Final Results - Part One

Petrofac Limited
05 March 2007


PART 1

                                PETROFAC LIMITED


               FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006


Petrofac Limited (Petrofac, the group or the Company) is a leading international
provider of facilities solutions to the oil & gas production and processing
industry, providing project development, engineering, construction and
facilities operation, maintenance and training services to many of the world's
leading integrated, independent and national oil & gas companies. Petrofac's
predominant focus is on the UK Continental Shelf (UKCS), Africa, the Middle
East, the Commonwealth of Independent States (CIS) and the Asia Pacific region,
with 17 offices worldwide and approaching 8,000 employees.


FINANCIAL HIGHLIGHTS*


   • Revenue of US$1,864 million (2005: US$1,485 million), up 25.5%


   • EBITDA(1) of US$199.6 million (2005: US$115.6 million), up 72.7%

        - Engineering & Construction EBITDA of US$127.3 million, up 100.5%

        - Operations Services EBITDA of US$32.9 million, up 19.6%

        - Resources EBITDA of US$40.1 million, up 23.0%


   • Net profit(2) of US$121.9 million (2005: US$75.4 million), up 61.7%


   • Backlog(3) at 31 December 2006 of US$4,173 billion (2005: US$3,244
     billion), up 28.6%


   • Return on capital employed(4) of 47.5% (2005: 32.5%)


   • Earnings per share (fully diluted) of 35.32 cents (2005: 22.41 cents),
     up 57.6%


   • Final dividend of 6.43 cents (3.30 pence(5)) per ordinary share taking
     dividends for the full year to 8.83 cents per ordinary share

* continuing operations


OUTLOOK


The capital programmes and associated operating expenditure required to address
increasing global energy demand and the depletion of existing production
together with the limited capacity of the oil services industry to support such
programmes should ensure that demand for the group's services remains strong for
the foreseeable future.


The current level of backlog within our Engineering & Construction division
provides particularly strong visibility for current year revenue and we will
continue our focus on project execution to ensure consistent margin delivery. We
believe that we are well positioned to secure further new business, particularly
in regions and on projects which have the potential for long term capital
expenditure.


Our Operations Services division also has good visibility for revenue for the
current and future years and will look to continue its growth both in the UKCS
and internationally, in particular, the contract with Dubai Petroleum
Establishment will make an important contribution to this growth and towards
continued margin expansion.


The integrity management of hydrocarbon facilities is becoming an increasingly
significant challenge for many asset owners. Through our strong engineering and
operational capabilities, in particular within our growing Brownfield activity,
we believe we are well positioned to assist clients extend the life span of
their facilities whilst ensuring the highest standards of operational safety are
met.


Within our Resources division, we expect the investment in Cendor, Malaysia, to
have substantially, if not entirely, recovered its costs during the first half
of the year. During the year ahead, in addition to seeking further opportunities
to expand our investment portfolio, in particular on the energy infrastructure
side, we will be actively progressing our existing development assets, in
particular Chergui, Tunisia, and the greater Don area assets in the UKCS.


The current financial year has started well and, with the group's backlog at
record levels, continuing focus on execution and strong demand for its services,
the Board believes the group is well positioned to continue its growth during
the current year and beyond.


Commenting on the results, Ayman Asfari, Petrofac's Group Chief Executive, said:

"I am very pleased to be able to report another set of strong financial results,
in particular, with our E&C division reporting good growth in both revenue and
profitability. Whilst we continue to face challenges, in particular because of
industry-wide resource constraints, the benefit of our consistent focus on
delivery is reflected in our results. Demand for our services continues to be
strong and we expect this to remain the case at least for the medium term which,
with our backlog at its current levels, positions us well for continued growth
during the current year and beyond."



For further information, please contact:


Petrofac Limited                             [phone]
Ayman Asfari, Group Chief Executive
Keith Roberts, Chief Financial Officer
Jonathan Low, Head of Investor Relations


Bell Pottinger Corporate & Financial         [phone]
Ann-marie Wilkinson
Geoff Callow




Petrofac Limited

Final results for the year ended 31 December 2006

(Note: all financial information set out herein reflects the group's continuing
operations, unless stated otherwise)


Chairman's statement


It has been a very good year for Petrofac. We have strengthened our position
from 2005, continued to grow and enjoyed some significant achievements along the
way. We increased revenue by 26% to US$1,864 million and net profit by 62% to
US$121.9 million. In our first full year as a listed Company, these are
impressive results.


Market overview

The past year has seen continuing strong demand for oil & gas and, as a result,
commodity prices have remained high. Brent oil has averaged US$65 per barrel and
the Henry Hub Gas price has averaged US$7 per million British thermal units.


Although speculation remains concerning trends in the energy market, the mid- to
long-term prospects for oil & gas production remain solid. Demand is continuing
to increase while, in areas with large, ageing oil fields, supply is beginning
to decline. This is unquestionably an opportunity for Petrofac to help companies
extend the life of their assets, improve the efficiency of production and
develop resources in new, more challenging environments.


We are well positioned strategically and geographically to take advantage of
opportunities as they arise. Over the past year we have extended our global
reach with a new office in Chennai, India, entered into Egypt and Tunisia and
strengthened our position in Kazakhstan.


Petrofac's progress

There have been many highlights over the past year. There have been new
beginnings, for example the award of our service operator contract with the
Dubai Petroleum Establishment (DPE), wholly owned by the Government of Dubai, is
an exciting opportunity, and we believe the first time that a national oil
company has chosen to contract directly in this way. At the same time we have
had some successful ongoing projects such as the completion of work on the
challenging Baku to Ceyhan pipeline.


After 25 years in business, Petrofac has clearly come a long way. Yet at the
heart of our success there remains the continued drive, dedication and passion
of the management team, and of all our people. It is important we maintain this
entrepreneurial spirit as we expand our team and broaden our services.


Dividends

The Board is recommending a final dividend of 6.43 cents per ordinary share with
an equivalent of 3.30 pence per ordinary share which, if approved, will be paid
to eligible shareholders on the register at 20 April 2007. Together with the
interim dividend of 2.40 cents per ordinary share, this gives a total dividend
for the year of 8.83 cents per ordinary share.


Corporate governance

As a large and growing company, it is essential we meet our responsibilities to
our people, the communities where we work and the environment. To us this is not
simply a duty, it is an important aspect of our long-term success. We have taken
numerous steps in this area over the past year including conducting a major
review of our Code of Conduct to make sure all our people understand their
ethical and legal commitments. We are launching a 'Give As You Earn' scheme in
the UK and we are making environmental recommendations to partners and customers
on new developments. As the Company grows, I will continue to ensure we maintain
this good corporate governance.


Over the past year we did experience one major incident when one of our
employees tragically died in the Morecambe Bay helicopter accident. I would like
to take this opportunity to express my deepest sympathies to his family, friends
and colleagues.


Our people

Although we work with advanced technology and machinery, we are, unquestionably,
a people business. Over the year the dedication of our employees has been
demonstrated in numerous ways, from their unerring attention to detail to those
moments when they have gone the extra mile. We are delighted that over 1,000 of
our employees are participating in our employee share plans.


Changes to the Board

During 2006 there were no changes to report. However, subject to shareholder
agreement, we look forward to welcoming two additional members to the Board,
Rijnhard van Tets and Amjad Bseisu. Further details of these proposed
appointments are included in a separate announcement released today.


Finally, I would like to thank all our people for their hard work throughout
2006. It has been a year of exciting developments and new opportunities, and
with our continued focus, energy and drive I am confident 2007 will bring many
more successes.



Rodney Chase
Chairman



Group Chief Executive's review


I am pleased to be able to report a strong set of financial results for the year
ended 31 December 2006.

                                       2006            2005
                                       US$m            US$m
Revenue                               1,863.9        1,485.5       up 25.5%
EBITDA                                 199.6          115.6        up 72.7%
EBITDA margin                          10.7%           7.8%
Net profit                             121.9           75.4        up 61.7%
Net margin                             6.5%            5.1%
Backlog                                4,173          3,244        up 28.6%


Group revenue increased by 25.5% to US$1,863.9 million (2005: US$1,485.5
million) reflecting strong growth across all three divisions. EBITDA increased
by 72.7% to US$199.6 million (2005: US$115.6 million). Net profit increased by
61.7% to US$121.9 million (2005: US$75.4 million), representing a net margin of
6.5% (2005: 5.1%). At the close of 2006, the combined backlog of the Engineering
& Construction and Operations Services divisions was US$4,173 million (2005:
US$3,244 million).


ENGINEERING & CONSTRUCTION

                                        2006            2005
                                        US$m            US$m
Revenue                                1,081.3          858.2       up 26.0%
EBITDA                                  127.3           63.5
EBITDA margin                           11.8%           7.4%
Net profit                              95.4            55.1        up 73.1%
Net margin                              8.8%            6.4%
Backlog                                 2,228           2,121       up 5.0%


Results

The division's strong operational performance has increased revenue by 26.0% to
US$1,081.3 million (2005: US$858.2 million) and net profit by 73.1% to US$95.4
million (2005: US$55.1 million), representing a net margin of 8.8% (2005: 6.4%).
The majority of revenue in 2006 came from further progress on contract awards
secured in 2005, in particular the Kuwait Oil Company (KOC) facilities upgrade
project and the Harweel and Kauther projects in Oman. The significant growth in
net profit and net margin was driven by the timing of profit recognition
(profits are typically not recognised in the early stages of lump-sum contracts
and, therefore, profits lag revenue recognition) on lump-sum EPC contracts and
increased profitability through the division's ongoing strong execution
performance. In 2006, the main divisional profit drivers were the Kashagan
engineering and procurement contract, the KOC facilities upgrade and Kauther gas
plant projects.


Engineering & Construction increased its number of employees(6) from
approximately 2,400 at 31 December 2005 to 2,700 at 31 December 2006. Much of
the increase was in the division's operating centres in the Middle East and
India. The group is currently building a new office tower in Sharjah, UAE, which
will be able to accommodate approximately 1,800 employees and is establishing a
new office in Chennai which expects to have around 200 employees by the end of
2007.


The division's backlog increased to US$2,228 million at 31 December 2006 (31
December 2005: US$2,121 million) principally due to the Hasdrubal and Salam gas
plant awards towards the end of the year.


Review of operations

In the early part of 2006, with a significant value of lump-sum contracts
awarded towards the end of 2005, the focus of the Engineering & Construction
division was on the mobilisation of these new contracts and on the execution of
other projects in hand:


Middle East

Over two-thirds of the division's revenue in 2006 was generated from lump-sum
Engineering, Procurement and Construction (EPC) contracts, many awarded in late
2005, in the Middle East region:


   •The northern oil export system for KOC was substantially completed during
    the year, as were, following an extended commissioning period, the flare
    mitigation works for Qatar Petroleum.


   •Good progress was made on both the facilities upgrade project for KOC,
    where the scope, particularly in piping and civils, has increased, and with
    the EPC of the Kauther gas plant for the Ministry of Oil & Gas in Oman,
    albeit against a challenging schedule.


   •Satisfactory progress has been made on the Harweel Cluster Development
    project for Petroleum Development Oman (PDO) with significant technical
    re-design work meaning the expected completion of the project will be later
    than planned but in line with PDO's expectations.


Commonwealth of Independent States (CIS)

The Engineering & Construction division continues to see a high level of
principally reimbursable activity in the CIS, particularly in Kazakhstan and
Russia:


   •In Kazakhstan, the Kashagan engineering and procurement contract is
    substantially complete, while the related construction management contract,
    awarded in January 2006, is still in its early stages as scheduled; the
    front-end engineering and design (FEED) study for the fourth oil processing
    train for Karachaganak Petroleum Operating B.V. (KPO), a BG Group and ENI
    led consortium, was substantially completed by the end of 2006 and, as
    referred to below, has been followed by the award of the EPCM for the fourth
    train.


   •In Russia, substantial progress was made in particular with the Kovykta
    project management contract and, building on our recently established
    engineering presence in Moscow, with various engineering services projects
    for other customers.


   •The BTC/SCP project, which became a reimbursable contract at the
    beginning of 2006, was successfully completed in the second half of the
    year.


A number of significant EPC and consultancy and engineering services contracts
were secured during 2006 and in early 2007:


Hasdrubal Gas Plant, Tunisia

In November 2006, following on from the FEED study awarded late in 2005, the
group was awarded a US$400 million lump-sum turnkey project by BG Tunisia
Limited, a BG Group (BG) subsidiary, and Entreprise Tunisienne d'Activites
Petrolieres (ETAP) to build the new Hasdrubal onshore gas processing facility
and liquefied petroleum gas (LPG) production facility.


The project scope covers project management, detailed design, procurement,
construction, pre-commissioning, commissioning, start-up and performance testing
of the new gas plant. Petrofac will draw on the capabilities and expertise of
Pireco, a local construction and fabrication company, as its main construction
subcontractor for the project. The award represents further progress in
developing the group's growing business relationship with BG.


Salam Gas Plant, Egypt

In November 2006, the division was awarded a US$200 million lump-sum EPC
contract by Khalda Petroleum Company (KPC) to build a new gas processing train.
In December 2006, KPC awarded the division a further lump-sum EPC contract for
an additional gas processing train, increasing the value of the overall project
to US$375 million. KPC is adding these third and fourth gas processing trains to
its existing facilities in the Salam area to process the gas produced from its
new discoveries. KPC is a joint venture between Apache Corporation and the
state-owned Egyptian General Petroleum Corporation.


The project is scheduled for completion before the end of 2008 and will utilise
the capabilities and expertise of local construction and fabrication company,
Petrojet. The project scope includes project management, detailed design,
procurement, construction, pre-commissioning, commissioning, start-up,
performance testing and initial operations.


Strasshof Development FEED, Austria

In late 2006, the division was awarded a US$5 million contract by OMV Austria
Exploration & Production GmbH (OMV Austria), to carry out two parallel FEED
studies for the development of the Strasshof gas field near Vienna, Austria. The
project is due for completion in early 2007 and represents the first time that
Petrofac has carried out FEED work on behalf of OMV Austria.


Karachaganak 4th train, Kazakhstan

In January 2007, the division announced the award of the engineering,
procurement, construction management and commissioning support of the
Karachaganak fourth train. The project, scheduled for completion in mid 2009,
will be executed on a part lump-sum and part reimbursable basis.


El Gassi field, Algeria

In February 2007, the division was awarded a US$16 million contract by SonaHess,
a joint venture of Sonatrach and Amerada Hess, to engineer, procure and manage
the construction and commissioning of new facilities on an existing production
site at the El Gassi field in Algeria. This project follows on from other recent
work in Algeria and consolidates the group's position in the North African
market.


OPERATIONS SERVICES

                                       2006            2005
                                       US$m            US$m
Revenue                                729.2           605.3       up 20.5%
EBITDA                                 32.9            27.5        up 19.6%
EBITDA margin                          4.5%            4.5%
Net profit                             18.1            15.6        up 16.0%
Net margin                             2.5%            2.6%
Backlog                                1,945           1,123       up 73.2%


Results

Divisional revenue for the period increased by 20.5% to US$729.2 million (2005:
US$605.3 million) reflecting new business and an increased level of pass-through
revenue. Net profit increased to US$18.1 million (2005: US$15.6 million),
representing a net margin of 2.5% (2005: 2.6%). Net of pass-through revenue(7),
net margin increased by 0.2%, reflecting an improvement in the division's
operational performance.


Operations Services' employee numbers grew from 4,700 at 31 December 2005 to
over 4,900 at 31 December 2006 principally due to the growth in Petrofac
Brownfield.


The division's backlog increased to US$1,945 million at 31 December 2006 (2005:
US$1,123 million) as a result of a successful year of new contract awards,
including the DPE contract, and existing contract renewals and extensions.



Review of operations

During the year, the facilities management and training businesses continued to
perform strongly in a buoyant oil & gas market and secured a number of
significant contract wins, renewals and extensions.


The European facilities management business continues to be the largest
contributor to the division and achieved strong growth during the year. During
2006, Petrofac Facilities Management Europe secured a further 12-month renewal
with Maersk Oil for the Gryphon, Janice and Global Producer III assets and an
extension of the contract with Sea Production for the Northern Producer, a
floating production installation located on the Galley field, operated by
Talisman Energy.


Petrofac Facilities Management Europe extended its range of service operator
contracts in November 2006 by taking on duty holder responsibility from BHP
Billiton for the Irish Sea Pioneer, a mobile, self-elevating operations support
vessel in the Liverpool Bay area of the Irish Sea. Petrofac was also awarded a
small life-of-field duty holder contract by Helix Energy Solutions for a
normally unmanned installation on the Camelot field. New operations support
contracts, as referred to in the 2005 Annual Report, were signed during the year
with CNR International and Marathon.


A key operational highlight in 2006 was the performance of Petrofac Brownfield,
which provides maintenance and modifications engineering services, primarily to
the UK Continental Shelf (UKCS) market. This business has achieved exceptional
growth since inception in 2004 and now employs over 600 staff. Petrofac
Brownfield has projects underway for a variety of customers including Lundin
Petroleum, Marathon, Venture Production and Talisman Energy. In September 2006,
Lundin Petroleum awarded Petrofac Brownfield a two-year contract extension to
provide engineering support and construction services to both the Heather and
Thistle North Sea installations. During the year, Petrofac Brownfield safely and
successfully installed the Wood and Gas Export (WaGE) module onto Talisman
Energy's Montrose platform. Associated gas from the Montrose platform, which is
currently being flared, will, in the future, be compressed and exported using
the new facilities. In November 2006, Talisman awarded the division a concept
and optional FEED study for the Claymore platform compression upgrade project
and in February 2007, following the findings of the conceptual study, Talisman
awarded the division the FEED study. The additional facilities represent a
significant undertaking in the future of the Claymore production platform. In
September 2006, the group completed, safely and a month ahead of schedule, the
tie-back from the Venture Production owned Goosander field to the Kittiwake
installation, through a subsea flow-line providing production, gas lift and
water injection facilities.


Internationally, the facilities management business continues to perform in line
with expectations, supporting national oil companies and their subsidiaries,
directly and in consortia, in Kuwait, Sudan and Iran and working with Marathon
in Equatorial Guinea.


The division's most significant contract win during the year was a major service
operator contract with Dubai Petroleum Establishment (DPE), wholly-owned by the
Government of Dubai, for the provision of well and facilities management
services to Dubai's offshore oil & gas assets. The transition process from the
existing operator commenced in the second half of 2006 and the group will take
full responsibility for these operations in April 2007. The award of this major
contract was the result of significant investment over a number of years in our
international business development activities and represents a material increase
in scale for the international Operations Services business. The contract covers
four offshore oilfields, with approximately 70 platforms, currently run by
around 1,100 personnel. Some 600 staff will be employed by Petrofac from April
2007, the remainder being contractors.


In January 2007, the division extended its capabilities with the acquisition of
a majority interest in SPD Group Limited (SPD), a specialist provider of well
operations services. Based in Dubai and Aberdeen, SPD's main areas of expertise
are well project management, well engineering optimisation, well engineering
studies and consultancy services. SPD, which was already providing services in
the Dubai fields, was recently awarded a new contract to provide well operations
management services in support of the DPE contract.


The training business continues to perform well in the UK and its range of
services was further strengthened during the year with the opening of Rubicon
Response's integrated Emergency Response Service Centre (ERSC) in Aberdeen, the
first integrated ERSC in the UKCS. The ERSC is located in close proximity to the
emergency services and is the first point of contact for a number of North Sea
installations, providing them with an immediate and effective response in
emergency situations. Good progress has been made internationally with awards in
the Gulf of Mexico from BP, to design, establish and implement a world class
training function across BP's deepwater activities in the United States, and
with Shell, for a multi-year contract which includes the provision of water
survival and helicopter underwater egress training (HUET). In April 2006, the
group acquired PPS Process Control and Instrumentation Services Limited (PPS)
which provides operations and maintenance training in Sakhalin, Russia (and
process control and instrumentation services in Singapore, Malaysia and
Indonesia). In January 2007, PPS secured a further contract with Sakhalin Energy
to provide operations and maintenance training at the Sakhalin Technical
Training Centre. In late 2006, Petrofac Training, in conjunction with joint
venture partner TTE International, was awarded a two-year extension to its
management and operations contract for BP's technical training centre in Baku,
Azerbaijan.


RESOURCES

                                       2006            2005
                                       US$m            US$m
Revenue                                62.1            46.3        up 34.1%
EBITDA                                 40.1            32.6        up 23.0%
EBITDA margin                          64.6%           70.4%
Net profit*                            14.4            18.3       down 21.3%
Net margin                             23.1%           39.5%

Adjusted net profit*                   13.8             9.4        up 46.8%
Adjusted net margin                    22.2%           20.3%


* 2006 net profit includes recognition of a net tax credit of US$0.6 million
from tax losses in Petrofac (Malaysia-PM304) Limited (2005: US$8.9 million); the
adjusted net profit and adjusted net profit margin presented above exclude the
impact of these tax credits


Results

Divisional revenue increased by 34.1% to US$62.1 million (2005: US$46.3 million)
due predominantly to commencement of production from the Cendor field and
subsequent cargo liftings. Net profit for the period was US$14.4 million (2005:
US$18.3 million). The net profit in 2005 included the recognition of a deferred
tax asset of US$8.9 million in respect of Cendor pre-trading losses. Following
commencement of production in late 2006, the UK deferred tax asset was written
down to recognise the future availability of Malaysian double tax credits
against UK tax, whilst a Malaysian deferred tax asset was set up to reflect the
anticipated utilisation of carried forward losses against Malaysian tax at 38%;
this resulted in an overall recognition of a further tax credit of US$0.6
million in the year. Net of Cendor tax credits, the division's net profit
increased from US$9.4 million in 2005 to US$13.8 million in 2006.


Review of operations

The division increased its portfolio of producing assets in the latter part of
the year with the commencement of oil production from the Cendor field, offshore
Peninsular Malaysia in Block PM304. Petrofac, as operator, working alongside its
partners, developed an innovative and low-cost solution for the development of
the field, which delivered first oil in September 2006, ahead of schedule and
within budget. The division's other producing assets, Ohanet and the Kyrgyz
Petroleum Company refinery, continued to perform strongly and in line with
expectations during 2006.


Under the terms of the Cendor production sharing contract (PSC), by way of which
the group owns a 30% share in the field, the division will receive revenues
based on the market value of crude oil sales until its development and operating
costs are recovered, which is expected to be during 2007. Subsequently, the
division will be entitled to its share of production at an index-linked price
which is currently below market price. Following a gradual ramp-up in
production, the field averaged 12,100 bpd for the month of December 2006.
Current production levels, uptime and reservoir performance are in excess of the
project investment case. The division is undertaking detailed analysis of the
reservoir to re-evaluate the extent of estimated reserves.


Ohanet production was marginally lower than during 2005 at, on average,
approximately 14.6 million m3/d (2005: 15.5 million m3/d) of gas for export,
approximately 24,240 bpd (2005: 28,000 bpd) of condensate and approximately
2,770 tonnes per day (2005: 2,230 tonnes per day) of liquefied petroleum gas (a
combined oil equivalent of 138,500 bpd; 2005: 151,700 bpd). On average, the
division earned its share of the monthly liquids production by the 11th day of
the month reflecting the prevailing oil price (2005: 9th). At the division's
current base case production profiles and current oil price forecasts, it is
likely that the group will earn its defined return within the target eight-year
period ending November 2011.


Resources owns a 50% share in Kyrgyz Petroleum Company which is engaged in the
production and refining of crude oil and marketing the sale of oil products from
the refinery. The Operations Services division runs the refinery on behalf of
the joint venture partners on a reimbursable basis. During 2006, the refinery
produced an average of approximately 1,700 bpd (2005: 1,700 bpd) of principally
gasoline, diesel and fuel oil. Finding a steady supply of feedstock remains a
challenge, although increased product prices during 2006 resulted in an improved
financial performance.


The division's portfolio of development assets in the UKCS was extended in 2006
and early 2007:


   •In December 2006, the division acquired a 60% interest in part of Block
    211/18a containing the Don Southwest discovery. The partners in the
    acquisitions were First Oil (30% interest in West Don area) and Valiant
    Petroleum (30% interest in West Don; 40% interest in Don Southwest).


   •During 2006, Petrofac (50%) and Valiant Petroleum (50%) were successful
    in securing Block 211/18c, adjoining the West Don field, in the UK's 23rd
    licensing round. In February 2007, Petrofac (50%) and Valiant (50%) secured
    Block 211/17 in the 24th licensing round. These awards are an important
    development in the strategy to build a core area of operations in the
    'greater Don area' and seek opportunities in neighbouring blocks.


   •The division increased its interest in Block 9/28a part B (containing the
    Crawford field) from 5.58% to 29% in February 2006, assuming operatorship of
    the field. The group's partners are Fairfield Acer (52%) and Stratic (19%).


   •In early 2007, Petrofac was awarded a 100% equity interest in Block 28/3b
    in the 24th licensing round. The group already owns 100% equity in Block 28/
    3a, containing the Elke field.


The three divisions of the Petrofac group are working together towards
submission of field development plans for these assets.


In November 2006, the group agreed to acquire, subject to approval by the
relevant government authorities, a 45% interest in the Chergui concession,
Tunisia, for a consideration of approximately US$30 million from Entreprise
Tunisienne d'Activites Petrolieres, the Tunisian state oil company, which holds
the remaining 55% interest. The transaction legally completed in February 2007
(see note 33 to the financial statements). Petrofac will be operator of the
newly acquired concession. In addition to the initial consideration of US$30
million, Petrofac will incur a share of the costs to complete the central
production facilities and pipeline to shore, amounting to approximately
US$20 million. Production is expected to start at the field in late 2007, with
plateau rates expected to be maintained for around four years with a further
eight years of operation beyond that. Produced gas is to be sold to Societe
Tunisienne d'Electricite et Gaz under the gas pricing formula fixed by existing
law, in which the price of gas is linked to FOB Med (free on board
Mediterranean) fuel oil prices. The return on the investment will depend upon
fuel oil prices, the performance of the reservoir and managing, in conjunction
with the Engineering & Construction division, the completion of the central
processing facilities and pipeline.


OUTLOOK


The capital programmes and associated operating expenditure required to address
increasing global energy demand and the depletion of existing production
together with the limited capacity of the oil services industry to support such
programmes should ensure that demand for the group's services remains strong for
the foreseeable future.


The current level of backlog within our Engineering & Construction division
provides particularly strong visibility for current year revenue and we will
continue our focus on project execution to ensure consistent margin delivery. We
believe that we are well positioned to secure further new business, particularly
in regions and on projects which have the potential for long term capital
expenditure.


Our Operations Services division also has good visibility for revenue for the
current and future years and will look to continue its growth both in the UKCS
and internationally, in particular, the contract with Dubai Petroleum
Establishment will make an important contribution to this growth and towards
continued margin expansion.


The integrity management of hydrocarbon facilities is becoming an increasingly
significant challenge for many asset owners. Through our strong engineering and
operational capabilities, in particular within our growing Brownfield activity,
we believe we are well positioned to assist clients extend the life span of
their facilities whilst ensuring the highest standards of operational safety are
met.


Within our Resources division, we expect the investment in Cendor, Malaysia, to
have substantially, if not entirely, recovered its costs during the first half
of the year. During the year ahead, in addition to seeking further opportunities
to expand our investment portfolio, in particular on the energy infrastructure
side, we will be actively progressing our existing development assets, in
particular Chergui, Tunisia, and the greater Don area assets in the UKCS.


The current financial year has started well and, with the group's backlog at
record levels, continuing focus on execution and strong demand for its services,
the Board believes the group is well positioned to continue its growth during
the current year and beyond.



Ayman Asfari
Group Chief Executive



Chief Financial Officer's review

                                      2006         2005
                                      US$m         US$m
Revenue                             1,863.9      1,485.5      up 25.5%
Operating profit(8)                  171.1         88.6       up 93.1%
Operating margin                      9.2%         6.0%
EBITDA                               199.6        115.6       up 72.7%
EBITDA margin                        10.7%         7.8%
Net profit                           121.9         75.4       up 61.7%
Net margin                            6.5%         5.1%
Backlog                              4,173        3,244       up 28.6%


Group revenue increased by 25.5% to US$1,863.9 million (2005: US$1,485.5
million) reflecting strong growth across all three divisions, though the
increase is principally driven by the Engineering & Construction and Operations
Services divisions which contribute 97% of the group's revenue. The revenue
increase in Engineering & Construction was primarily as a result of construction
progress made on contracts awarded in late 2005 and in Operations Services was
primarily due to new contract awards and increased pass-through revenue.


Operating profit increased by 93.1% from US$88.6 million in 2005 to US$171.1
million in 2006, with all three divisions showing growth. Operating margins
increased to 9.2% (2005: 6.0%), reflecting strong growth in margins in
Engineering & Construction, a slight decline in Operations Services due to
increased levels of pass-through revenue, a slight increase in Resources
operating margins and US$6.3 million of one off IPO costs in 2005. The increased
margin in the Engineering & Construction division reflects the stage of
completion, and, therefore, timing of profit recognition, and residual risk
profile of major projects and continuing good execution. Net of pass-through
revenues, the Operations Services division generated an increased operating
margin as a result of additional margins earned on new contracts awarded during
2006. Operating margins were marginally higher in the Resources division due
largely to the commencement of production from the Cendor field in September
2006.


Net profit attributable to the shareholders of Petrofac Limited from the group's
continuing business activities increased by 61.7% to US$121.9 million (2005:
US$75.4 million). The net margin increased to 6.5% (2005: 5.1%) due primarily to
the 3.2% increase in the group's operating margin, net finance income of US$2.2
million (as compared to net finance cost of US$5.3 million in 2005, reflecting a
combination of higher average cash balances held by the group during the year
offset slightly by higher prevailing interest rates on the group's debt),
partially offset by a significant increase in the group's effective tax rate.


EBITDA increased by 72.7% to US$199.6 million (2005: US$115.6 million),
representing 10.7% (2005: 7.8%) of revenue. The increase in the group EBITDA
margin was driven by the Engineering & Construction division's strong
operational performance. This improvement was partly offset by a decrease in
Resources' EBITDA margin brought about by lower than divisional average EBITDA
margin contribution from the Cendor asset.


The significant revenue and EBITDA margin growth achieved in 2006 by the
Engineering & Construction division diluted the proportion of EBITDA contributed
by the Operations Services and Resources divisions relative to 2005. Taken as a
percentage of EBITDA, excluding the effect of corporate costs, consolidation and
elimination adjustments, Engineering & Construction accounted for 63.5% (2005:
51.4%) of group EBITDA, Operations Services 16.5% (2005: 22.2%) and Resources
20.0% (2005: 26.4%).


At the close of 2006, the combined backlog of the Engineering & Construction and
Operations Services divisions was US$4,173 million (2005: US$3,244 million),
representing an increase of 28.6% on the comparative figure at 31 December 2005.
A significant proportion of the Operations Services division backlog is
denominated in Sterling and has therefore benefited from the depreciation of the
US$ against Sterling over the year. On a constant currency basis, group backlog
increased 23.4% compared to 31 December 2005.


Petrofac's functional currency for financial reporting purposes is US dollars.
Although during 2006, there was a significant change in the year-end US$ to
Sterling exchange rates, there was only a marginal change in the average
exchange rate compared to 2005, and therefore the year on year impact of
currency fluctuation on the group's UK trading activities was not significant.
The table below sets out the average and year end exchange rates for US dollar
and Sterling for the years ended 31 December 2006 and 2005 as used by Petrofac
for its financial reporting.



                                           2006                2005
                                                US$ to Sterling
Average rate for the year                  1.85                1.81
Year end rate                              1.96                1.72


Discontinued operations

Net losses from the group's discontinued operation in the US, Petrofac Inc, were
US$1.6 million (2005: US$0.8 million). The loss incurred in the year includes an
impairment provision against the remaining property in Tyler, Texas, and current
and projected costs in relation to the arbitration of a claim against a customer
for the recovery of project-related costs. While the group is confident of a
favourable outcome to the arbitration process, no revenue from the claims which
are subject to arbitration has been recognised to date.


Interest and taxation

Net interest receivable for the year on continuing operations was US$2.2 million
(2005: net interest payable of US$5.3 million). The reduction in net interest
payable was largely attributable to the group's higher average cash balances
during 2006. These arose principally from the significant increase in contract
advance payments from Engineering & Construction division customers and the
impact of strong conversion of earnings into operating cash flows.


Gearing ratio                              2006               2005
                                       US$'000 (unless otherwise stated)

Interest-bearing loans and                117,180            106,870
borrowings (A)
Cash and short term deposits (B)          457,848            208,896
Net cash/(debt) (C = B - A)               340,668            102,026
Total net assets (D)                      324,904            195,127
Gross gearing ratio (A/D)                  36.1%              54.8%
Net gearing ratio (C/D)              Net cash position  Net cash position




Interest cover                             2006               2005
                                       US$'000 (unless otherwise stated)

Operating profit from continuing          
operations (A)                            171,119            88,603
Net interest cost (B)                    n/a - net            5,255
                                         interest
                                        receivable
Interest cover (A/B)                        n/a            16.9 times


An analysis of the income tax charge is set out in note 6 to the financial
statements. The income tax charge on continuing operations as a percentage of
profit before tax in 2006 was 29.6% (2005: 9.5%). The increase in the effective
tax rate for 2006 is largely attributable to the following factors:


   •During 2006, the Engineering & Construction division generated the
    majority of its profits from higher taxable jurisdictions;


   •The Resources division's effective tax rate in 2005 included recognition
    of a deferred tax asset of US$8.9 million in respect of Cendor pre-trading
    losses. Following commencement of production in late 2006, the UK deferred
    tax asset was written down to recognise the future availability of Malaysian
    double tax credits against UK tax, whilst a Malaysian deferred tax asset was
    set up to reflect the anticipated utilisation of carried forward losses
    against Malaysian tax at 38%; this resulted in an overall recognition of a
    further tax credit of US$0.6 million in the period; and


   •The group had unrecognised tax losses of US$1.8 million at 31 December
    2006 (2005: US$1.5 million less utilisation of tax losses of US$3.1
    million).


Adjusting for Cendor tax credits and net tax losses utilised/(unrecognised), the
underlying effective tax rate was 28.9% for 2006 (2005: 22.1%), as set out in
the table below:

                                             2006          2005 (as restated)
                                     US$'000        %      US$'000        %

Reported tax charge                   51,340    29.6%        7,951     9.5%
Tax credit re Cendor PM304               609     0.4%        8,943    10.7%
Net tax losses utilised/             
(unrecognised)                        (1,797)   (1.1%)        1,538     1.9%
                                    -----------------------------------------

                                      50,152    28.9%       18,432    22.1%
                                    ========================================


Earnings per share

Fully diluted earnings per share from continuing operations increased by 57.6%
in 2006 to 35.32 cents per share (2005: 22.41 cents per share, after adjusting
for the 40:1 share split in October 2005), reflecting the group's improved
profitability.


Operating cash flow and liquidity

Net cash flow from continuing operations was US$329.0 million compared with
US$133.0 million in 2005, representing 164.8% of EBITDA (2005: 115.1%). The
increase in net cash inflows was principally as a result of increased operating
profit and a decrease in the utilisation of net working capital. The favourable
net working capital movement arose principally from short-term timing
differences at the year end in respect of the customer billing and supplier
payment positions on long-term engineering and construction contracts and from
the impact of significant cash advances received on certain major engineering
and construction contracts.


The group maintained a broadly comparable level of interest-bearing loans and
borrowings at US$117.2 million (2005: US$106.9 million) on an increased equity
base, resulting in a decrease in the group's gross gearing ratio to 36.1% at 31
December 2006 (2005: 54.8%).


The group's total gross borrowings before associated debt acquisition costs at
the end of 2006 were US$119.0 million (2005: US$108.3 million), of which 38.1%
was denominated in US dollars (2005: 49.5%), 56.0% was denominated in Sterling
(2005: 44.7%) with the majority of the balance, 5.9%, denominated in Kuwaiti
Dinars (2005: 5.8%).


The group maintained a balanced borrowing profile with 22.3% of borrowings
maturing within one year, 40.6% maturing between one and five years and the
remaining 37.1% maturing in more than five years (2005: 28.3%, 56.1% and 15.6%
respectively). The increase in the average duration of borrowings reflects the
renegotiation in December 2006 of the group's facilities with the Royal Bank of
Scotland/Halifax Bank of Scotland. The borrowings repayable within one year
include US$20.4 million of bank overdrafts and revolving credit facilities
(representing 17.2% of total gross borrowings), which are expected to be renewed
during 2007 in the normal course of business (2005: US$15.0 million and 13.8% of
total gross borrowings).


The group's policy is to hedge between 60% and 80% of variable interest rate
loans and borrowings. At 31 December 2006, 64.8% of the group's term
interest-bearing loans and borrowings were hedged (2005: 84.7%). An analysis of
the derivative instruments used by the group to hedge this exposure and an
analysis of the group's risk management objectives and policies is contained in
note 32 to the financial statements.


With the exception of Petrofac International Ltd, which undertakes the majority
of Petrofac's lump-sum EPC contracts and which, under its existing banking
covenants, is restricted from making upstream cash payments in excess of 70% of
its net profit in any one year, 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.


Capital expenditure

Capital expenditure on property, plant and equipment during 2006 was US$59.4
million (2005: US$17.6 million). The main elements were the purchase of freehold
land and other capital expenditure in relation to the construction of the
group's new office building in Sharjah, UAE, amounting to US$15.0 million and
US$17.6 million of development expenditure on Resources' oil & gas assets. Other
capital expenditure included the cost of plant, equipment and office furniture
to support the growth in the Engineering & Construction and Operations Services
divisions.


Capital expenditure on intangible oil & gas assets totalled US$12.9 million
(2005: US$4.8 million), principally in relation to the Crawford and Don
Southwest acquisitions.


Shareholders' funds

Total equity increased from US$195.1 million at 31 December 2005 to US$324.9
million at 31 December 2006. The primary elements of the increase were the
retained profits for the year of US$105.7 million, the favourable movement in
the group's unrealised position on derivative instruments and foreign currency
translation of US$30.4 million, partially offset by the cost of additional
treasury shares purchased by the Company in relation to employee share schemes
of US$8.1 million.


Return on capital employed (ROCE)

The group's ROCE for 2006 was 47.5% (2005: 32.5%). The increase reflects the
increased profitability of the group, albeit on an expanding capital base as the
group continues to grow.


Keith Roberts
Chief Financial Officer



End notes:


(1) EBITDA means earnings before interest, tax, depreciation and
amortisation and is calculated as profit from continuing operations before tax
and finance costs adjusted to add back charges for depreciation, amortisation
and impairment losses (as set out in note 3 to the financial statements).


(2) Net profit (for the group) means profit for the year from continuing
operations attributable to Petrofac Limited shareholders.


(3) Backlog consists of the estimated revenue attributable to the
uncompleted portion of lump sum 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 life of field
facilities management contracts, five years. To the extent work advances on
these contracts, revenue is recognised and removed from the backlog. Where
contracts extend beyond five years, the backlog relating thereto is added to the
backlog on a rolling monthly basis. Backlog includes only the revenue
attributable to signed contracts for which all pre-conditions to entry have been
met and only the proportionate share of joint venture contracts that is
attributable to Petrofac. Backlog does not include any revenue expected to arise
from contracts where the client has no commitment to draw upon services from
Petrofac. Backlog is not an audited measure. Other companies in the oil and gas
industry may calculate these measures differently.


(4) Return on capital employed is defined as the ratio of earnings before
interest, income tax and amortisation (i.e. operating profit plus goodwill and
other amortisation and impairment losses) (EBITA) and average capital employed,
being average total assets employed less average total current liabilities.


(5) The group reports its financial results is US dollars and, accordingly,
will declare any dividends in US dollars together with a Sterling equivalent.
Unless shareholders have made valid elections to the contrary, they will receive
any dividends payable in Sterling. Conversion of the 2006 final dividend from US
dollars into Sterling is based upon an exchange rate of US$1.9481:£1, being the
Bank of England Sterling spot rate as at midday on 2 March 2007.


(6) Includes agency and contract staff but exclude employees of joint
ventures.


(7) Pass-through revenue refers to the revenue recognised from low or
zero-margin third-party procurement services provided to customers.


(8) Operating profit means profit from continuing operations before tax and
finance costs.



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