The successful refinancing of all near-term maturities, through the Refinancing Plan, will reinforce Petrofac's balance sheet and liquidity position enabling it to be at an optimal position to benefit from the expected market recovery. The Company has introduced multiple cost-reduction measures to reduce overhead and project support costs, while preserving core capabilities. The Company is on track to deliver more than USUSD250 million cost savings relative to pre-pandemic levels. 7. Reinforced compliance structure

The Group's commitment to the highest level of ethical and effective governance is supported by a culture of integrity, transparency, and trust. The Group's compliance framework utilises a three lines of defence approach, with each line forming a feedback loop that informs improvement: leadership & people, processes & controls, and assurance. There is a strong alignment between management incentives and ESG performance metrics, with ESG performance metrics making up on average 40% of senior leadership incentives. Over the last several years, the Group has strengthened its cultural focus on ethical conduct, supported by a well-developed, independently-audited compliance and governance regime committed to best-in-class compliance systems and practices. MSCI's ESG ratings upgraded the Group to "AA" in March 2021, denoting industry leadership, with the Group's "robust business ethics policies driving the upgrade" and rating the Group's business ethics policies "strong" relative to peers, its corporate governance practices as "leading those of peers" and highlighting improvement since 2020.

The Company has established a Board Compliance & Ethics Committees which oversees and upholds implementation of principles and rules relating to compliance and ethics and provide assurance to Petrofac's shareholders that policies and standards are both adequate and effective.

The changes implemented have led to the creation of a highly qualified compliance leadership team based in Sharjah, including new Group General Counsel, Chief Compliance Officer and Investigations Director and dedicated officers in major operating hubs.

Furthermore, the Company has made significant investments in new technologies with new confidential reporting tools and externally hosted due diligence screening tools and has established an independent compliance investigations team.

The Company's implementation of an independent review and subsequent regular audit process reporting directly to the Compliance & Ethics Committee adds additional layers to and further strengthened its compliance structure.

A revised Code of Conduct was launched in January 2020, with mandatory eLearning training for employees and third parties who work with the Group to ensure that expected standards and behaviours are understood and enacted.

With the new compliance structure implemented, Petrofac has established a Zero tolerance approach to Code of Conduct breaches, retaliation, victimisation and bullying and harassment. 8. Reinvigorated management team with demonstrable expertise

The appointment of a new CEO, Sami Iskander, with more than 30-years of international experience in both oilfield services and upstream exploration and production companies immensely strengthens the Company's leadership. Sami is supported by a new CFO, Afonso Reis e Sousa, with almost a decade at Petrofac, in a number of roles including most recently as Group Treasurer and Head of Tax, Insurance and Risk. The new leadership team has a wealth of experience in the sector and is well positioned to lead the transformation of the Company and has established clear values to underpin the Group's purpose and societal licence to operate, which govern how Petrofac functions. Clearly defined behavioural expectations set by the Petrofac Board for those that work for and with the Group support a culture of superior performance coupled with high standards of ethical business conduct.

3.3 Strategy

As announced in April 2021 at its full year results, the Group's strategy is underpinned by three overarching objectives: best-in-class delivery, returning to growth and generating superior returns.

Best-in-class delivery

Best-in-class delivery requires an optimal execution structure supported by technology, lean, efficient processes, and local, customer-focused delivery to a global standard where quality and value are independently assured, and risks mitigated.

Simplify the organisation

Petrofac is simplifying its organisation, creating a streamlined structure supported by technology and efficient processes. This includes the establishment of a collaborative technical organisation 1tec, which brings together the Group's technical experts in a series of "Functions" such as proposals, engineering, supply chain and quality assurance, to ensure that best practices are developed and shared effectively across the Group and that Petrofac's teams across the globe deliver world class performance in every location.

This efficient and digitally enabled organisation is also expected to further enhance the Group's cost competitiveness, leaving it well positioned to rebuild its Backlog when the market recovers and to consistently deliver premium margins for shareholders.

Global capability, location execution

The enhanced organisational structure, with 1tec as its backbone, will aim to ensure that projects are executed to one global standard in all countries in which Petrofac operates, via a local, customer focused delivery system. This local delivery model is expected to bring the Group closer to its customers and deepen Petrofac's understanding of the markets in which it operates, which will further de-risk execution and enhance profitability.

At the same time, Petrofac will continue to maximise in-country value (measured by the value of local expenditure on goods and services), a source of competitive advantage, by investing in new local leadership with the mandate to build strong and resilient businesses, underpinned by supply chains, in key markets. For reference, Petrofac's in-country-value expenditure in 2020 was 53% on non-joint venture projects and significantly higher in certain core geographies. When submitting bids for new work, in-country-value is a key metric evaluated by customers and Petrofac's success rate in winning tenders confirms that it is a market leader on this front.

Digitally enabled

Petrofac has invested, and continues to invest, heavily in its digital capability which, coupled with technical expertise, enhances productivity and provides optimal solutions to customers while driving greater consistency and cost reduction across portfolios.

For example, in December 2020, Petrofac's work to digitalise its operations and maintenance delivery was recognised with a prestigious award from Oil & Gas UK, the leading representative body for the offshore energy industry in the UK. Combining digital twin and mobile technologies with the Group's proprietary software, BuildMETM, Petrofac has digitalised its inspection processes. Proven across more than 4,000 North Sea inspections, the approach has driven a 200% improvement in productivity.

The Group has also made significant investments in its internal systems to increase automation and drive efficiency. These investments have already improved the Group's productivity, and will be an important lever in maximising the Group's cost competitiveness when pursuing future contract awards.

Strategic partnerships

Petrofac has a number of successful strategic partners, which allow customers to benefit from combined expertise as well as delivering higher in country-value.

In NES, Petrofac is forming strategic partnerships with both developers and technology providers. These customer-centric relationships not only facilitate the development of projects now, but also enhance the Group's ability to pursue future opportunities.

For example, Petrofac has formed a global technical delivery alliance ("TDA") with Storegga, which has the potential to be the first industrial-scale carbon capture and storage project in the UK. The TDA combines Petrofac's world class engineering, project delivery and operational expertise with Storegga's project development capability, supporting fast-track delivery of critical net zero infrastructure both in the UK and internationally.

Technology neutral

In addition, as a technology-neutral service provider, Petrofac will continue to leverage its subject matter experts to offer optimal bespoke solutions to customers, without being limited by the need to deploy any particular in-house technologies.

This not only enables the Group to provide optimal solutions to its customers, but it also maximises the market opportunities available to Petrofac. This is particularly relevant for the new energies segment where there is a wide array of new technologies, each of which is limited to specific niches within particular sub-sectors. For instance, the Group estimates that there are around 1,000 large industrial sites suitable for carbon capture in Europe alone, which will all require bespoke solutions to suit each producer's exhaust volumes, CO2 gas percentage, and the physical layout of its facilities. A wide range of technologies will be required to provide solutions across this heterogeneous opportunity set, and Petrofac's technology-neutral approach ensures that it can serve the entirety of this market.

Return to growth

Petrofac's focus on return to growth will be supported by improving customer centricity, becoming closer to both existing and new customers to drive growth in core markets, pursue growth opportunities in selective new markets, and accelerate the Group's expansion into new energies.

Customer-centric approach

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October 26, 2021 02:27 ET (06:27 GMT)