 2009 awards 2009 2696752 820077 in respect of 2008 awards 2009 1237 786 and nil in respect of 2007 awards 
2009 759653
the charge recognised in the 2010 income statement in relation to matching share awards amounted to us9195000 2009 us8064000
share incentive plan sip
all uk employees including uk resident directors are eligible to participate in the scheme employees may invest up to sterling 1500 per tax 
year of gross salary or if lower 10 of salary to purchase ordinary shares in the company there is no holding period for these shares
restricted share plan rsp
under the restricted share plan scheme selected employees are granted shares in the company over a discretionary vesting period which may 
or may not be at the direction of the remuneration committee of the board of directors subject to the satisfaction of performance conditions 
at present there are no performance conditions applying to this scheme nor is there currently any intention to introduce them in the future the 
fair values of the awards granted under the plan at various grant dates during the year are based on the quoted market price at the date of grant 
adjusted for an assumed vesting rate over the relevant vesting period for details of the fair values and assumed vesting rate of the rsp scheme 
see below
weighted
average fair 
value per share
assumed 
vesting rate
2010 awards 990p 958
2009 awards 430p 694
2008 awards 478p 880
2007 awards 456p 943
the following shows the movement in the number of shares held under the rsp scheme outstanding but not exercisable
2010 
number
2009 
number
outstanding at 1 january 1082461 1  184711
granted during the year 203384 86432
vested during the year 176360 167053
forfeited during the year 105773 21629
outstanding at 31 december 1003712 1082461
notes to the consolidated financial statements continued
for the year ended 31 december 2010
130    petrofac annual report and accounts 2010 the number of outstanding shares exclude the 8 uplift adjustment made in respect of the enquest demerger 78156 shares and rolled up 
declared dividends of 48474 2009 33691
the number of awards still outstanding but not exercisable at 31 december 2010 is made up of 195580 in respect of 2010 awards 2009 nil 
36658 in respect of 2009 awards 2009 86432 665542 in respect of 2008 awards 2009 786826 and 105932 in respect of 2007 awards 
2009 209203
during the year the company recognised a charge of us2381000 2009 us2472000 in relation to the above
the group has recognised a total charge of us14784000 2009 us13263000 in the consolidated income statement during the year 
relating to the above employee sharebased schemes see note 4d which has been transferred to the reserve for sharebased payments along 
with us12750000 of the bonus liability accrued for the year ended 31 december 2009 which has been settled in shares granted during the 
year 2009 us10942000
for further details on the above employee sharebased payment schemes refer to pages 88 to 90 of the directors’ remuneration report
25 other reserves
net unrealised 
gainslosses 
on availablefor
salefinancial
assets
us’000
net unrealised
losses
gains on
derivatives
us’000
foreign
currency
translation
us’000
reserve for
sharebased 
payments
us’000
total
us’000
balance at 1 january 2009 74 7847 79415 32202 39292
foreign currency translation – – 15087 – 15087
net gains on maturity of cash flow hedges recycled in the year – 4303 – – 4303
net changes in fair value of derivatives and financial assets 
designated as cash flow hedges – 29229 – – 29229
sharebased payments charge note 24 – – – 13263 13263
transfer during the year note 24 – – – 10942 10942
shares vested during the year note 24 – – – 12617 12617
deferred tax on share based payments reserve – – – 13085 13085
balance at 1 january 2010 74 32773 64328 56875 25394
foreign currency translation – – 908 – 908
foreign currency translation recycled to consolidated income 
statement in the year on enquest demerger note 11 – – 45818 – 45818
net gains on maturity of cash flow hedges recycled in the year – 16612 – – 16612
net changes in fair value of derivatives and financial assets 
designated as cash flow hedges – 18958 – – 18958
net changes in fair value of availableforsale financial assets 70 – – – 70
disposal of availableforsale financial assets 74 – – – 74
sharebased payments charge note 24 – – – 14784 14784
transfer during the year note 24 – – – 12750 12750
shares vested during the year note 24 – – – 261 70 261 70
deferred tax on share based payments reserve – – – 1366 1366
balance at 31 december 2010 70 2797 19418 56873 34728
nature and purpose of other reserves
net unrealised gainslosses on availableforsale financial assets
this reserve records fair value changes on availableforsale financial assets held by the group net of deferred tax effects realised gains and 
losses on the sale of availableforsale financial assets are recognised as other income or expenses in the consolidated income statement
net unrealised gainslosses on derivatives
the portion of gains or losses on cash flow hedging instruments that are determined to be effective hedges are included within this reserve  
net of related deferred tax effects when the hedged transaction occurs or is no longer forecast to occur the gain or loss is transferred out  
of equity to the consolidated income statement realised net gains amounting to us16764000 2009 us5161000 relating to foreign 
currency forward contracts and financial assets designated as cash flow hedges have been recognised in cost of sales realised net losses  
of us nil 2009 us1470000 loss relating to interest rate derivatives have been classified as a net interest expense and a realised net loss  
of us152000 2009 us611000 gain was added to revenues in respect of oil derivatives
notes to the consolidated financial statements 131    petrofac annual report and accounts 2010
group financial statements 25 other reserves continued
net unrealised gainlosses on derivatives continued
the forward currency points element and ineffective portion of derivative financial instruments relating to forward currency contracts and gains 
on the maturity of undesignated derivatives amounting to a net loss of us3409000 2009 us19508000 gain have been recognised in the 
cost of sales 
foreign currency translation reserve
the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements in foreign 
subsidiaries it is also used to record exchange differences arising on monetary items that form part of the group’s net investment in subsidiaries
reserve for sharebased payments
the reserve for sharebased payments is used to record the value of equity settled sharebased payments awarded to employees and transfers 
out of this reserve are made upon vesting of the original share awards
the transfer during the year reflects the transfer from accrued expenses within trade and other payables of the bonus liability relating to the year 
ended 2009 of us12750000 2008 bonus of us10942000 which has been voluntarily elected or mandatorily obliged to be settled in shares 
during the year note 24 
26 interestbearing loans and borrowings
the group had the following interestbearing loans and borrowings outstanding
31 december 2010
actual interest rate 
31 december 2009
actual interest rate 
effective
interest rate  maturity
2010
us’000
2009
us’000
current
revolving credit facility i na us libor 
 150
us libor 
 150
– 20000
bank overdrafts ii uk libor 
 150 
us libor 
 150
uk libor 
 150 
us libor 
 150
uk libor 
 150
 us libor 
 150
on demand 28908 26619
other loans
current portion of term loan iii usuk libor 
 0875
usuk libor 
 0875
326 to 414 
2009 314 
to 371
14241 10489
current portion of term loan iv usuk libor 
 0875
usuk libor 
 0875
201 to 391 
2009 265 
to 344
4286 963
47435 58071
noncurrent
term loan iv usuk libor 
 0875
usuk libor 
 0875
201 to 391 
2009 265 
to 344
20102013 13809 18291
term loan iii usuk libor 
 0875
usuk libor 
 0875
326 to 414 
2009 314 
to 371
20102013 30576 46694
44385 64985
less
debt acquisition costs net of 
accumulated amortisation and 
effective rate adjustments
4159 5790
40226 59195
details of the group’s interestbearing loans and borrowings are as follows
i revolving credit facility
this facility has been repaid on 31 december 2010
ii bank overdrafts
bank overdrafts are drawn down in us dollars and sterling denominations to meet the group’s working capital requirements these are repayable 
on demand
notes to the consolidated financial statements continued
for the year ended 31 december 2010
132    petrofac annual report and accounts 2010 iii term loan
this term loan at 31 december 2010 comprised drawings of us23057 000 2009 us28877 000 denominated in us and us21760000 
2009 us28306000 denominated in sterling both elements of the loan are repayable over a period of three years ending 30 september 2013
iv term loan
this term loan is to be repaid over a period of three years ending 30 september 2013 the drawings at 31 december 2010 comprised 
us13203000 2009 us13900000 denominated in us and us4892000 2009 us5354000 denominated in sterling 
the group’s credit facilities and debt agreements contain covenants relating to interest and net borrowings cover none of the company’s 
subsidiaries is subject to any material restrictions on their ability to transfer funds in the form of cash dividends loans or advances to the company 
27 provisions
other longterm
employment 
benefits provision
us’000
provision 
for 
decommissioning
us’000
provision for 
insurance 
claims
us’000
total
us’000
at 1 january 2010 34130 57973 – 92103
additions during the year 12770 984 1561 15315
don assets demerger note 11 – 55967 – 55967
unused amounts reversedpaid in the year 6696 90 – 6786
unwinding of discount – 776 – 776
at 31 december 2010 40204 3676 1561 45441
other longterm employment benefits provision
labour laws in certain countries in which the group operates require employers to provide for other longterm employment benefits these 
benefits are payable to employees on being transferred to another jurisdiction or on cessation of employment
provision for decommissioning
the decommissioning provision primarily relates to the group’s obligation for the removal of facilities and restoration of the site at the pm304 field 
in malaysia and at chergui in tunisia the liability is discounted at the rate of 380 on pm304 2009 380 525 on chergui 2009 525 
and nil 2009 450 on demerged don assets the unwinding of the discount is classified as finance cost note 5 the group estimates that 
the cash outflows against these provisions will arise in 2014 on pm304 and in 2018 on chergui 
provision for insurance claims
the provision for insurance claims relates to the amount set aside to cover potential future insurance claims against the group which will be 
settled by the captive insurance company jermyn insurance company limited
28 other financial liabilities
2010 
us’000
2009 
us’000
other financial liabilities – noncurrent
deferred consideration payable 11279 27438
fair value of derivative instruments note 33 174 –
other – 47
11453 27485
other financial liabilities – current
deferred consideration payable 24595 1622
interest payable 9 22
fair value of derivative instruments note 33 12197 1813
other 253 177
37054 3634
included in deferred consideration payable above is an amount payable of us3918000 2009 us4890000 relating to the group’s purchase 
of a floating platform and us6556000 2009 us nil relating to the group’s investment in an associate note 14
29 trade and other payables
2010 
us’000
restated 
2009 
us’000
trade payables 278383 292414
advances received from customers 412044 379684
accrued expenses 251512 260290
other taxes payable 12755 14699
other payables 66742 29930
1021436 97701 7
notes to the consolidated financial statements 133    petrofac annual report and accounts 2010
group financial statements 29 trade and other payables continued
advances from customers represent payments received for contracts on which the related work had not been performed at the statement  
of financial position date
included in other payables are retentions held against subcontractors of us6170000 2009 us938000 also included in other payables 
above is u11969000 deferred revenue relating to the provision of services required to earn the right to subscribe for the additional seven 
energy warrants note 16
certain trade and other payables will be settled in currencies other than the reporting currency of the group mainly in sterling euros and  
kuwaiti dinars
30 accrued contract expenses
2010 
us’000
2009 
us’000
accrued contract expenses 1272942 832503
reserve for contract losses 2523 4153
1275465 836656
the reserve for contract losses is to cover costs in excess of revenues on certain contracts
31 commitments and contingencies
commitments
in the normal course of business the group will obtain surety bonds letters of credit and guarantees which are contractually required to secure 
performance advance payment or in lieu of retentions being withheld some of these facilities are secured by issue of corporate guarantees  
by the company in favour of the issuing banks 
at 31 december 2010 the group had letters of credit of us2984000 2009 us91042000 and outstanding letters of guarantee including 
performance advance payments and bid bonds of us2951553000 2009 us2124134000 against which the group had pledged or 
restricted cash balances of in aggregate us19462000 2009 us2675000 
at 31 december 2010 the group had outstanding forward exchange contracts amounting to us188561000 2009 us351803000  
these commitments consist of future obligations to either acquire or sell designated amounts of foreign currency at agreed rates and value  
dates note 33 
leases
the group has financial commitments in respect of noncancellable operating leases for office space and equipment these noncancellable 
leases have remaining noncancellable lease terms of between one and 17 years and for certain property leases are subject to renegotiation  
at various intervals as specified in the lease agreements the future minimum rental commitments under these noncancellable leases are  
as follows
2010 
us’000
2009 
us’000
within one year 18031 35796
after one year but not more than five years 41239 57 1 27
more than five years 76914 73030
136184 165953
included in the above are commitments relating to the lease of an office building extension in aberdeen united kingdom of us49232000 
2009 us39735000 lease of mobile operating production unit and floating storage and offloading unit us15619000 2009 us35665000 
in block pm304 offshore malaysia and mobile drilling rig for the don southwest project of us nil 2009 us10089000
minimum lease payments recognised as an operating lease expense during the year amounted to us35625000 2009 us33063000 
capital commitments
at 31 december 2010 the group had capital commitments of us90416000 2009 us18786000 excluding the above lease commitments 
included in the above are commitments to refurbish the floating production storage and offloading unit for east fortune of us52800000 
2009 us nil further appraisal and development of wells as part of the cendor project in malaysia amounting to us7 269000 2009 
us14572000 commitments in respect of the ticleni production enhancement contract in romania us21046000 2009 us nil and 
commitments in respect of it projects of us9281000 2009 us3300000 
notes to the consolidated financial statements continued
for the year ended 31 december 2010
134    petrofac annual report and accounts 2010 32 related party transactions 
the consolidated financial statements include the financial statements of petrofac limited and the subsidiaries listed in note 35 petrofac limited 
is the ultimate parent entity of the group
the following table provides the total amount of transactions which have been entered into with related parties
sales to related
parties
us’000
purchases from
related parties
us’000
amounts owed
by related
parties
us’000
amounts owed
to related parties
us’000
joint ventures 2010 101370 88796 327 11098
2009 27337 15434 1 7773 56925
key management personnel interests 2010 – 1688 – 612
2009 – 1405 487 401
all sales to and purchases from joint ventures are made at normal market prices and the pricing policies and terms of these transactions are 
approved by the group’s management
all related party balances will be settled in cash
purchases in respect of key management personnel interests of us1601000 2009 us1336000 reflect the market rate based costs  
of chartering the services of an aeroplane used for the transport of senior management and directors of the group on company business  
which is owned by an offshore trust of which the group chief executive of the company is a beneficiary 
also included in purchases in respect of key management personnel interests is us87 000 2009 us69000 relating to client entertainment 
provided by a business owned by a member of the group’s key management
amounts owed by key management personnel comprises of a temporary loan of us nil 2009 us487 000 provided in respect of income tax 
payable on vesting of restricted share plan shares pending disposal of shares to meet this liability once the close period for trading petrofac 
shares ends
compensation of key management personnel 
the following details remuneration of key management personnel of the group comprising of executive and nonexecutive directors of the 
company and other senior personnel further information relating to the individual directors is provided in the directors’ remuneration report  
on pages 84 to 95
2010 
us’000
2009 
us’000
shortterm employee benefits 11870 11 209
other longterm employment benefits 142 129
sharebased payments 3827 3368
fees paid to nonexecutive directors 581 506
16420 15212
33 risk management and financial instruments
risk management objectives and policies
the group’s principal financial assets and liabilities other than derivatives comprise availableforsale financial assets trade and other receivables 
amounts due fromto related parties cash and shortterm deposits workinprogress interestbearing loans and borrowings trade and other 
payables and deferred consideration
the group’s activities expose it to various financial risks particularly associated with interest rate risk on its variable rate cash and shortterm 
deposits loans and borrowings and foreign currency risk on both conducting business in currencies other than reporting currency as well  
as translation of the assets and liabilities of foreign operations to the reporting currency these risks are managed from time to time by using  
a combination of various derivative instruments principally interest rate swaps caps and forward currency contracts in line with the group’s 
hedging policies the group has a policy not to enter into speculative trading of financial derivatives
the board of directors of the company has established an audit committee and risk committee to help identify evaluate and manage the 
significant financial risks faced by the group and their activities are discussed in detail on pages 80 to 83
notes to the consolidated financial statements 135    petrofac annual report and accounts 2010
group financial statements 33 risk management and financial instruments continued
the other main risks besides interest rate and foreign currency risk arising from the group’s financial instruments are credit risk liquidity risk  
and commodity price risk and the policies relating to these risks are discussed in detail below
interest rate risk 
interest rate risk arises from the possibility that changes in interest rates will affect the value of the group’s interestbearing financial liabilities  
and assets 
the group’s exposure to market risk arising from changes in interest rates relates primarily to the group’s longterm variable rate debt obligations 
and its cash and bank balances the group’s policy is to manage its interest cost using a mix of fixed and variable rate debt the group’s cash 
and bank balances are at floating rates of interest
interest rate sensitivity analysis
the impact on the group’s pretax profit and equity due to a reasonably possible change in interest rates on loans and borrowings at the reporting 
date is demonstrated in the table below the analysis assumes that all other variables remain constant
pretax profit equity
100 basis 
point increase
us’000
100 basis 
point decrease
us’000
100 basis
point increase
us’000
100 basis
point decrease
us’000
31 december 2010 710 710 – –
31 december 2009 1096 1096 – –
the following table reflects the maturity profile of these financial liabilities and assets 
year ended 31 december 2010
within
1 year
us’000
12
years
us’000
23
years
us’000
34
years
us’000
45
years
us’000
more than
5 years
us’000
total
us’000
financial liabilities
floating rates
bank overdrafts note 26 28908 – – – – – 28908
term loans note 26 18527 23823 20562 – – – 62912
47435 23823 20562 – – – 91820
financial assets
floating rates
cash and shortterm deposits 
note 21 1063005 – – – – – 1063005
restricted cash balances  
note 17 19 196 266 – – – – 19462
1082201 266 – – – – 1082467
year ended 31 december 2009
within
1 year
us’000
12
years
us’000
23
years
us’000
34
years
us’000
45
years
us’000
more than
5 years
us’000
total
us’000
financial liabilities
floating rates
revolving credit facility note 26 20000 – – – – – 20000
bank overdrafts note 26 26619 – – – – – 26619
term loans note 26 11 452 18901 24221 21863 – – 76437
58071 18901 24221 21863 – – 123056
financial assets
floating rates
cash and shortterm deposits 
note 21 1 4 1 7363 – – – – – 1 4 1 7363
restricted cash balances  
note 17 7431 226 – – – 2654 10311
1424794 226 – – – 2654 1 42767 4
financial liabilities in the above table are disclosed gross of debt acquisition costs and effective rate adjustments of us4159000 2009 
us5790000
interest on financial instruments classified as floating rate is repriced at intervals of less than one year the other financial instruments of the 
group that are not included in the above tables are noninterest bearing and are therefore not subject to interest rate risk
notes to the consolidated financial statements continued
for the year ended 31 december 2010
136    petrofac annual report and accounts 2010 derivative instruments designated as cash flow hedges 
at 31 december 2010 the group held no derivative instruments designated as cash flow hedges in relation to floating rate interestbearing  
loans and borrowings
foreign currency risk
the group is exposed to foreign currency risk on sales purchases and translation of assets and liabilities that are in a currency other than the 
functional currency of its operating units the group is also exposed to the translation of the functional currencies of its units to the us dollar 
reporting currency of the group the following table summarises the percentage of foreign currency denominated revenues costs financial 
assets and financial liabilities expressed in us dollar terms of the group totals 
2010
 of foreign 
currency
denominated
 items 
2009
 of foreign
currency
denominated 
items 
revenues 416 395
costs 622 501 
current financial assets 348 353
noncurrent financial assets 00 10
current financial liabilities 512 423
noncurrent financial liabilities 594 346
the group uses forward currency contracts to manage the currency exposure on transactions significant to its operations it is the group’s policy 
not to enter into forward contracts until a highly probable forecast transaction is in place and to negotiate the terms of the derivative instruments 
used for hedging to match the terms of the hedged item to maximise hedge effectiveness 
foreign currency sensitivity analysis
the income statements of foreign operations are translated into the reporting currency using a weighted average exchange rate of conversion 
foreign currency monetary items are translated using the closing rate at the reporting date revenues and costs in currencies other than the 
functional currency of an operating unit are recorded at the prevailing rate at the date of the transaction the following significant exchange rates 
applied during the year in relation to us dollars
2010 2009
average rate closing rate average rate closing rate
sterling 154 156 156 162
kuwaiti dinar 349 355 347 348
euro 132 134 140 144
the following table summarises the impact on the group’s pretax profit and equity due to change in the fair value of monetary assets liabilities 
and derivative instruments of a reasonably possible change in us dollar exchange rates with respect to different currencies
pretax profit equity
10 us dollar 
rate increase 
us’000
5 us dollar 
rate decrease 
us’000
10 us dollar 
rate increase 
us’000
5 us dollar 
rate decrease 
us’000
31 december 2010 3750 1875 6272 3136
31 december 2009 10238 5 141 7980 3990
derivative instruments designated as cash flow hedges 
at 31 december 2010 the group had foreign exchange forward contracts as follows 
contract value fair value undesignated fair value designated net unrealised gainloss 
2010 
us’000
2009 
us’000
2010 
us’000
2009 
us’000
2010 
us’000
2009 
us’000
2010 
us’000
2009 
us’000
euro currency purchases 171072 101909 1794 5017 2046 24479 1827 28430
sterling currency purchases 14405 38700 135 – 1583 4703 1695 4966
yen currency purchases sales 1721 160 128 – 76 942 117 862
swiss francs purchases 1363 – – – 175 – 14 –
kuwaiti dinars sales – 211 034 – 53 – 1349 – 266
1 32800
the above foreign exchange contracts mature and will affect income between january 2011 and july 2013 2009 between january 2010 and 
july 2013
notes to the consolidated financial statements 137    petrofac annual report and accounts 2010
group financial statements 33 risk management and financial instruments continued
at 31 december 2010 the group had cash and shortterm deposits designated as cash flow hedges with a fair value loss of us1633000 
2009 us1786000 gain as follows 
fair value net unrealised gainloss 
2010 
us’000
2009 
us’000
2010 
us’000
2009 
us’000
euro currency cash and shortterm deposits 15730 91660 1798 1 163
sterling currency cash and shortterm deposits 2086 5264 120 772
yen currency cash and shortterm deposits 4510 – 278 –
swiss francs cash and shortterm deposits 660 – 7 –
kuwaiti dinars cash and shortterm deposits – 191 46 – 149
1633 1786
during 2010 changes in fair value losses of us19456000 2009 losses us28043000 relating to these derivative instruments and financial 
assets were taken to equity and us16764000 of gains 2009 us5161000 gains were recycled from equity into cost of sales in the income 
statement the forward points and ineffective portions of the above foreign exchange forward contracts and loss on maturity of undesignated 
derivatives of us3409000 2009 us19508000 gains were recognised in the income statement note 4b
commodity price risk – oil prices
the group is exposed to the impact of changes in oil  gas prices on its revenues and profits generated from sales of crude oil  gas the 
group’s policy is to manage its exposure to the impact of changes in oil and gas prices using derivative instruments primarily swaps and collars 
hedging is only undertaken once sufficiently reliable and regular long term forecast production data is available
during the year the group entered into various crude oil swaps hedging oil production of 176400 bbl 2009 96000 bbl with maturities  
ranging from 1 april 2010 to 31 december 2011 in addition fuel oil swaps were also entered into for hedging gas production of 43750mt  
2009 27 000mt with maturities from 1 april 2010 to 31 december 2011 
the fair value of oil derivatives at 31 december 2010 was us1163000 liability 2009 us1813000 liability with a loss recognised in equity of 
us1163000 2009 us1813000 loss during the year a loss of us152000 2009 us611000 gain was recognised in the consolidated 
income statement on the occurrence of the hedged transactions
the following table summarises the impact on the group’s pretax profit and equity due to a change in the fair value of oil derivative instruments 
and the underlifting assetoverlifting liability of a reasonably possible change in the oil price
pretax profit equity
10 usbbl
increase 
us’000
10 usbbl
decrease 
us’000
10 usbbl
increase 
us’000
10 usbbl
decrease 
us’000
31 december 2010 194 194 802 802
31 december 2009 82 82 861 861
credit risk
the group trades only with recognised creditworthy third parties business unit risk review committees burrc have been set up by the 
board of directors to evaluate the creditworthiness of each individual third party at the time of entering into new contracts limits have been 
placed on the approval authority of the burrc above which the approval of the board of directors of the company is required receivable 
balances are monitored on an ongoing basis with appropriate followup action taken where necessary at 31 december 2010 the group’s  
five largest customers accounted for 720 of outstanding trade receivables and work in progress 2009 57 5
with respect to credit risk arising from the other financial assets of the group which comprise cash and cash equivalents availableforsale 
financial assets and certain derivative instruments the group’s exposure to credit risk arises from default of the counterparty with a maximum 
exposure equal to the carrying amount of these instruments
notes to the consolidated financial statements continued
for the year ended 31 december 2010
138    petrofac annual report and accounts 2010 liquidity risk
the group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts revolving credit facilities 
project finance and term loans to reduce its exposure to liquidity risk the maturity profiles of the group’s financial liabilities at 31 december 2010 
are as follows 
year ended 31 december 2010
6 months
or less
us’000
612
months
us’000
12
years
us’000
25
years
us’000
more than
5 years
us’000
contractual
undiscounted
cash flows
us’000
carrying
amount
us’000
financial liabilities
interestbearing loans and 
borrowings 37776 9659 23823 20562 – 91820 87661
trade and other payables 
excluding advances  
from customers 551233 58159 – – – 609392 609392
due to related parties 11 710 – – – – 11 710 11 710
deferred consideration 24595 – 11 279 – – 35874 35874
derivative instruments 11 034 1 163 1 74 – – 12371 12371
interest payable 9 – – – – 9 9
interest payments 421 388 632 206 – 1647 –
636778 69369 35908 20768 – 762823 757017
year ended 31 december 2009
6 months
or less
us’000
612
months
us’000
12
years
us’000
25
years
us’000
more than
5 years
us’000
contractual
undiscounted
cash flows
us’000
carrying
amount
us’000
financial liabilities
interestbearing loans and 
borrowings 31863 26208 18901 46084 – 123056 1 1 7266
trade and other payables 
excluding advances  
from customers 585490 11 843 – – – 597 333 597 333
due to related parties 44496 12830 – – – 57326 57326
deferred consideration 1622 – 20519 11 356 – 33497 29060
derivative instruments 907 906 – – – 1813 1813
interest payable 22 – – – – 22 22
interest payments 816 1 1 48 2094 2291 – 6349 –
665216 52935 41514 59731 – 819396 802820
the group uses various funded facilities provided by banks and its own financial assets to fund the above mentioned financial liabilities
notes to the consolidated financial statements 139    petrofac annual report and accounts 2010
group financial statements 33 risk management and financial instruments continued
capital management
the group’s policy is to maintain a healthy capital base to sustain future growth and maximise shareholder value 
the group seeks to optimise shareholder returns by maintaining a balance between debt and capital and monitors the efficiency of its capital 
structure on a regular basis the gearing ratio and return on shareholders’ equity is as follows
2010 
us’000
restated 
2009 
us’000
cash and shortterm deposits 1063005 1 4 1 7363
interestbearing loans and borrowings a 87661 1 1 7266
net cash b 975344 1300097
equity attributable to petrofac limited shareholders c 776462 894710
profit for the year attributable to petrofac limited shareholders d 557817 353603
gross gearing ratio ac 113 131 
net gearing ratio bc net cash
 position
net cash
 position
shareholders’ return on investment dc 718 395
fair values of financial assets and liabilities
the fair value of the group’s financial instruments and their carrying amounts included within the group’s statement of financial position are set 
out below 
carrying amount fair value
2010 
us’000
2009 
us’000
2010 
us’000
2009 
us’000
financial assets
cash and shortterm deposits 1063005 1 4 1 7363 1063005 1 4 1 7363
restricted cash 19462 10311 19462 10311
availableforsale financial assets 101494 539 101494 539
seven energy warrants 11969 – 11969 –
forward currency contractsdesignated as cash flow hedge 7961 26891 7961 26891
forward currency contractsundesignated 1234 5070 1234 5070
financial liabilities
interestbearing loans and borrowings 87661 1 1 7266 87661 1 1 7266
deferred consideration 35874 301 78 35874 301 78
oil derivative 1163 1813 1163 1813
forward currency contractsdesignated as cash flow hedge 8173 – 8173 –
forward currency contractsundesignated 3035 – 3035 –
fair values of financial assets and liabilities
market values have been used to determine the fair values of availableforsale financial assets forward currency contracts and oil derivatives 
seven energy warrant’s fair value has been calculated using a black scholes option valuation model note 16 the fair values of longterm 
interestbearing loans and borrowings are equivalent to their amortised costs determined as the present value of discounted future cash flows 
using the effective interest rate the company considers that the carrying amounts of trade and other receivables workinprogress trade and 
other payables other current and noncurrent financial assets and liabilities approximate their fair values and are therefore excluded from the 
above table
notes to the consolidated financial statements continued
for the year ended 31 december 2010
140    petrofac annual report and accounts 2010 fair value hierarchy
the following financial instruments are measured at fair value using the hierarchy below for determination and disclosure of their respective  
fair values
tier 1 unadjusted quoted prices in active markets for identical financial assets or liabilities
tier 2 other valuation techniques where the inputs are based on all observation data directly or indirectly
tier 3 other valuation techniques where the inputs are based on unobservable market data
assets measured at fair value 
year ended 31 december 2010
tier 1
us’000
tier 2
us’000
2010
us’000
financial assets
availableforsale financial assets 243 101251 101494
seven energy warrants – 11 969 11969
forward currency contractsdesignated as cash flow hedge – 7961 7961
forward currency contractsundesignated – 1234 1234
financial liabilities
interestbearing loans and borrowings – 87661 87661
forward currency contractsdesignated as cash flow hedge – 81 73 8173
forward currency contractsundesignated – 3035 3035
oil derivative – 1 163 1163
year ended 31 december 2009
tier 1
us’000
tier 2
us’000
2009
us’000
financial assets
availableforsale financial assets – 539 539
forward currency contractsdesignated as cash flow hedge – 26891 26891
forward currency contractsundesignated – 5070 5070
financial liabilities
interestbearing loans and borrowings – 1 1 7266 1 1 7266
oil derivative – 1813 1813
34 events after the reporting date
on 31 january 2011 energy developments signed an rsc to lead the development of the berantai field offshore peninsular malaysia for petronas 
the malaysian national oil company petrofac has a 50 interest in the rsc alongside our two local partners who each hold a 25 interest and 
the joint venture will develop the field and subsequently operate it for seven years after first gas production as part of the fast track development 
of the field the group has committed as at 31 december 2010 to acquire an fpso vessel which will be jointly owned by berantai joint venture 
partners see note 31 for details
notes to the consolidated financial statements 141    petrofac annual report and accounts 2010
group financial statements 35 subsidiaries and joint ventures
at 31 december 2010 the group had investments in the following subsidiaries and incorporated joint ventures
proportion of nominal value of issued
shares controlled by the group
name of company country of incorporation 2010 2009
trading subsidiaries
petrofac inc usa 100 100
petrofac international ltd jersey 100 100
petrofac energy development uk limited england 100 –
petrofac energy developments limited england – 100
petrofac energy developments international limited jersey 100 100
petrofac uk holdings limited england 100 100
petrofac facilities management international limited jersey 100 100
petrofac services limited england 100 100
petrofac services inc usa 100 100
petrofac training international limited jersey 100 100
petroleum facilities e  c limited jersey 100 100
petrofac esop trustees limited jersey 100 100
jermyn insurance company limited guernsey 100 –
atlantic resourcing limited scotland 100 100
petrofac algeria eurl algeria 100 100
petrofac engineering india private limited india 100 100
petrofac engineering services india private limited india 100 100
petrofac engineering limited england 100 100
petrofac offshore management limited jersey 100 100
petrofac fze united arab emirates 100 100
petrofac facilities management group limited scotland 100 100
petrofac facilities management limited scotland 100 100
petrofac international nigeria ltd nigeria 100 100
petrofac pars pjsc iran 100 100
petrofac iran pjsc iran 100 100
plant asset management limited scotland 100 100
petrofac nuigini limited papua new guinea 100 100
pfmap sendirian berhad malaysia 100 100
petrofac caspian limited azerbaijan 100 100
petrofac malaysiapm304 limited england 100 100
petrofac training group limited scotland 100 100
petrofac training holdings limited scotland 100 100
petrofac training limited scotland 100 100
petrofac training inc usa 100 100
petrofac training trinidad limited trinidad 100 100
monsoon shipmanagement limited jersey 100 100
petrofac ec international limited united arab emirates 100 100
petrofac saudi arabia limited saudi arabia 100 100
petrofac energy developments ohanet jersey limited jersey 100 100
petrofac energy developments ohanet llc usa 100 100
pedl limited england – 100
petrofac cyprus limited cyprus 100 100
pkt technical services ltd russia 50 50
pkt training services ltd russia 100 100
pt pci indonesia indonesia 80 80
petrofac training institute pte limited singapore 100 100
petrofac training sdn bhd malaysia 100 100
 directly held by petrofac limited 
companies consolidated as subsidiaries on the basis of control
notes to the consolidated financial statements continued
for the year ended 31 december 2010
142    petrofac annual report and accounts 2010 proportion of nominal value of issued
shares controlled by the group
name of company country of incorporation 2010 2009
trading subsidiaries continued
sakhalin technical training centre russia 80 80
petrofac norge as norway 100 100
spd group limited british virgin islands 51 51
spd uk limited scotland 51 51
spd llc united arab emirates 25 25
petrofac energy developments oceania limited cayman islands – 100
pt petrofac ikpt international indonesia 51 51
petrofac kazakhstan limited england 100 100
petrofac international uae llc united arab emirates 100 100
petrofac ec oman llc oman 100 100
petrofac international south africa pty limited south africa 100 100
eclipse petroleum technology limited england 100 100
eclipse petroleum technology inc united states 100 100
caltec limited england 100 100
i perform limited scotland 100 100
petrofac fpf1 limited jersey 100 100
petrofac platform management services limited jersey 100 100
petrokyrgyzstan limited jersey 100 100
scotvalve services limited scotland 100 –
stephen gillespie consultants limited scotland 100 –
co2deepstore limited scotland 100 –
co2deepstore holdings limited jersey 100 –
co2deepstore aspen limited england 100 –
tnei services limited england 100 –
petrofac ec sdn bhd malaysia 100 –
petrofac fpso holding limited jersey 100 –
the new energy industries limited england 100 –
petrofac information services private limited india 100 –
petrofac solutions  facilities support srl romania 100 –
joint ventures
costain petrofac limited england 50 50
kyrgyz petroleum company kyrgyz republic 50 50
mjvi sendirian berhad brunei 50 50
spie capag – petrofac international limited jersey 50 50
tte petrofac limited jersey 50 50
petrofac emirates llc united arab emirates 49 49
dormant subsidiaries
joint venture international limited scotland 100 100
montrose park hotels limited scotland 100 100
rgit ethos health  safety limited scotland 100 100
scota limited scotland 100 100
monsoon shipmanagement limited cyprus 100 100
rubicon response limited scotland 100 100
companies consolidated as subsidiaries on the basis of control
notes to the consolidated financial statements 143    petrofac annual report and accounts 2010
group financial statements company 
financial 
statements
144    petrofac annual report and accounts 2010 we have audited the parent company financial statements of petrofac 
limited the ‘company’ for the year ended 31 december 2010 which 
comprise the company income statement the company statement of 
comprehensive income the company statement of financial position 
the company cash flow statement the company statement of  
changes in equity and the related notes 1 to 17 the financial reporting 
framework that has been applied in their preparation is applicable 
jersey law and international financial reporting standards ifrss 
this report is made solely to the company’s members as a body  
in accordance with article 113a of the companies jersey law 1991 
and our engagement letter dated 15 february 2011 our audit work 
has been undertaken so that we might state to the company’s 
members those matters we are required to state to them in an 
auditor’s report and for no other purpose to the fullest extent 
permitted by law we do not accept or assume responsibility to anyone 
other than the company and the company’s members as a body  
for our audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the statement of directors’ responsibilities 
set out on page 96 the directors are responsible for the preparation  
of the parent company financial statements and for being satisfied that 
they give a true and fair view our responsibility is to audit and express 
an opinion on the parent company financial statements in accordance 
with applicable law and international standards on auditing uk and 
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors
in addition the company has also instructed us to
report to you our opinion on whether the section of the remuneration ■ ■
report that is described as audited has been properly prepared  
in accordance with the basis of preparation described therein
review certain elements of the report to shareholders by the  ■ ■
board on directors’ remuneration which for a premium listed uk 
incorporated company is specified for review by the listing rules  
of the financial services authority 
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give reasonable 
assurance that the financial statements are free from material 
misstatement whether caused by fraud or error this includes  
an assessment of whether the accounting policies are appropriate  
to the parent company’s circumstances and have been consistently 
applied and adequately disclosed the reasonableness of significant 
accounting estimates made by the directors and the overall 
presentation of the financial statements
opinion on financial statements
in our opinion the parent company financial statements
give a true and fair view of the state of the company’s affairs as  ■ ■
at 31 december 2010 and of its profit for the year then ended
have been properly prepared in accordance with international ■ ■
financial reporting standards
have been prepared in accordance with the requirements of the ■ ■
companies jersey law 1991 
opinion on other matter 
in our opinion the part of the remuneration report to be audited  
which you have instructed us to review has been properly prepared  
in accordance with the basis of preparation as described therein
matters on which we are required to report by exception
we have nothing to report in respect of the following matters
where the companies jersey law 1991 requires us to report to  ■ ■
you if in our opinion
 –  proper accounting records have not been kept or proper returns 
adequate for our audit have not been received from branches not 
visited by us
 –  the financial statements are not in agreement with the accounting 
records and returns
 –  we have not received all the information and explanations we 
require for our audit
where the company instructed us to review certain elements of  ■ ■
the report to shareholders by the board on director’s remuneration
other matter
we have reported separately on the group financial statements  
of petrofac limited for the year ended 31 december 2010 
justine belton  
for and on behalf of ernst  young llp 
london 
4 march 2011
1  the maintenance and integrity of the petrofac limited website is the responsibility  
of the directors the work carried out by the auditors does not involve consideration of 
these matters and accordingly the auditors accept no responsibility for any changes 
that may have occurred to the financial statements since they were initially presented  
on the website
2  legislation in jersey governing the preparation and dissemination of financial statements 
may differ from legislation in other jurisdictions
independent auditors’ report
to the members of petrofac limited
145    petrofac annual report and accounts 2010
company financial statements 146    petrofac annual report and accounts 2010
notes
2010
us’000
2009
us’000
revenue 3 342997 161994
general and administration expenses 4 15903 11 440
other income 5 177890 –
other expenses 1822 577
profit before tax and finance incomecosts 503162 149977
finance costs 6 1800 5349
finance income 6 2678 9858
profit before tax 504040 154486
income tax expense – –
profit for the year 504040 154486
2010
us’000
2009
us’000
profit for the period 504040 154486
net lossgains on maturity of cash flow hedges recycled in the period – 537
net changes in fair value of derivatives and financial assets designated as cash flow hedges – 962
other comprehensive income loss – 425
total comprehensive income for the period 504040 154911
the attached notes 1 to 17 form part of these company financial statements
company income statement
for the year ended 31 december 2010
company statement of comprehensive income
for the year ended 31 december 2010 company statement of financial position
at 31 december 2010
notes
2010
us’000
2009
us’000
assets
noncurrent assets
property plant and equipment 33 27
investments in subsidiaries 8 233231 265599
availableforsale investment 9 101251 –
334515 265626
current assets
trade and other receivables 300 189
amounts due from subsidiaries 10 42508 379939
warrants on availableforsale investment 9 11969 –
cash and shortterm deposits 11 88257 64387
143034 444515
total assets 477549 710 141
equity and liabilities
equity attributable to petrofac limited shareholders
share capital 17 6914 8638
share premium 992 69712
capital redemption reserve 10881 10881
treasury shares 12 65317 56285
share based payments reserve 45154 43790
retained earnings 18214 119 103
total equity 16838 195839
noncurrent liabilities
interestbearing loans and borrowings 14 26887 39008
longterm employee benefit provisions 251 176
27138 39184
current liabilities
trade and other payables 18804 811
amounts due to subsidiaries 10 403126 448048
interestbearing loans and borrowings 14 11643 26259
433573 475 118
total liabilities 460711 514302
total equity and liabilities 477549 710 141
the financial statements on pages 146 to 158 were approved by the board of directors on 4 march 2011 and signed on its behalf by  
keith roberts – chief financial officer
the attached notes 1 to 17 form part of these company financial statements
147    petrofac annual report and accounts 2010
company financial statements company cash flow statement
for the year ended 31 december 2010
notes
2010
us’000
2009
us’000
operating activities
profit before tax 504040 154486
gain on enquest demerger 5 177890 –
326150 154486
adjustments for
 depreciation 4 20 27
 sharebased payments 13 671 912
 difference between other longterm employment benefits paid and amounts recognised in the 
income statement 75 32
 net finance income 6 878 4509
 other noncash items net 1526 1843
operating profit before working capital changes 327564 152791
 trade and other receivables 111 60
 amounts due from subsidiaries 15199 109097
 trade and other payables 6024 319
 amounts due to subsidiaries 44922 160583
 current financial liabilities – 433
273356 204223
other noncurrent items net – 307
cash generated from operations 273356 204530
interest paid 1800 1443
net cash flows generated from operating activities 271556 203087
investing activities
purchase of availableforsale financial assets 9 101251 –
purchase of property plant and equipment 26 13
repayment of investment by subsidiaries 44886 50000
interest received 5270 187
net cash flows used in investing activities 51121 49826
financing activities
repayment of interestbearing loans and borrowings 26773 5121
treasury shares purchased 12 36486 –
equity dividends paid 132244 98995
net cash flows used in financing activities 195503 104 116
net increase in cash and cash equivalents 24932 491 45
net foreign exchange difference on cash and cash equivalents 1062 726
cash and cash equivalents at 1 january 64387 14516
cash and cash equivalents at 31 december 11 88257 64387
the attached notes 1 to 17 form part of these company financial statements
148    petrofac annual report and accounts 2010 company statement of changes in equity
for the year ended 31 december 2010
issued
share
capital
us’000
note 16
share 
premium
us’000
capital
redemption
reserve
us’000
treasury
shares
us’000
note 12
sharebased
payments
reserve
us’000
note 13
net 
unrealised
gains
 losses on
derivatives
us’000
retained
earnings
us’000
total
equity
us’000
balance at 1 january 2009 8636 68203 10881 69333 32202 425 61577 111 7 4 1
net profit for the year – – – – – – 154486 154486
other comprehensive incomeexpense – – – – – 425 – 425
total comprehensive incomeexpense – – – – – 425 154486 154911
shares issued as payment of deferred consideration 2 1509 – – – – – 1 511
sharebased payments charge note 13 – – – – 912 – – 912
shares vested during the year – – – 13048 12617 – 431 –
transfer to reserve for sharebased payments note 13 – – – – 23293 – – 23293
dividends note 7 – – – – – – 96529 96529
balance at 1 january 2010 8638 69712 10881 56285 43790 – 119 103 195839
net profit for the year – – – – – – 504040 504040
other comprehensive income – – – – – – – –
total comprehensive income – – – – – – 504040 504040
sharebased payments charge note 13 – – – – 671 – – 671
shares vested during the year – – – 27 454 261 70 – 1284 –
treasury shares purchased note 12 – – – 36486 – – – 36486
transfer to reserve for sharebased payments note 13 – – – – 26863 – – 26863
shares issued as payment of deferred consideration 4 2452 – – – – – 2456
enquest demerger share split and redemption note 5 1728 – – – – – 1728 –
distribution on enquest demerger note 5 – 71 1 72 – – – – 473325 544497
dividends note 7 – – – – – – 132048 132048
balance at 31 december 2010 6914 992 10881 65317 45154 – 18214 16838
shares held by petrofac employee benefit trust
the attached notes 1 to 17 form part of these company financial statements
149    petrofac annual report and accounts 2010
company financial statements notes to the company financial statements
for the year ended 31 december 2010
1 corporate information 
the financial statements of petrofac limited ‘the company’  
referred to as the company financial statements for the year ended  
31 december 2010 were authorised for issue in accordance with  
a resolution of the directors on 4 march 2011 
petrofac limited is a limited liability company registered in  
jersey under the companies jersey law 1991 and is the holding 
company for the international group of petrofac subsidiaries together  
‘the group’ the group’s principal activity is the provision of facilities 
solutions to the oil  gas production and processing industry
2 summary of significant accounting policies
basis of preparation
the separate financial statements have been prepared on a  
historical cost basis except for derivative financial instruments and 
availableforsale financial assets that have been measured at fair value 
the functional and presentation currency of the separate financial 
statements is united states dollars and all values in the separate 
financial statements are rounded to the nearest thousand us’000 
except where otherwise stated certain comparative information  
has been reclassified to conform to current period presentation
statement of compliance
the separate financial statements have been prepared in accordance 
with international financial reporting standards ifrs and applicable 
requirements of jersey law 
investments in subsidiaries
investments in subsidiaries are stated at cost less any provision for 
impairment
longterm loan receivables from subsidiaries
longterm loan receivables from subsidiaries are initially stated at  
fair value after initial recognition they are subsequently measured  
at amortised cost using the effective interest rate method
due fromdue to subsidiaries
due fromdue to subsidiaries are both interest bearing and noninterest 
bearing shortterm funding to and from subsidiaries these are 
recognised at the fair value of consideration receivedpaid less  
any provision for impairment 
cash and cash equivalents
cash and cash equivalents consist of cash at bank and in hand  
and shortterm deposits with an original maturity of three months  
or less for the purpose of the cash flow statement cash and cash 
equivalents consists of cash and cash equivalents as defined above 
net of any outstanding bank overdrafts
interestbearing loans and borrowings
all interestbearing loans and borrowings are initially recognised at  
the fair value of the consideration received net of issue costs directly 
attributable to the borrowing
after initial recognition interestbearing loans and borrowings are 
subsequently measured at amortised cost using the effective interest 
rate method amortised cost is calculated by taking into account  
any issue costs and any discount or premium on settlement
employee benefit trust
the petrofac employee benefit trust pebt is treated as an extension 
of the activities of the company and accordingly the company 
financial statements include all transactions and balances of the pebt 
except for transaction and balances between the company and pebt
sharebased payment transactions
employees including directors of the group receive remuneration  
in the form of sharebased payment transactions whereby employees 
render services in exchange for shares or rights over shares  
‘equitysettled transactions’
equitysettled transactions
the cost of equitysettled transactions with employees is measured  
by reference to the fair value at the date on which they are granted  
in valuing equitysettled transactions no account is taken of any 
service or performance conditions other than conditions linked to the 
price of the shares of petrofac limited ‘market conditions’ if applicable
the cost of equitysettled transactions is recognised together with a 
corresponding increase in equity over the period in which the relevant 
employees become fully entitled to the award the ‘vesting period’ 
the cumulative expense recognised for equitysettled transactions at 
each reporting date until the vesting date reflects the extent to which 
the vesting period has expired and the group’s best estimate of the 
number of equity instruments that will ultimately vest the income 
statement charge or credit for a period represents the movement  
in cumulative expense recognised as at the beginning and end of  
that period
no expense is recognised for awards that do not ultimately vest 
except for awards where vesting is conditional upon a market or 
nonvesting condition which are treated as vesting irrespective  
of whether or not the market or nonvesting condition is satisfied 
provided that all other performance conditions are satisfied equity 
awards cancelled are treated as vesting immediately on the date of 
cancellation and any expense not recognised for the award at that 
date is recognised in the income statement
the company operates a number of share award schemes on behalf 
of the employees of the group which are described in detail in note 24 
of the consolidated financial statements of the group 
the reserve for sharebased payments is used to record the value  
of equity settled sharebased payments awarded to employees and 
transfers out of this reserve are made upon vesting of the original 
share awards the sharebased payments charges pertaining to fellow 
group companies are recharged to them and shown as investment 
subsequently they are transferred to due from subsidiaries and settled 
in cash
availableforsale financial assets
investments classified as availableforsale are initially stated at fair 
value including acquisition charges associated with the investment
after initial recognition availableforsale financial assets are measured 
at their fair value using quoted market rates or in the absence of 
market data other fair value calculation methodologies gains and 
losses are recognised as a separate component of equity until the 
investment is sold or impaired at which time the cumulative gain or 
loss previously reported in equity is included in the income statement
derivative financial instruments and hedging 
the company uses derivative financial instruments such as forward 
currency contracts interest rate collars and swaps and oil price  
collars and forward contracts to hedge its risks associated with  
foreign currency interest rate and oil price fluctuations such derivative 
financial instruments are initially recognised at fair value on the date  
on which a derivative contract is entered into and are subsequently 
remeasured at fair value derivatives are carried as assets when the 
fair value is positive and as liabilities when the fair value is negative
any gains or losses arising from changes in the fair value of derivatives 
that do not qualify for hedge accounting are taken to the income 
statement 
the fair value of forward currency contracts is calculated by reference 
to current forward exchange rates for contracts with similar maturity 
profiles the fair value of interest rate cap swap and oil price collar 
contracts is determined by reference to market values for similar 
instruments
150    petrofac annual report and accounts 2010 3 revenues
revenues comprise of dividends from subsidiaries which are recognised when the right to receive payment is established
2010
us’000
2009
us’000
dividend income from subsidiaries 342997 161994
4 general and administration expenses
2010
us’000
2009
us’000
staff costs 10750 7 595
depreciation 20 27
other operating expenses 5133 3818
15903 11 440
included in other operating expenses above are auditors’ remuneration of us65000 2009 us67 000 related to the fee for the audit  
of the parent company financial statements it excludes fees in relation to the audit of the group financial statements which are borne by  
petrofac services limited
5 gain on enquest demerger
on 5 april 2010 the group’s interests in the don area oil assets were demerged via a transfer of three of its subsidiaries petrofac energy 
developments limited pedl petrofac energy developments oceania limited pedol and pedl limited pedll to enquest plc for  
a deemed consideration for accounting purposes of us553300000 which was settled by the issue of enquest plc shares directly to  
petrofac limited shareholders the gain on the demerger transaction has been computed as follows
us’000
fair value of consideration 553300
less 
net book value of pedl investment 373774
transaction costs 1636
gain on demerger 177890
 in order to effect the demerger of the pedl sub group to enquest the existing issued ordinary share capital of petrofac limited was subdivided and converted into new ordinary petrofac
shares with a nominal value of us002 each and petrofac b shares of us0005 each and subsequent to this share split the b shares were purchased and cancelled in exchange for an 
allotment and issue of enquest ordinary shares directly to holders of petrofac b shares
as a result of this capital reorganisation and purchase of petrofac b shares us1728000 of petrofac issued ordinary share capital was extinguished 
and transferred to retained earnings and the noncash distribution to petrofac shareholders for accounting purposes of us553300000 was 
made via the utilisation of the existing share premium account of balance of us71172000 with the remaining amount of us482128000 being 
transferred out of retained earnings in addition us8803000 of proceeds generated by the petrofac employee benefit trust selling its holding of 
enquest shares arising from the demerger have been credited to retained earnings leaving a net impact on retained earnings of us473325000
6 finance costsincome
2010
us’000
2009
us’000
interest payable
longterm borrowings 1205 1443
on amounts due to subsidiaries 595 3906
total finance cost 1800 5349
interest receivable
bank interest receivable 44 55
on amounts due from subsidiaries 2634 9803
total finance income 2678 9858
151    petrofac annual report and accounts 2010 notes to the company financial statements
company financial statements 7 dividends paid
2010
us’000
2009
us’000
declared and paid during the year
equity dividends on ordinary shares
final dividend for 2008 17 90 cents per share – 60332
interim dividend 2009 1070 cents per share – 36197
final dividend for 2009 2510 cents per share 85291 –
interim dividend 2010 1380 cents per share 46757 –
132048 96529
2010
us’000
2009
us’000
proposed for approval at agm not recognised as a liability as at 31 december
equity dividends on ordinary shares
final dividend for 2010 3000 cents per share 2009 2510 cents per share 103715 86729
8 investments in subsidiaries
2010
us’000
2009
us’000
at 1 january 265599 214088
investment in petrofac uk holdings limited 22331 1 511
investment in petrofac energy developments limited pedl – 50000
investment repaid by pedl 50000 –
capitalisation of amount due from pedl 373774 –
derecognition of pedl investment and amounts due on enquest demerger 373774 –
investment in jermyn insurance company limited 3001 –
receipt from petrofac facilities management limited 7700 –
invested bonus in deferred bonus share plan dbsp charged to subsidiaries 12518 10753
receipt of invested bonus in dbsp from subsidiaries 12518 10753
share based payment amounts receivable from subsidiaries 14113 12351
transferred to due from subsidiaries 14113 12351
as at 31 december 233231 265599
at 31 december 2010 the company had investments in the following subsidiaries
proportion of nominal value of issued 
shares controlled by the company
name of company country of incorporation 2010 2009
trading subsidiaries
petrofac inc usa 100 100
petrofac international ltd jersey 100 100
petrofac energy developments limited england – 100
petrofac energy developments international limited jersey 100 100
petrofac uk holdings limited england 100 100
petrofac facilities management international limited jersey 100 100
petrofac services limited england 100 100
petrofac services inc usa 100 100
petrofac training international limited jersey 100 100
petroleum facilities e  c limited jersey 100 100
petrofac energy developments uk limited england 100 –
jermyn insurance company limited guernsey 100 –
9 availableforsale investment
on 25 november 2010 the company invested us100000000 for 15 126 on a fully diluted basis of the share capital of seven energy 
international limited seven energy a leading nigerian gas development and production company incurring us1251000 of transaction costs 
the company also has the option to subscribe for 148571 of additional warrants in seven energy at a cost of a further us52000000 subject 
to the performance of certain service provision conditions and milestones in relation to project execution these warrants have been fair valued  
as derivative financial instruments under ias 39 using black scholes model amounting to us11969000 with a corresponding entry in trade 
and other payables representing deferred revenue relating to the performance conditions this will be recognised as a gain once the warrants 
become exercisable
notes to the company financial statements continued
for the year ended 31 december 2010
152    petrofac annual report and accounts 2010 10 amounts due fromdue to subsidiaries
amounts due fromdue to subsidiaries comprise both interest and noninterest bearing shortterm loans provided toreceived from subsidiaries 
listed in note 8
11 cash and shortterm deposits
2010
us’000
2009
us’000
cash at bank and in hand 19687 4857
shortterm deposits 68570 59530
total cash and bank balances cash and cash equivalents 88257 64387
shortterm deposits are made for varying periods of between one day and one month depending on the immediate cash requirements of the 
group and earn interest at respective shortterm deposit rates the fair value of cash and bank balances is us88257 000 2009 us64387 000
12 treasury shares
for the purpose of making awards under its employee share schemes the company acquires its own shares which are held by the  
petrofac employee benefit trust all these shares have been classified in the statement of financial position as treasury shares within equity
the movements in total treasury shares are shown below
2010 2009
number us’000 number us’000
at 1 january 7210965 56285 9540306 69333
acquired during the year 2122960 36486 – –
vested during the year 2576586 27454 2329341 13048
at 31 december 6757339 65317 7210965 56285
during the year 5467 852 of the above shares held by lehman brothers in a client custody account were released to the company as part of  
the lehman brothers administration process
13 sharebased payments chargereserve 
share based payment charge
sharebased payment plan information is disclosed in note 24 of the consolidated financial statements of the group the following table shows 
the movements in the number of shares held under the three group employee schemes
deferred bonus 
share plan
number
performance 
share plan
number
restricted 
share plan
number
outstanding at 1 january 2009 41809 137047 –
granted during the period 47766 85033 –
vested during the period 21000 37383 –
forfeited during the period 1605 – –
outstanding at 1 january 2010 66970 184697 –
granted during the period 24912 75210 5585
vested during the period 29239 48505 –
forfeited during the period 518 – –
outstanding but not exercisable at 31 december 2010 62125 211402 5585
deferred bonus 
share plan
number
performance 
share plan
number
restricted
share plan
number
made up of following awards
2008 6791 51 159 –
2009 30422 85033 –
2010 24912 75210 5585
62125 211402 5585
during the year a sharebased payment scheme charge of us671000 2009 us912000 was recognised by the company in respect of its 
own employees time spent on shareholder related services
sharebased payment reserve
the transfer during the year into sharebased payment reserve disclosed in the statement of changes in equity of us26863000 2009 
us23293000 is the charge for sharebased payments awards by the company to its own employees as well as employees of subsidiaries 
including bonus amounts converted into shares
153    petrofac annual report and accounts 2010 notes to the company financial statements
company financial statements 14 interestbearing loans and borrowings
the company had the following interestbearing loans and borrowings outstanding
31 december 2010
actual interest rate 
31 december 2009
actual interest rate 
effective
interest rate  maturity
2010
us’000
2009
us’000
current
revolving credit facility iii – us libor 
 150
us libor 
 150
– 20000
current portion of term loan i us libor 
 0875
us libor 
 0875
326 
2009 371
7357 5296
current portion of term loan ii usuk libor 
 0875
usuk libor 
 0875
201 to 391 
2009 265 
to 344
4286 963
11643 26259
noncurrent
term loan ii usuk libor 
 0875
usuk libor 
 0875
201 to 391 
2009 265 
to 344
2010–2013 13809 18291
term loan i us libor 
 0875
us libor 
 0875
326 
2009 371
2010–2013 15700 23581
29509 41872
less
debt acquisition costs net of 
accumulated amortisation  
and effective interest rate 
adjustments 2622 2864
26887 39008
details of the company’s interestbearing loans and borrowings are as follows
i term loan
this term loan at 31 december 2010 comprised drawings of us23057 000 2009 us28877 000 repayable over a period of three years 
ending 30 september 2013
ii term loan
this term loan is to be repaid over a period of three years ending 30 september 2013 
iii revolving credit facility
this facility was repaid on 31 december 2010
notes to the company financial statements continued
for the year ended 31 december 2010
154    petrofac annual report and accounts 2010 15 risk management and financial instruments
risk management objectives and policies
the company’s principal financial assets and liabilities are amounts due from and due to subsidiaries cash and shortterm deposits and interest 
bearing loans and borrowings
the company’s activities expose it to various financial risks particularly associated with interest rate risks on its external variable rate loans and 
borrowings which are addressed by using derivative instruments to hedge this exposure the company has a policy not to enter into speculative 
trading of financial derivatives
the other main risks besides interest rate are foreign currency risk credit risk and liquidity risk and the policies relating to these risks are discussed 
in detail below
interest rate risk 
interest rate risk arises from the possibility that changes in interest rates will affect the value of the company’s interestbearing financial liabilities 
and assets the company does not hedge its exposure on its interest bearing funding tofrom subsidiaries 
interest rate sensitivity analysis
the impact on the company’s pretax profit and equity due to a reasonably possible change in interest rates is demonstrated in the table below 
the analysis assumes that all other variables remain constant
pretax profit equity
100 basis 
point increase
us’000
100 basis 
point decrease
us’000
100 basis
point increase
us’000
100 basis
point decrease
us’000
31 december 2010 401 401 – –
31 december 2009 823 823 – –
the following table reflects the maturity profile of interest bearing financial liabilities and assets excluding interest bearing subsidiary related 
financial assets and liabilities 
year ended 31 december 2010
within
1 year
us’000
12
years
us’000
23
years
us’000
34
years
us’000
45
years
us’000
more than
5 years
us’000
total
us’000
financial liabilities
floating rates
term loan note 14 11 643 15497 14012 – – – 4 1 152
amount due to subsidiaries 
interest bearing 403126 – – – – – 403126
414769 15497 14012 – – – 444278
financial assets
floating rates
cash and shortterm deposits 
note 11 88257 – – – – – 88257
amount due from subsidiaries 
interest bearing 42508 – – – – – 42508
130765 – – – – – 130765
155    petrofac annual report and accounts 2010 notes to the company financial statements
company financial statements 15 risk management and financial instruments continued
year ended 31 december 2009
within
1 year
us’000
12
years
us’000
23
years
us’000
34
years
us’000
45
years
us’000
more than
5 years
us’000
total
us’000
financial liabilities
floating rates
revolving credit facility note 14 20000 – – – – – 20000
term loan note 14 6259 11 688 15567 14617 – – 48131
amount due to subsidiaries 
interest bearing 448048 – – – – – 448048
474307 11 688 15567 14617 – – 5161 79
financial assets
floating rates
cash and shortterm deposits 
note 11 64387 – – – – – 64387
amount due from subsidiaries 
interest bearing 358693 – – – – – 358693
423080 – – – – – 423080
financial liabilities in the above table are disclosed gross of debt acquisition costs and effective interest rate adjustments of us2622000  
2009 us2864000
interest on financial instruments classified as floating rate is repriced at intervals of less than one year
derivative instruments designated as cash flow hedges
there were no outstanding interest rate derivatives designated as cash flow hedges at 31 december 2009 and 31 december 2010
foreign currency risk
almost all of the financial assets and liabilities of the company are denominated in us dollars the foreign currency exposure is limited to  
sterling 3134000 equivalent us4892000 2009 sterling 3300000 equivalent us5354000 of its interest bearing loans and borrowings
the following table summarises the impact on the company’s pretax profit and equity due to change in the fair value of monetary assets 
liabilities and derivative instruments of a reasonably possible change in us dollar exchange rates with respect to different currencies
pretax profit equity
10 us dollar 
rate increase 
us’000
–5 us dollar 
rate decrease 
us’000
10 us dollar 
rate increase 
us’000
–5 us dollar 
rate decrease 
us’000
31 december 2010 1482 741 – –
31 december 2009 3821 1 911 – –
credit risk
the company’s principal financial assets are cash and shortterm deposits and amounts due from subsidiaries 
the company manages its credit risk in relation to cash and shortterm deposits by only depositing cash with financial institutions that have  
high credit ratings provided by international credit rating agencies
liquidity risk
the company’s objective is to maintain a balance between continuity of funding and flexibility through the use of term loans and revolving  
credit facilities to reduce its exposure to liquidity risk 
notes to the company financial statements continued
for the year ended 31 december 2010
156    petrofac annual report and accounts 2010 the maturity profiles of the company’s financial liabilities at 31 december 2010 are as follows
year ended 31 december 2010
6 months
or less
us’000
612
months
us’000
12
years
us’000
25
years
us’000
more than
5 years
us’000
contractual
undiscounted
cash flows
us’000
carrying
amount
us’000
financial liabilities
interestbearing loans and 
borrowings 5583 6060 15497 14012 – 4 1 152 38530
trade and other payables 18804 – – – – 18804 18804
amounts due to subsidiaries – 403126 – – – 403126 403126
interest payments 250 234 391 134 – 1009 –
24637 409420 15888 14146 – 464091 460460
year ended 31 december 2009
6 months
or less
us’000
612
months
us’000
12
years
us’000
25
years
us’000
more than
5 years
us’000
contractual
undiscounted
cash flows
us’000
carrying
amount
us’000
financial liabilities
interestbearing loans and 
borrowings 2648 23611 11 688 30184 – 68131 65267
trade and other payables 811 – – – – 811 811
amounts due to subsidiaries – 448048 – – – 448048 448048
interest payments 563 798 1273 1472 – 4106 –
4022 472457 12961 31656 – 521096 51 4126 
the company uses various funded facilities provided by banks and its own financial assets to fund the above mentioned financial liabilities
capital management
the company’s policy is to maintain a healthy capital base using a combination of external and internal financing to support its activities as the 
holding company for the group
the company’s gearing ratio is as follows
2010
us’000
2009
us’000
cash and shortterm deposits 88257 64387
interestbearing loans and borrowings a 38530 65267
netcash debt b 49727 880
total equity c 16838 195839
gross gearing ratio ac 2288 333
net gearing ratio bc
net cash 
position 04
 significant increase in gross gearing ratio in 2010 is as a result of enquest demerger
157    petrofac annual report and accounts 2010 notes to the company financial statements
company financial statements 15 risk management and financial instruments continued
fair values of financial assets and liabilities
the fair value of the company’s financial instruments and their carrying amounts included within the company’s statement of financial position 
are set out below 
carrying amount fair value
2010
us’000
2009
us’000
2010
us’000
2009
us’000
financial assets
cash and shortterm deposits 88257 64387 88257 64387
financial liabilities
interestbearing loans and borrowings 38530 65267 38530 65267
the fair values of longterm interestbearing loans and borrowings and longterm receivable from a subsidiary are equivalent to amortised costs 
determined as the present value of discounted future cash flows using the effective interest rate the company considers that the carrying amounts 
of trade and other receivables amounts due fromdue to subsidiaries trade and other payables and other current financial liabilities approximate 
their fair values and are therefore excluded from the above table
fair value hierarchy
the following financial instruments are measured at fair value using the hierarchy below for determination and disclosure of their respective  
fair values
tier 1 unadjusted quoted prices in active markets for identical financial assets or liabilities
tier 2 other valuation techniques where the inputs are based on all observation data directly or indirectly
tier 3 other valuation techniques where the inputs are based on unobservable market data
assets and liabilities measured at fair value 
tier 2
us’000
2010
us’000
financial assets
seven energy warrants 11 969 11969
tier 2
us’000
2010
us’000
financial assets
interestbearing loans and borrowings 38530 38530
tier 2
us’000
2009
us’000
financial assets
interestbearing loans and borrowings 65267 65267
16 related party transactions
the company’s related parties consist of its subsidiaries and the transactions and amounts due todue from them are either of funding or 
investing nature note 8 the company is recharged a portion of the key management personnel cost by one of its subsidiaries the amount 
recharged during the year was us2854000 2009 us2182000 for further details of the full amount of key management personnel costs 
refer to the directors’ remuneration report on pages 93 to 95
17 share capital
the movements in share capital are disclosed in note 22 to the consolidated financial statements of the group
notes to the company financial statements continued
for the year ended 31 december 2010
158    petrofac annual report and accounts 2010 oil  gas reserves unaudited
at 31 december 2010
europe africa south east asia total
oil  ngls
mmbbl
oil  ngls
mmbbl
gas
bcf
oil  ngls
mmbbl
oil  ngls
mmbbl
gas
bcf
oil equivalent
mmboe
proven reserves
at 1 january 2010
developed 34 14 193 36 84 193 11 8
undeveloped 97 – 05 – 97 05 97
proven 131 14 198 36 181 198 215
changes during the year
revisions – 01 82 04 05 82 09
additions – – 16 89 89 16 91
divestments 126 – – – 126 – 126
production 05 05 46 1 1 21 46 28
at 31 december 2010
developed – 08 234 21 29 234 70
undeveloped – – 16 89 89 16 91
proven – 08 250 110 118 250 161
probable reserves
at 1 january 2010 64 – 62 05 69 62 81
changes during the year
revisions – – 33 04 04 33 01
additions – – 14 04 04 14 05
divestments 64 – – – 64 – 64
production – – – – – – –
at 31 december 2010 – – 43 13 13 43 21
total proven  probable reserves
at 1 january 2010 195 14 260 41 250 260 296
changes during the year
revisions – 01 49 – 01 49 08
additions – – 30 93 93 30 96
divestments 190 – – – 190 – 190
production 05 05 46 1 1 21 46 28
at 31 december 2010 – 08 293 123 131 293 182
notes
■ ■ these estimates of reserves were prepared by the group’s engineers and audited by a competent independent third party based on the guidelines of the petroleum resources 
management system sponsored by the society of petroleum engineers the world petroleum council the american association of petroleum geologists and the society of  
petroleum evaluation engineers
■ ■ the reserves presented are the net entitlement volumes attributable to the company under the terms of relevant production sharing contracts and assuming future oil prices  
equivalent to us75 per barrel brent
■ ■ for the purpose of calculating oil equivalent total reserves volumes of natural gas have been converted to oil equivalent volumes at the rate of 5800 standard cubic feet of gas  
per barrel of oil
■ ■ the europe geographical segment contains reserves attributable to the don fields which were divested from the company in april 2010
159    petrofac annual report and accounts 2010 oil  gas reserves unaudited
company financial statements shareholder information
at 31 december 2010
petrofac shares are traded on the london stock exchange using  
code ‘pfcl ’ 
registrar
capita registrars jersey limited
12 castle street
st helier
jersey je2 3rt
uk transfer agent
capita registrars
the registry
34 beckenham road
beckenham
kent br3 4tu
company secretary and registered office
ogier corporate services jersey limited
ogier house
the esplanade
st helier
jersey je4 9wg 
legal advisers to the company
freshfields bruckhaus deringer llp
65 fleet street
london ec4y 1hs
joint brokers
goldman sachs
peterborough court
133 fleet street
london ec4a 2bb
jp morgan cazenove
10 aldermanbury
london ec2v 7rf
auditors
ernst  young llp
1 more london place
london se1 2af
corporate and financial pr
tulchan communications group
85 fleet street
london ec4y 1ae
financial calendar
13 may 2011 annual general meeting
20 may 2011 final dividend payment
22 august 2011 interim results announcement
october 2011 interim dividend payment
dates correct at time of print but subject to change
the group’s investor relations website can be found through wwwpetrofaccom
160    petrofac annual report and accounts 2010 designed and produced by
conran design group 44 020 7284 5200
photography by sam robinson 
this report is printed on revive 100 pure white silk paper and revive pure  
white uncoated paper and has been independently certified on behalf of the  
forest stewardship council fsc the inks used are all vegetable oil based
printed at st ives westerham press ltd iso14001 fsc certified and carbonneutral
®
but the journey 
is just beginning annual report and accounts 2010
we’ve come  
a long way
petrofac annual report and accounts 2010
petrofac services limited
117 jermyn street
london sw1y 6hh
united kingdom
t 44 20 7811 4900 
f 44 20 7811 4901
wwwpetrofaccom


Summary:
 18    petrofac annual report and accounts 2010
petrofac’s group chief executive ayman asfari  
comments on the progress made by the company  
during 2010 and its plans for the future
interview with the group chief executive 19    petrofac annual report and accounts 2010
petrofac has delivered another 
exceptional set of results  
why was 2010 such a good year
many factors played a part significant 
contract wins moves into new geographies 
and the successful completion of a number  
of projects fundamentally however we 
delivered record results once again because 
we remained focused on our customers  
on attention to detail and on excellence in 
delivery and execution
what were the highlights
the year’s highlights and they occurred  
right across the petrofac group were all 
characterised by us breaking new ground
we reaped the first rewards of our ‘build  
and harvest’ strategy with the demerging  
of our uk continental shelf ukcs assets  
to enquest plc where they were combined 
with the ukcs assets of lundin petroleum 
ab in a separate listed entity this crystallised 
a significant gain for petrofac demonstrated 
the value of our investment model and also 
enabled petrofac shareholders to participate 
as shareholders in a production and 
development company which has since  
gone on to create even more value as a  
public company
commencing work on the second phase  
of the south yoloten gas processing plant 
construction project in turkmenistan  
a new and important market for petrofac  
was another milestone the us34 billion 
engineering procurement and commissioning 
project is the largest lumpsum turnkey 
contract that we have ever signed we are 
very pleased to be working with turkmengas 
the stateowned national gas company on 
this project and our initial planning and setup 
studies have given us confidence that we can 
maintain our high standards and first class 
project delivery for this worldscale project 
which is due to be completed in 2013 
our production enhancement services 
contract for the ticleni oilfield in romania 
was another breakthrough the 15year 
contract which we estimate will be worth 
us270 million in the first five years involves 
us taking full operational responsibility  
for this mature field on behalf of petrom 
romania’s largest oil  gas group it marks 
both our first production enhancement 
services contract something we had been 
targeting for some time and our first project 
in romania
another advance came with our 
appointment by total to develop the  
laggan tormore gas processing plant  
on the shetland islands the £500 million  
award is our first predominantly lumpsum 
engineering procurement and construction 
contract in the uk and is a significant award 
for our offshore engineering  operations 
business which will also draw on the  
support of our established engineering  
construction business to deliver the project
another great moment was the inauguration 
of syria’s national training centre the 
country’s first ever oil  gas training facility 
which we designed refurbished and 
equipped the inauguration event coincided 
with our annual investor trip and around  
50 investors and financial analysts were 
present when the syrian prime minister  
his excellency mohammad naji ottri 
inaugurated the facility our gift of the centre 
to the syrian government in support of  
its drive to develop more skilled oil  gas 
personnel was the most significant donation 
we have ever made and emphasised our 
commitment to the communities in which  
we work
as well as these exciting new projects and 
awards we kept our focus on execution  
we successfully completed the ebla gas 
plant in syria for petrocanada two months 
ahead of schedule and have substantially 
completed the jihar gas plant in syria  
for the hayan petroleum company the 
harweel cluster development for petroleum 
development oman the mina alahmadi 
refinery pipelines project for kuwait oil 
company and the in salah gas compression 
project for sonatrach bp and statoil in algeria
petrofac is changing as it grows  
in 2010 for example you extended 
your service offering and moved into 
new countries what is your growth 
strategy
petrofac is still a focused oil  gas business 
operating mainly in the upstream sector  
we are changing but in an evolutionary way 
our growth strategy has two main elements 
first it will be built on deepening our 
competencies in order to become more 
active across the entire value chain we will 
also continue to pursue opportunities in new 
countries where we see potential for growth 
and development 
how do you intend to operate across 
the ‘entire value chain’
we want to deepen and extend our capability 
so that we can operate much more widely 
across the life cycle of an asset from concept 
definition and drilling management to 
delivering a turnkey development 
that process has been under way for some 
time our engineering and construction roots 
are now complemented by other strengths 
such as our strong operations management 
training and consulting businesses in 2010 
our appointment by the malaysian national oil 
company petronas to develop the sepat 
offshore early production system and our 
move into the field development programme 
for the second phase of the cendor project 
also in malaysia significantly expanded our 
offshore engineering activity 
interview with the group chief executive
business review 20    petrofac annual report and accounts 2010
we believe we can create additional  
value for our customers by integrating 
services and delivering them through a 
different serviceled approach this will  
give customers the full capability they need  
while enabling them to retain full ownership  
of their resources 
our contract to lead the development of the 
berantai field which we signed just after the 
yearend shows the potential for this type  
of integrated service contract and how it can 
generate additional value for both customers 
and for us we will develop and operate the 
berantai field offshore malaysia again for 
petronas for seven years after the first 
production of gas alongside two local 
partners we will be responsible for providing 
and integrating a full range of services –  
from design and construction to subsurface 
technical services and operations
the innovative commercial framework 
whereby petronas retains full ownership 
of its resources while our returns are linked  
to the delivery of the project illustrates our 
commercial flexibility and commitment to 
creating true alignment with the objectives  
of resource holders
interview with the group chief executive 
continued
how swiftly do you intend to expand 
geographically
building foundations in new markets as we 
did in turkmenistan nigeria and iraq in 2010 
is a major focus to ensure that we get  
it absolutely right for our customers and 
shareholders we are expanding in a very 
measured way geographically aiming to  
add a selected number of markets each year 
in 2010 you made a number  
of relatively small acquisitions  
are you actively looking for further 
acquisitions
we are interested in making acquisitions  
but only those that fulfil a strong strategic 
rationale or offer real synergies as we grow 
our new energy businesses co2deepstore 
limited a leading developer of co2 storage 
projects and tnei services limited a 
renewable energy specialist for instance 
offer a platform for potential future growth  
in the emerging low carbon world
as you evolve how will you maintain 
the core qualities that have made 
petrofac successful
in the coming years we expect to recruit many 
thousands more staff as our organisation 
expands retaining our unique culture and 
being true to our values will be essential
this culture or ‘dna’ encompasses important 
things like taking ownership of problems 
keeping a relentless focus on project  21    petrofac annual report and accounts 2010
“ there is no doubt that in the last 30 years  
petrofac has achieved a great deal but if we stay 
focused on execution and delivery as i am sure  
we will we have a fantastic journey ahead”
execution being safe and responsive to  
our customers and maintaining a focus on 
close management of costs if we get these 
fundamental aspects of our business right 
then we have a strong foundation from which 
to grow
while we are developing new capabilities  
and executing our differentiated business 
model particularly in the areas of offshore 
engineering and providing integrated services 
for resource holders we remain as committed 
to the core activities that have made us 
successful so far we will go on growing  
our lumpsum turnkey and operations 
management activities in both existing  
and new markets
you have invested in strengthening 
your internal systems this year with 
for example the first rollout of 
petrofac’s groupwide enterprise 
resource planning erp system  
and new hr processes why was 
this necessary
petrofac has grown very fast within six years 
of our initial public offering we have achieved 
more than a sevenfold increase in market 
capitalisation and have more than doubled 
our employee headcount 
so our systems must be robust they must 
allow petrofac to be consistent and scalable 
support strong governance and effective risk 
management and help us to ensure we have 
the right people with the right skills both now 
and in the future 
the strengthening of our corporate functions 
and systems so they serve as a stronger 
resource for the business has been a 
continuing priority for a number of years 
throughout this process we have identified 
what is already working well and have acted 
to enhance it and spread best practice 
throughout the organisation central to this 
development is the implementation of our 
new erp system ‘tempo’ technology to 
empower the petrofac organisation but  
this was not simply imposed on the business 
instead we chose the very best processes 
from those already operating in the business 
and tailored the system around them we  
are determined that our corporate functions 
should support our entrepreneurial business 
style not just be a bureaucratic overlay to it
petrofac attracted major oil  gas 
executives to its board this year  
in both executive and nonexecutive 
roles see page 70 for details 
what do they bring to the company
they bring many things not least a deep 
knowledge of the industry and a thorough 
understanding of customer needs having 
come from international oil companies 
more importantly they bring experience of 
how some of the world’s most successful 
companies think and work i am sure that 
they will provide invaluable insights that will 
help us as we continue to develop our own 
organisation
our new directors are building on strong 
foundations i would like to thank our 
outgoing chairman rodney chase who  
has led our board very effectively for six  
years and in this time has made a significant 
contribution to our success also retiring from 
our board at the agm is senior independent 
director kjell almskog kjell has served on 
our board for six years and i thank him for  
his valued contribution during this time 
why are major industry figures 
attracted to petrofac
i think we are becoming an increasingly 
attractive employer for staff at all levels 
people see us as doing things differently  
to others in the industry they are joining us 
because they want to be part of our success 
and to contribute to our future growth
what do you believe has 
characterised petrofac’s success  
to date
our success is rooted in our people and our 
culture we have a great team of exceptional 
individuals who are very motivated and 
driven they personify the petrofac culture 
and values 
the high level of employee share ownership 
also helps explain why we are different –  
and our success almost one in three of  
our people participate in one or more of  
our share schemes and i believe that this 
creates a huge degree of alignment between 
employees the company and our external 
shareholders they all share one aspiration  
of building longterm sustainable value 
although we have continued to make great 
progress we remain vigilant to complacency 
and are focused on continually developing  
our people and evolving our business to  
stay at pace with the changing needs of  
our customers 
2011 marks the 30th anniversary of 
the foundation of petrofac and the 
20th anniversary of you joining the 
company can petrofac remain 
successful over the longterm
absolutely the 2010 annual report theme 
– ‘we’ve come a long way but the journey is 
just beginning’ – is absolutely right before we 
look forward i would like to briefly look back 
and thank everyone who contributed to our 
journey over the last three decades especially 
ralph martin who passed away in february 
this year as one of petrofac’s original 
founders ralph was an inspiration to everyone 
that knew and worked with him we all miss 
him a great deal 
there is no doubt that in the last 30 years 
petrofac has achieved a great deal but if we 
stay focused on execution and delivery as i 
am sure we will we have a fantastic journey 
ahead in the coming years i am confident 
that we will continue to create value for  
our shareholders and maintain our strong 
growth trajectory i am looking forward to 
participating in this next stage of our journey
ayman asfari
group chief executive
interview with the group chief executive
business review