PETROFAC LD — Interim / Quarterly Report 2011

Jun 30, 2011

Interim report 2011

...but the journey is just beginning

Contents

• 2 Group financial highlights

• 4 Business review

• 15 Interim condensed consolidated income statement

• 16 Interim condensed consolidated statement of comprehensive income

• 17 Interim condensed consolidated 22 Notes to the interim condensed statement of financial position consolidated financial statements

• 31 Statement of directors’

• 18 Interim condensed consolidated cash flow statement

• responsibilities

• 20 Interim condensed consolidated statement of changes in equity

• 32 Independent review report to Petrofac Limited

• 33 Shareholder information

In 2011, Petrofac turned 30. In three decades we have grown from a Texas-based producer of modular plant to a leading FTSE 100 company, with more than 14,500 people in 27 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.

2 Petrofac Interim report 2011

Group financial highlights

For the six months ended 30 June 2011

Revenue

US$2,711m 30 June 2010 restated[1] : US$2,166m

+25.2%

Net profit[2, 3] US$246.3m 30 June 2010 restated[1] : US$231.0m

+6.6%

Backlog[4]

US$11,368m 31 December 2010: US$11,699m

-2.8%

1 See note 2 to the financial statements for details of the restatement 2 Net profit for the period attributable to Petrofac Limited shareholders.

• 3 Excluding the gain on the EnQuest demerger in April 2010.

EBITDA[3]

US$332.0m 30 June 2010 restated[1] : US$349.7m

-5.1%

Earnings per share (diluted)[3]

71.84 cents per share 30 June 2010 restated[1] : 67.31[3] cents per share +6.7%

Interim dividend[5]

17.40 cents

30 June 2010: 13.80 cents

+26.1%

• 4 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. The group uses this key performance indicator as a measure of the visibility of future earnings. Backlog is not an audited measure.

3 Petrofac Interim report 2011

Group financial highlights

Revenue

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2,711
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US$ millions
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4,354
3,330 [3,655]
2,711
2,440
2,166
07 08 09 10 1H10 1H11
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Net profit[2, 3]

246

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US$ millions
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433
353
265 231 246
189
07 08 09 10 1H10 1H11
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Backlog[4]

11,368

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US$ millions
11,699 11,368
8,071
4,441
3,997
07 08 09 10 1H11
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EBITDA[3]

332

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US$ millions
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634
550
419
301 350 332
07 08 09 10 1H10 1H11
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Earnings per share (diluted)[3]

71.84

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Cents per share
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126.09
103.19
77.11 67.31 [71.84]
54.61
07 08 09 10 1H10 1H11
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Interim dividend[5]

17.40

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Cents per share
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17.40
13.80
10.70
7.50
4.90
1H07 1H08 1H09 1H10 1H11
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• 5 The group reports its financial results in 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 2011 interim dividend from US dollars into Sterling is based upon an exchange rate of US$1.6510:£1, being the Bank of England Sterling spot rate as at midday on 19 August 2011.

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Business review

Results

We are pleased to report that the group has had a successful first half of 2011, with an order intake of US$2.2 billion, including new awards in Algeria, Malaysia and Iraq. We continue to deliver good operational performance across our portfolio of projects and we expect to deliver like-for-like[1] net profit growth in 2011 of at least 15% and in line with current market expectations[2] .

In the six months ended 30 June 2011, revenue increased by 25.2% to US$2,711.1 million (2010 restated[3] : US$2,165.8 million) due to high activity levels following recent awards, particularly in the Engineering & Construction and Offshore Engineering & Operations reporting segments.

Net profit attributable to Petrofac Limited shareholders, excluding the gain on the EnQuest demerger in the corresponding period in 2010, increased 6.6% to US$246.3 million (2010 restated[3] : US$231.0 million). The increase in net profit was lower than the increase in revenue predominantly as a result of the timing of profit recognition. We have recognised revenue on a number of early stage projects, particularly in Engineering & Construction, where we have not yet reached the progress threshold for recognising profit. In addition, the net margin in the first half of 2010 benefited from the first-time recognition of profit on a number of Engineering & Construction contracts awarded in 2009.

EBITDA, excluding the gain on the EnQuest demerger, was lower at US$332.0 million (2010 restated: US$349.7 million) following the demerger of the high EBITDA margin Don assets in April 2010.

The group’s net cash increased to US$1,768.0 million over the six months to 30 June 2011 (31 December 2010: US$975.3 million) as the net result of:

• operating profits before working capital and other non-current changes of US$361 million

• net working capital inflows of US$906 million, including an increase in advances received from customers of US$976 million (including receipt of an advance payment in January 2011 in relation to the South Yoloten project in Turkmenistan) and a reduction in work in progress of US$247 million

• investing activities of US$218 million, including investment of a further US$50 million (of an agreed US$75 million) in Seven Energy (see note 11 for details), US$99 million for the purchase and upgrade of three floating production, storage and offloading (FPSO) vessels (see note 9 for details: note 9 includes an accrual for US$37 million in addition to the cash outflow) and US$16 million for deferred consideration in relation to an acquisition

• financing activities, in particular, payment of the 2010 final dividend of US$101 million and financing the purchase of treasury shares for US$47 million for the purpose of making awards under the group’s share schemes

• taxes paid of US$98 million

	Net cash(US$ million)	30 June 2011	31 December 2010	30 June 2010
	Cash and short-term
	deposits	1,848.2	1,063.0	1,074.8
	Interest-bearing loans and borrowings Net cash	(80.2) 1,768.0	(87.7) 975.3	(114.2) 960.6

Net finance income for the period was US$1.8 million (2010: US$0.5 million) due to higher average net cash balances being held over the first half of the year.

The tax charge for the six months ended 30 June 2011 of US$53.1 million (2010 restated: US$61.2 million) represents an effective tax rate, excluding the gain from the EnQuest demerger, of 17.7% (six months ended 30 June 2010 restated: 21.0%; year ended 31 December 2010: 20.3%). The reduction in the group’s effective tax rate is largely as a result of differences in the timing of profit recognition on Engineering & Construction contracts between the first and second half of 2011. The effective tax rate for the group for the year to 31 December 2011 is expected to be 21.7%.

• 1 Like-for-like net profit growth excludes the gain of US$124.9 million on the EnQuest demerger and the trading net profit from Energy Developments’ demerged assets of US$2.1 million for the year ended 31 December 2010.

• 2 The current market expectations for Petrofac’s net profit for the year ending 31 December 2011 are based on forecasts provided to Petrofac by 21 equity analysts since publication of the group’s 2010 Final Results in March 2011. The average of those forecasts is US$514 million.

• 3 See note 2 to the financial statements for details of the restatement. Prior to restatement, revenue and net profit for the six months ended 30 June 2010 (on the same basis as above) were US$2,130.6 million and US$206.3 million, respectively.

5 Petrofac Interim report 2011

Business review

Diluted earnings per share, excluding the gain on the EnQuest demerger, for the six months ended 30 June 2011 increased by 6.7% to 71.84 cents per share (2010 restated: 67.31 cents per share) in line with the growth in net profit.

The group’s combined backlog was US$11.4 billion at 30 June 2011 (31 December 2010: US$11.7 billion), maintaining our outstanding revenue visibility for the remainder of 2011 and beyond.

At 30 June 2011, the group had more than 14,500 employees (including long-term contractors), compared to around 13,900 at 31 December 2010. An increase in headcount in Engineering & Construction and Engineering Services to support high levels of activity more than offset a net

reduction in Offshore Engineering & Operations following completion of a long-term maintenance services contract.

Dividend

The Board has declared an interim dividend of 17.40 cents per share (2010: 13.80 cents), an increase of 26.1%, which will be paid on 21 October 2011 to eligible shareholders on the register at 23 September 2011. Shareholders who have not elected to receive dividends in US dollars will receive a Sterling equivalent of 10.54 pence per share. The Board will set the total dividends payable for the year to 31 December 2011 according to the group’s earnings and expects to distribute approximately 35% of full year post tax profits by way of dividend, in accordance with the group’s dividend policy.

Segmental review

The group reports the financial results of its seven business units under four reporting segments:

Business unit	Reporting segment
Engineering & Construction	• Engineering & Construction
Engineering & Construction Ventures
Offshore Engineering & Operations	• Offshore Engineering & Operations
Engineering Services	• Engineering, Training Services and
Training Services	Production Solutions
Production Solutions
Energy Developments	• Energy Developments

We present below an update on each of the group’s reporting segments:

US$ millions For the six months ended 30 June	Revenue 2011 20104	Operating proft1,3 2011 20104	Netproft2,3 2011 20104	EBITDA3
				2011 20104
Engineering& Construction	1,903.7 1,622.7	235.8 242.7	205.9 206.5	248.5 259.8
Offshore Engineering& Operations	581.0 327.2	39.2 5.8	31.8 4.0	41.3 7.0
Engineering, Training Services and Production Solutions	193.5 161.5	14.2 13.6	13.1 13.0	18.1 21.5
EnergyDevelopments	159.7 106.3	23.2 37.1	7.7 17.5	38.2 69.8
Corporate,consolidation and elimination	(126.8) (51.9)	(13.9) (8.3)	(12.2) (10.0)	(14.1) (8.4)
Group	2,711.1 2,165.8	298.5 290.9	246.3 231.0	332.0 349.7
Growth/margin analysis % For the six months ended 30 June	Revenuegrowth 2011 20104	Operatingmargin 2011 20104	Net margin 2011 20104	EBITDA margin
				2011 20104
Engineering& Construction	17.3 53.0	12.4 15.0	10.8 12.7	13.1 16.0
Offshore Engineering& Operations	77.6 10.9	6.8 1.8	5.5 1.2	7.1 2.1
Engineering, Training Services and Production Solutions	19.8 (12.2)	7.4 8.4	6.8 8.1	9.4 13.3
EnergyDevelopments	50.3 29.3	14.5 34.9	4.8 16.5	23.9 65.7
Group	25.2 36.5	11.0 13.4	9.1 10.7	12.2 16.1

• 1 Profit from operations before tax and finance costs.

2 Profit for the year attributable to Petrofac Limited shareholders.

3 Excludes gain on the EnQuest demerger.

4 As restated. See note 2 to the financial statements for details of the restatements.

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Business review continued

Engineering & Construction

The Engineering & Construction reporting segment includes the group’s Engineering & Construction business unit and Engineering & Construction Ventures, which was established to replicate the success of the Engineering & Construction business in new markets, such as Abu Dhabi, Saudi Arabia and Turkmenistan. Engineering & Construction undertakes engineering, procurement and construction (EPC) projects predominantly on a lump-sum basis, with a typical duration of two to four years, and is focused on markets in the Middle East and Africa and the Commonwealth of Independent States, particularly the Caspian region.

We have continued our good operational performance across our portfolio of projects over the first half of the year, including the completion of the Jihar gas plant in Syria and the In Salah Gas compression facilities and power generation in Algeria. We have made substantial progress on the Asab field development and the GASCO natural gas liquids train in Abu Dhabi, the El Merk central processing facility in Algeria, the gas sweetening facilities for Qatar Petroleum and the fuel gas and gas oil pipelines project in Kuwait. In Malaysia, we remain on course to deliver first oil around the end of the year on the SEPAT development for PETRONAS. We are making good progress on the South Yoloten development, in Turkmenistan, having substantially completed construction of the temporary facilities and early works and placed the majority of orders for procurement items.

New awards

In Salah Gas southern fields, Algeria

In January 2011, we were awarded a US$1.2 billion lump-sum EPC contract by In Salah Gas, an association between Sonatrach, BP and Statoil, to develop southern fields in the In Salah development. The 50-month project, to be completed in phases, will support the maintenance of plateau gas production rates of 9 billion cubic metres per annum beyond 2013. As noted above, we recently completed the compression facilities and power generation project for the same customer with success, and believe this new award reflects our dedication to this strategically important market

where we maintain excellent relationships with both our customers and local construction partners.

Majnoon early production facility, Iraq

In March 2011, we announced the award of our first contract in Iraq, a US$240 million engineering, procurement and construction management project with Shell. The Majnoon field in southern Iraq is one of Iraq’s largest developments and we are delighted to be working with Shell to assist them with unlocking the field’s potential. We are providing engineering, procurement, fabrication and construction management services for the development of a new early production system comprising two trains each with capacity for 50,000 barrels of oil per day, along with upgrading of existing brownfield facilities. Work on the project began in mid-2010 and is expected to complete during the fourth quarter of 2012.

Results

Revenue for the first half of the year increased by 17.3% to US$1,903.7 million (2010 restated: US$1,622.7 million), reflecting a substantial increase in activity levels, particularly on the Asab field development in Abu Dhabi and the second phase of the South Yoloten project in Turkmenistan.

Net profit was US$205.9 million (2010 restated: US$206.5 million), representing a net margin of 10.8% (2010 restated: 12.7%). The lower net margin reflects the dilutive effects of the recognition of revenue on some early stage contracts, particularly the South Yoloten project, where we have not yet reached the progress threshold for recognising profit. In addition, the net margin in the first half of 2010 benefited from the first-time recognition of profit on a number of contracts awarded in 2009.

During the first half, Engineering & Construction headcount increased from 5,400 to 6,200, reflecting the increase in activity levels. In addition, our engineering offices in Mumbai, Chennai and Delhi are reported within our Engineering, Training Services and Productions Solutions reporting segment, but principally support our Engineering & Construction activities. Including these offices, our Engineering & Construction headcount stood at 7,800 at 30 June 2011 (December 2010: 7,000).

At 30 June 2011, the Engineering & Construction backlog stood at US$8.7 billion (31 December 2010: US$9.0 billion), maintaining our outstanding revenue visibility for the remainder of 2011 and beyond.

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Business review

Offshore Engineering & Operations

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. Offshore Engineering & Operations’ activities are primarily in the UK Continental Shelf (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 production and maintenance contracts are long-term (typically three to five years) and in the case of the provision of Duty Holder services[1] are generally open-ended. Increasingly, we are looking to deliver our engineering and construction services on a lump-sum basis, with the Laggan Tormore gas plant on Shetland, which was awarded in October last year, being the first major predominantly lump-sum project undertaken by Offshore Engineering & Operations.

We have secured a number of contract extensions and new awards in recent months, including, more recently, a contract to provide maintenance services on the Rumaila oilfield in Iraq and an operations contract for the FPF3 FPSO (formerly the Jasmine Venture) in Thailand (see Energy Developments section on page 9). We are experiencing high activity levels across the business, including significant activity on the SEPAT development and upgrade and life extension works on the FPSO Berantai (formerly the East Fortune) in Malaysia (both projects are being undertaken jointly with Engineering & Construction). We have made good progress on the awards secured in the second half of 2010, including the Duty Holder contract for the Sajaa gas plant in the UAE and the Laggan Tormore gas plant on Shetland.

Results

Reported revenue for the period increased by 77.6% to US$581.0 million (2010: US$327.2 million) and revenue excluding ‘pass-through’ revenue[2] increased by 98.3% to US$483.4 million (2010: US$243.8 million), reflecting high activity levels across the business, particularly on the SEPAT development and the FPSO Berantai in Malaysia, the Sajaa gas plant Duty Holder contract in Sharjah, the Laggan Tormore gas plant on Shetland and the

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 Department of Energy and Climate Change.

Apache engineering and construction contract in the UKCS. Around two-thirds of Offshore

Engineering & Operations’ revenue was generated in the UKCS and those revenues are generally denominated in Sterling. The average US dollar to Sterling exchange rate for the first half of 2011 was around 7% higher than the corresponding period in 2010, which made a marginal contribution to the reported revenue growth.

Financial reporting exchange rates

		Six months		Six months
	US$/Sterling	ended 30 June 2011	Year ended 31 December 2010	ended 30 June 2010
	Average rate forperiod	1.62	1.54	1.52
	Period-end rate	1.60	1.56	1.50

Net profit increased by 703.5% to US$31.8 million (2010: US$4.0 million), reflecting the significant increase in activity levels, particularly on the SEPAT development and the FPSO Berantai, and a provision release following completion of a long-term services maintenance contract.

At 30 June 2011, headcount stood at 4,200 (December 2010: 4,400) as the increase in headcount due to new projects was more than offset by the completion of the long-term maintenance services contract.

Offshore Engineering & Operations backlog remained steady over the period at US$2.4 billion (31 December 2010: US$2.4 billion).

Engineering, Training Services and Production Solutions

The Engineering Services, Training Services and Production Solutions business units are reported together within this segment. Engineering Services and Training Services provide services predominantly on a reimbursable basis. Production Solutions offers customers access to a wide range of services to help them improve production, profitability, operational efficiency, asset integrity and the recovery of marginal reserves. In addition to providing these specialist services on a stand-alone basis, we provide integrated solutions for resource holders, such as on the Ticleni Production Enhancement Contract (PEC) for Petrom in Romania.

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

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Business review continued

Engineering Services continues to support front end engineering and design (FEED) work and early engineering on projects across the group, predominantly in Engineering & Construction and Energy Developments. We have recently opened a third Indian office, in Delhi, to help support the growth in activity levels across the group. We expect the Delhi office to grow to around 100 by the end of the year, which would take the total complement of our Indian engineering offices to around 1,800.

In Training Services, year to date delegate numbers have grown strongly compared to the same period in 2010. The first half of the year saw the first graduates from our recently opened training facility at Hassi Messaoud in Algeria. Supporting the development of local workforces remains a core part of our strategy and we are actively considering establishing training centres in other important markets for the group, including Iraq and Turkmenistan, and aim to develop strategic partnerships with resource holders in our key markets. In July, we signed a memorandum of understanding (MOU) with PETRONAS to collaborate in the area of competency development, capability building and education activities. This will involve a technical training partnership with Institut Teknologi Petroleum PETRONAS (INSTEP) to develop competency-based training for operations and maintenance personnel, as well as lecture and seminar programmes with the Universiti Teknologi PETRONAS.

In Production Solutions, we have made good progress to date on the Ticleni PEC, not only arresting the decline, but improving production through optimising pump settings, working over wells and, more recently, bringing back on-stream the first five of many shut-in wells. We have recently commenced a pilot water flood programme, the results of which are expected around the end of the year. In Nigeria, we continue to assist Seven Energy with development of their oil & gas assets and at 30 June 2011, 70% of our warrants had vested after reaching agreed milestones. We recently agreed to increase our interest in the company up to 24.5%[1] and, consequently, we are now accounting for Seven Energy as an associate (see note 11 to the

financial statements for more detail). In August, we were declared selected bidder for two PECs in Mexico for the Magallanes and Santuario blocks. We expect to sign the contracts, which will run for 25 years, on 18 October 2011 and we will take responsibility for field operations after an initial three-month transition period.

Results

Reported revenue for the period increased 19.8% to US$193.5 million (2010: US$161.5 million) and revenue excluding ‘pass-through’ revenue increased 20.1% to US$179.9 million (2010: US$149.8 million), due to an increase in activity in Engineering Services in support of Engineering & Construction and Energy Developments projects, particularly Berantai in Malaysia, and strong growth in the number of delegates in Training Services.

Net profit was broadly unchanged at US$13.1 million (2010: US$13.0 million), with an increase in net profit in Engineering Services and Training Services due to higher activity levels, largely offset by a reduction in profit in Production Solutions, where profit in relation to the vesting of Seven Energy warrants was more than offset by the change in scope of the Dubai Petroleum contract which took effect in October 2010 and early mobilisation and set-up costs on the Ticleni PEC in Romania.

At 30 June 2011, headcount had increased to 3,600 (31 December 2010: 3,400), predominantly due to growth in our Engineering Services offices in the UK and India.

Backlog for the Engineering, Training Services and Production Solutions reporting segment remained approximately US$0.3 billion at 30 June 2011 (31 December 2010: US$0.3 billion).

Energy Developments

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.

In late January 2011, we secured our first Risk Service Contract (RSC) in Malaysia, for the development of the Berantai field. We have a 50% interest in the RSC, alongside local partners

1 On a fully diluted basis assuming the full conversion of all convertible securities and exercise of all outstanding warrants and options.

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Business review

Kencana and Sapura, each of whom hold a 25% interest (together 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. As part of the fast-track development, a wellhead platform will be installed to support the drilling of 18 wells, with a second wellhead platform expected to be installed in a subsequent phase. Both platforms will be connected to the FPSO Berantai, which is being upgraded in Singapore, with support from Engineering & Construction and Offshore Engineering & Operations. Produced gas will be exported by subsea pipeline via the Angsi Field, while oil will be offloaded via shuttle tanker. The FPSO Berantai is expected to mobilise to the field in early 2012, with first gas from the field expected shortly thereafter.

Pre-investing in field infrastructure in readiness for future developments is part of our strategy to deliver fast-track development solutions for resource holders. In June, we acquired a high specification FPSO from Chevron, following its recent release from the Woodside-operated Cossack Wanaea fields in Australia. This unit, renamed the FPF4 (formerly the Cossack Pioneer), has substantial oil & gas processing capability and we are reviewing deployment opportunities with resource holders that require a combination of fast-track field development and floating production capability. Also in June, we acquired the FPF3 (formerly the Jasmine Venture) from field operator Pearl Energy. The FPF3 is currently deployed on the Jasmine field in the Gulf of Thailand, and is leased to Pearl Energy, a subsidiary of Mubadala Energy, for a minimum term of three years, with options to extend for a further three years. The transaction reflects our strong ongoing relationship with Mubadala, our partner in Petrofac Emirates. We are also providing operations and maintenance services for the FPF3 through Offshore Engineering & Operations. As both owner of the FPSO and its service provider, we can support Pearl’s current requirements, while working with them to identify potential areas for further support on this and future projects in the Gulf of Thailand. The combined cost of these two vessels was approximately US$70 million.

As anticipated, oil production from the first phase of Cendor, offshore Peninsular Malaysia, was lower in the first half of the year at 10,300 barrels per day (bpd) (2010: 14,300 bpd) due to natural field decline. We intend to install gas lift facilities during the second half to stabilise production levels. In July, we announced that we had signed an MOU with

PETRONAS to accelerate the development of the West Desaru fault block by introducing an early production system which will involve both utilising current export facilities and also upgrading and deploying a Mobile Offshore Production Unit (MOPU). This approach is expected to bring forward first oil from West Desaru into the fourth quarter of 2012. The second phase development of the Cendor fault block, also in Block PM304, is expected to start up in the second quarter of 2013, bringing the overall production capacity of Block PM304 to around 60,000 bpd.

Normal production from the Chergui gas plant has been strong during the first half, offsetting the impact of several short shut-ins following the political changes in Tunisia earlier in the year. Production averaged 25.8 million standard cubic feet per day (mmscfd) of gas during the period (2010: 27.0 mmscfd).

The Ohanet RSC in Algeria, which is due to finish in October this year, and the 10,000 bpd capacity KPC refinery in Kyrgyzstan continue to perform in line with expectations.

Results

Revenue for the period increased 50.3% to US$159.7 million (2010: US$106.3 million) due to the commencement of the Berantai RSC, partially offset by the demerger of the Don assets in April 2010. Excluding the current period revenue contribution from Berantai and the prior period contribution from the Don assets, revenue was 12.5% lower than in the corresponding period in 2010 due to lower production levels on Cendor, partially offset by higher average oil prices[1] .

No profit was recognised on the Berantai RSC during the first half of the year, as the project is in its early stages. Notwithstanding higher average oil prices, net profit was lower at US$7.7 million (2010: US$17.5 million), due to a lower contribution from Cendor due to lower production and the demerger of the Don assets.

Headcount was broadly flat over the first six months of the year at 600 (31 December 2010: 600).

1 Brent, a benchmark crude, averaged US$111 per barrel for the six months ended 30 June 2011, compared to US$77 per barrel for the corresponding period in 2010. Energy Developments’ policy is to hedge 75% of forecast production on a rolling 12-month basis for those assets that have achieved steady-state production. At 30 June 2011, a series of commodity price collars and swaps were outstanding in relation to the Cendor and Chergui assets.

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Summary of Energy Developments’ current projects

Project/asset	Country Type of asset Customer
Risk Service Contracts / Infrastructure
Berantai RSC	Malaysia Oil & gas feld PETRONAS
Supporting infrastructure:
FPSO Berantai (formerly East
Fortune)
Ohanet RSC	Algeria Gas Field Sonatrach
FPF1	Undeployed Floating production facility n/a - undeployed
FPF3	Thailand FPSO Pearl Energy
(previously Jasmine Venture)
FPF4	Undeployed FPSO n/a - undeployed
(previously Cossack Pioneer)
KPC refnery	Kyrgyzstan Refnery Kyrgyzneftgaz
Goldeneye	United Kingdom CO2 storage facility n/a - development stage
Gateway	United Kingdom Gas storage facility n/a - development stage
Production Sharing Contracts / Concessions
Block PM304:	Malaysia Oil feld PETRONAS
Cendor phase 1&2
West Desaru
Supporting infrastructure on West
Desaru:
MOPU to be confrmed
Chergui	Tunisia Gas feld ETAP

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Business review

Date of frst investment	Partners Interest Licence Operator
January 2011	Petrofac 50% Petrofac
March 2011	Kencana Sapura 25% 25% Kencana Sapura Petrofac Proceeding with participation of partners in proportion to RSC interest 100% n/a
July 2000	BHP Billiton Japan Ohanet Oil & Gas Woodside Energy Petrofac 45% 30% 15% 10% BHP Billiton
July 2009	None 100% n/a
June 2011	None 100% n/a
June 2011	None 100% n/a
January 2004	Petrofac Kyrgyzneftgaz 50% 50% Petrofac
October 2010	Petrofac Shell 50% 50% Shell
December 2010	Petrofac Various 20% 80% Petrofac
May 2004	Petrofac 30% Petrofac
Not yet fnalised	PETRONAS KUFPEC PetroVietnam 30% 25% 15% Petrofac 100% (tbc) n/a
February 2007	ETAP Petrofac 55% 45% ETAP

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Business review continued

Key risks and uncertainties

Those key risks and uncertainties that could lead to a significant loss of reputation or that could prevent us from executing our strategy and creating shareholder value are summarised below. Our approach to managing and mitigating these risks is as described on pages 30 to 35 of the group’s Annual report and accounts 2010, as is an explanation of our risk management systems and procedures:

Industry risk	Description
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.
Oil & gas commodity prices	Long-term 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 fnancial performance of Energy Developments
	is more leveraged to the price of oil & gas through
	its co-investment in upstream oil & gas assets, and its fnancial result may be impacted.
Availability of essential executive or project staff	The availability of skilled personnel remains one of the most signifcant challenges facing the oil & gas
	industry.

13 Petrofac Interim report 2011

Business review

Country risk	Description
Security	We operate in a number of countries where the security risk is signifcant.
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 access to
	systems and data.
Exchange rates	Signifcant movements in exchange rates could impact our fnancial performance.
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.
Breach of legal or regulatory code	We recognise the potential fnancial and
	reputational risk that could result from a breach
	of local or international laws, particularly in respect
	of behaviour relating to bribery and corruption.
Political risk	We are exposed to potential regime change and
	civil unrest that could affect our operations.
Project risk	Description
Contract performance	Our fnancial performance could be materially
	affected by the performance of a relatively small
	number of large contracts, particularly those which
	are lump-sum. Furthermore, our operational
	performance is important in maintaining our
	reputation for successful project delivery.
Counterparty	There is a risk of commercial counterparties defaulting on payment terms or fnancial
	counterparties defaulting on deposits that we hold
	with them.
Cost infation	Unexpected infation in costs could adversely impact the fnancial performance of our contracts.
Health, safety and environmental performance	A serious health, safety or environmental incident
	on any of our projects has the potential to cause signifcant commercial and reputational damage.

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 immaterial, that could affect the performance of the business.

14 Petrofac Interim report 2011

Business review continued

Going concern

The financial position of the Company, its cash flows, liquidity position and borrowing facilities, and its business activities, together with the factors likely to affect its future development, performance and position are set out in this Business review and in the group’s Annual report and accounts 2010 on pages 16 to 55. In addition, note 33 to the group’s Annual report and accounts 2010 includes 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.

The Company has considerable financial resources together with long-term 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.

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.

The second half performance of the Engineering, Training Services and Production Solutions reporting segment is expected to be broadly in line with the first half of the year, albeit with a greater contribution from Production Solutions, as we expect a general improvement in our consultancy and technology businesses and a positive contribution from the Ticleni PEC.

In Energy Developments, our operational assets are expected to continue to perform broadly in line with the first half, with the exception of the Ohanet RSC, which ends, as expected, in October. On the Berantai field development, we expect the FPSO Berantai to mobilise to the field in early 2012, with first gas from the field expected shortly thereafter.

With a strong financial position, a differentiated and competitive offering and a proven track record in project execution, we are confident that we will continue to deliver superior value for our customers and sector-leading returns for our shareholders. We expect to deliver like-for-like[1] net profit growth in 2011 of at least 15% and in line with current market expectations[2] .

Outlook

We are confident that we can continue the good progress that we have achieved in Engineering & Construction in the year to date, and we expect to deliver full year net margins in line with our medium-term guidance at around 11%.

While Offshore Engineering & Operations activity levels and revenues are expected to continue at record levels, net profit is expected to be lower in the second half of the year, as the first half benefited from significant progress on the SEPAT development and a provision release following completion of a long-term maintenance services contract. Net margins for the full year are expected to be substantially higher than in the prior year.

Norman Murray Chairman

==> picture [62 x 27] intentionally omitted <==

Ayman Asfari Group Chief Executive

• 1 Like-for-like net profit growth excludes the gain of US$124.9 million on the EnQuest demerger and the trading net profit from Energy Developments’ demerged assets of US$2.1 million for the year ended 31 December 2010.

• 2 The current market expectations for Petrofac’s net profit for the year ending 31 December 2011 are based on forecasts provided to Petrofac by 21 equity analysts since publication of the group’s 2010 Final Results in March 2011. The average of those forecasts is US$514 million.

Interim condensed consolidated income statement

15 Petrofac Interim report 2011

Interim condensed consolidated income statement

For the six months ended 30 June 2011

			Six months endedSix months ended	Six months endedSix months ended	Year ended
			30 June	30 June	31 December
			2011	2010	2010
			Unaudited	Unaudited	Audited
			US$’000	US$’000	US$’000
		Notes		Restated
Revenue		4	2,711,081	2,165,828	4,354,217
Cost of sales		5	(2,288,831)	(1,762,349)	(3,595,142)
Grossproft			422,250	403,479	759,075
Selling, general and administration expenses			(118,199)	(115,405)	(221,449)
Gain on EnQuest demerger			–	125,569	124,864
Other income			3,069	7,185	5,013
Other expenses			(8,660)	(4,319)	(4,053)
Proft from operations before tax and fnance income/(costs)			298,460	416,509	663,450
Finance costs			(3,422)	(4,580)	(5,131)
Finance income			5,243	5,049	10,209
Share of losses of associates		11	(687)	–	(131)
Proft before tax			~~299,594~~	416,978	668,397
Income tax expense		6	(53,140)	(61,245)	(110,545)
Proft for theperiod			246,454	355,733	557,852
Attributable to:
Petrofac Limited shareholders			246,286	356,535	557,817
Non-controllinginterests			168	(802)	35
			246,454	355,733	557,852
Earningsper share(US cents)		7
– Basic(excluding gain on EnQuest demerger)			72.71	68.17	127.76
– Diluted(excluding gain on EnQuest demerger)			71.84	67.31	126.09
– Basic(including gain on EnQuest demerger)			72.71	105.23	164.61
– Diluted(including gain on EnQuest demerger)			71.84	103.91	162.46

The attached notes 1 to 17 form part of these interim condensed consolidated financial statements.

16 Petrofac Interim report 2011

Interim condensed consolidated statement of comprehensive income For the six months ended 30 June 2011

			Six months endedSix months ended	Six months endedSix months ended	Year ended	Year ended
			30 June	30 June	31 December
			2011	2010		2010
			Unaudited	Unaudited		Audited
			US$’000	US$’000	US$’000
		Notes		Restated
Proft for theperiod			246,454	355,733	557,852
Foreign currencytranslation		15	9,934	(10,247)		(908)
Foreign currency translation recycled to income
statement in theperiod on EnQuest demerger		15	–	45,818	45,818
Net losses/(gains)on cash fow hedges recycled in theperiod		15	5,980	(14,409)	(16,612)
Net changes in fair value of derivatives and fnancial assets designated as cash fow hedges		15	14,055	(35,470)	(18,958)
Net changes in the fair value of available-for-sale fnancial assets		15	–	–		70
Disposal of available-for-sale fnancial assets		15	(70)	(74)		(74)
Other comprehensive income/(loss)			29,899	(14,382)		9,336
Total comprehensive income for theperiod			276,353	341,351	567,188
Attributable to:
Petrofac Limited shareholders			276,185	342,153	567,153
Non-controllinginterests			168	(802)		35
			276,353	341,351	567,188

The attached notes 1 to 17 form part of these interim condensed consolidated financial statements.

Interim condensed consolidated statement of financial position

17 Petrofac Interim report 2011

Interim condensed consolidated statement of financial position At 30 June 2011

			30 June	30 June	31 December
			2011	2010	2010
			Unaudited	Unaudited	Audited
		Notes	US$’000	US$’000	US$’000
Assets
Non-current assets
Property, plant and equipment		9	443,767	286,631	287,158
Goodwill		10	109,198	105,189	105,832
Intangible assets			91,452	75,793	85,837
Investment in associates		11	167,272	716	16,349
Available-for-sale fnancial assets		11	–	–	101,494
Longterm trade receivable			79,745	–	–
Other fnancial assets			260	5,101	2,223
Deferred income tax assets			29,128	28,932	26,301
			920,822	502,362	625,194
Current assets
Inventories			9,562	6,007	7,202
Work inprogress			520,344	903,494	803,986
Trade and other receivables			1,252,445	819,559	1,056,759
Due from relatedparties		17	330	292	327
Other fnancial assets			51,982	27,760	42,350
Income tax receivable			–	–	2,525
Cash and short-term deposits		13	1,848,249	1,074,853	1,063,005
			3,682,912	2,831,965	2,976,154
Total assets			4,603,734	3,334,327	3,601,348
Equity and liabilities
Equityattributable to Petrofac Limited shareholders
Share capital			6,915	6,912	6,914
Sharepremium			~~1,402~~	–	992
Capital redemption reserve			10,881	10,881	10,881
Shares to be issued			994	1,988	994
Treasuryshares		14	(81,691)	(67,039)	(65,317)
Other reserves		15	60,533	3,327	34,728
Retained earnings			928,005	632,662	787,270
			927,039	588,731	776,462
Non-controllinginterests			3,004	2,097	2,592
Total equity			930,043	590,828	779,054
Non-current liabilities
Interest-bearingloans and borrowings			30,129	51,074	40,226
Provisions			52,214	42,008	45,441
Other fnancial liabilities			10,027	31,546	11,453
Deferred income tax liabilities			50,247	53,789	48,086
			142,617	178,417	145,206
Current liabilities
Trade and otherpayables			1,606,204	879,207	1,021,436
Due to	relatedparties	17	18,205	1,077	11,710
Interest-bearingloans and borrowings			50,091	63,157	47,435
Other fnancial liabilities			21,734	47,565	37,054
Income taxpayable			62,964	105,006	105,559
Billings in excess of cost and estimated earnings			387,750	424,719	178,429
Accrued contract expenses			1,384,126	1,044,351	1,275,465
			3,531,074	2,565,082	2,677,088
Total liabilities			3,673,691	2,743,499	2,822,294
Total equityand liabilities			4,603,734	3,334,327	3,601,348

The attached notes 1 to 17 form part of these interim condensed consolidated financial statements.

18 Petrofac Interim report 2011

Interim condensed consolidated cash flow statement

For the six months ended 30 June 2011

			Six months endedSix months ended	Six months endedSix months ended	Year ended
			30 June	30 June	31 December
			2011	2010	2010
			Unaudited	Unaudited	Audited
		Notes	US$’000	US$’000	US$’000
Operating activities Proft before tax including gain on EnQuest demerger			299,594	416,978	668,397
Gain on EnQuest demerger			–	(125,569)	(124,864)
			299,594	291,409	543,533
Adjustments for:
Depreciation,amortisation and impairment			34,194	58,731	95,903
Share-basedpayments		14	9,910	6,538	14,784
Difference between other long-term employment benefts
paid and amounts recognised in the income statement			5,987	5,282	6,074
Net fnance income			(1,821)	(469)	(5,078)
Gain/(loss)on disposal ofproperty, plant and equipment			–	(192)	315
Gain on disposal	of intangible assets		–	–	(2,338)
Other non-cash items,net			13,543	11,586	13,319
Operating proft before workingcapital changes			361,407	372,885	666,512
Trade and other receivables			(196,033)	(24,936)	(266,757)
Work inprogress			246,810	(569,796)	(470,288)
Due from relatedparties			(3)	17,968	17,933
Inventories			(2,360)	(1,787)	(2,982)
Other current fnancial assets			(6,060)	4,843	(12,661)
Trade and otherpayables			609,598	43,035	167,707
Billings in excess of cost and estimated earnings			~~209,321~~	(36,425)	(282,715)
Accrued contract expenses			108,661	207,695	438,809
Due to relatedparties			6,495	(56,249)	(45,616)
Other current fnancial liabilities			(368)	7,089	6,045
			1,337,468	(35,678)	215,987
Other non-current items,net			(69,827)	(9,786)	(8,720)
Cashgenerated from/(used in)operations			1,267,641	(45,464)	207,267
Interestpaid			(1,943)	(941)	(1,948)
Income taxespaid,net			(97,903)	(47,167)	(99,030)
Net cash fows from/(used in)operatingactivities			1,167,795	(93,572)	106,289
Investing activities
Purchase ofproperty, plant and equipment		9	(144,849)	(78,177)	(115,345)
Acquisition of subsidiaries,net of cash acquired			–	(15,290)	(15,110)
Payment of deferred consideration on acquisition			(15,804)	–	–
Purchase of other intangible assets			(1,088)	–	(153)
Purchase of intangible oil &gas assets			(11,492)	(4,778)	(15,644)
Cash outfow on EnQuest demerger(includingtransaction costs)			–	(17,783)	(17,783)
Investment in associates		11	(50,359)	–	(8,459)
Purchase of available-for-sale fnancial assets			–	–	(101,494)
Proceeds from disposal ofproperty, plant and equipment			829	987	3,219
Proceeds from disposal of available-for-sale fnancial assets			374	534	539
Proceeds from disposal of intangible assets			–	–	6,018
Interest received			4,484	3,914	10,257
Net cash fows used in investingactivities			(217,905)	(110,593)	(253,955)

Interim condensed consolidated cash flow statement

19 Petrofac Interim report 2011

		Six months endedSix months ended	Six months endedSix months ended	Year ended
		30 June	30 June	31 December
		2011	2010	2010
		Unaudited	Unaudited	Audited
	Notes	US$’000	US$’000	US$’000
Financing activities
Repayment of interest-bearingloans and borrowings		(9,646)	(5,900)	(32,458)
Treasurysharespurchased	14	(47,387)	(37,016)	(36,486)
Equitydividendspaid		(101,443)	(84,548)	(132,244)
Net cash fows used in fnancingactivities		(158,476)	(127,464)	(201,188)
Net increase/(decrease)in cash and cash equivalents		791,413	(331,629)	(348,854)
Net foreign exchange difference on cash and cash equivalents		(6,856)	(13,480)	(7,793)
Cash and cash equivalents at 1 January		1,034,097	1,390,744	1,390,744
Cash and cash equivalents atperiod end	13	1,818,654	1,045,635	1,034,097

The attached notes 1 to 17 form part of these interim condensed consolidated financial statements.

20 Petrofac Interim report 2011

Interim condensed consolidated statement of changes in equity For the six months ended 30 June 2011

	Attributable to Petrofac Limited shareholders Issued Capital Shares Treasury Other Non- share Share redemption to be shares* reserves Retained controlling Total capital premium reserve issued US$’000 US$’000 earnings Total interests equity US$’000 US$’000 US$’000 US$’000 (note 14) (note 15) US$’000 US$’000 US$’000 US$’000
For the six months ended 30 June 2011
Balance at 1 January201	1 6,914 992 10,881 994 (65,317) 34,728 787,270 776,462 2,592 779,054
Proft for theperiod	– – – – – – 246,286 246,286 168 246,454
Other comprehensive income	– – – – – 29,899 – 29,899 – 29,899
Total comprehensive income	– – – – – 29,899 246,286 276,185 168 276,353
Share-based payments charge(note 14)	– – – – – 9,910 – 9,910 – 9,910
Shares vested during theperiod(note 14)	– – – – 31,013 (27,250) (3,763) – – –
Transfer to reserve for share-based payments(note 14)	– – – – – 16,906 – 16,906 – 16,906
Deferred tax on share- basedpayment reser	ve – – – – – (3,660) – (3,660) – (3,660)
Treasury shares purchased(note 14)	– – – – (47,387) – – (47,387) – (47,387)
Shares issued on acquisition 1 410 – – – – – 411 – 411
Dividends(note 8) – – – – – –(101,788) (101,788) –(101,788)
Movement in non-controllinginterests – – – – – – – – 244 244
Balance at 30 June 2011 (unaudited) 6,915 1,402 10,881 994 (81,691) 60,533 928,005 927,039 3,004 930,043

• Shares held by Petrofac Employee Benefit Trust.

	Attributable to Petrofac Limited shareholders Issued Capital Shares Treasury Other Non- share Share redemption to be shares* reserves Retained controlling Total capital premium reserve issued US$’000 US$’000 earnings Total interests equity US$’000 US$’000 US$’000 US$’000 (note 14) (note 15) US$’000 US$’000 US$’000 US$’000
For the six months ended 30 June 2010 (restated)
Balance at 1 January201	0 8,638 69,712 10,881 1,988 (56,285) 25,394 834,382 894,710 2,819 897,529
Proft for the period as reported	– – – – – – 331,918 331,918 2,860 334,778
Other comprehensive loss as reported	– – – – – (9,001) – (9,001) (5,381) (14,382)
Total comprehensive income as reported	– – – – – (9,001)331,918 322,917 (2,521)320,396
Restatement	– – – – – (5,381) 24,617 19,236 1,719 20,955
Total comprehensive inc as restated	ome – – – – – (14,382)356,535 342,153 (802)341,351
Share-based payments charge(note 14)	– – – – – 6,538 – 6,538 – 6,538
Shares vested during the period	– – – – 26,262 (24,895) (1,367) – – –
Transfer to reserve for share-based payments (note 14) – – – – – 12,750 – 12,750 – 12,750

Interim condensed consolidated statement of changes in equity

21 Petrofac Interim report 2011

	Attributable to Petrofac Limited shareholders Issued Capital Shares Treasury Other Non- share Share redemption to be shares* reserves Retained controlling Total capital premium reserve issued US$’000 US$’000 earnings Total interests equity US$’000 US$’000 US$’000 US$’000 (note 14) (note 15) US$’000 US$’000 US$’000 US$’000
For the six months ended 30 June 2010 (restated)
Deferred tax on share-ba payment reserve	sed – – – – – (2,078) – (2,078) – (2,078)
Treasury shares purchased (note 14) – – – – (37,016) – – (37,016) – (37,016)
Shares issued on acquisition 2 1,460 – – – – – 1,462 – 1,462
EnQuest demerger share split and redemption (1,728) – – – – – 1,728 – – –
Distribution on Enquest demerger – (71,172) – – – –(473,325) (544,497) –(544,497)
Dividends(note 8) – – – – – – (85,291) (85,291) – (85,291)
Movement in non-controlling interests – – – – – – – – 80 80
Balance at 30 June 2010 (unaudited) 6,912 – 10,881 1,988 (67,039) 3,327 632,662 588,731 2,097 590,828

• Shares held by Petrofac Employee Benefit Trust.

	Attributable to Petrofac Limited shareholders Issued Capital Shares Treasury Other Non- share Share redemption to be shares* reserves Retained controlling Total capital premium reserve issued US$’000 US$’000 earnings Total interests equity US$’000 US$’000 US$’000 US$’000 (note 14) (note 15) US$’000 US$’000 US$’000 US$’000
For the year ended 31 December 2010
Balance at 1 January201	0 8,638 69,712 10,881 1,988 (56,285) 25,394 834,382 894,710 2,819 897,529
Proft for theyear	– – – – – – 557,817 557,817 35 557,852
Other comprehensive income	– – – – – 9,336 – 9,336 – 9,336
Total comprehensive inc	ome – – – – – 9,336 557,817 567,153 35 567,188
Shares issued as payment of deferred consideration on acquisition 4 2,452 – (994) – – – 1,462 – 1,462
Share-based payments charge(note 14) – – – – – 14,784 – 14,784 – 14,784
Shares vested during the period – – – – 27,454 (26,170) (1,284) – – –
Transfer to reserve for share-based payments (note 14) – – – – – 12,750 – 12,750 – 12,750
Treasury shares purchased (note 14) – – – – (36,486) – – (36,486) – (36,486)
Deferred tax on share-based payments reserve – – – – – (1,366) – (1,366) – (1,366)
EnQuest demerger share split and redemption (1,728) – – – – – 1,728 – – –
Distribution on Enquest demerger – (71,172) – – – –(473,325) (544,497) –(544,497)
Dividends(note 8) – – – – – –(132,048) (132,048) –(132,048)
Movement in non-controlling interests – – – – – – – – (262) (262)
Balance at 31 December 2010(audited) 6,914 992 10,881 994 (65,317) 34,728 787,270 776,462 2,592 779,054

• Shares held by Petrofac Employee Benefit Trust.

The attached notes 1 to 17 form part of these interim condensed consolidated financial statements.

22 Petrofac Interim report 2011

Notes to the interim condensed consolidated financial statements For the six months ended 30 June 2011

~~interests to trade and other payables~~

1 Corporate information

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 activities are the provision of facilities solutions to the oil & gas production and processing industry and appraisal, development and operation of oil & gas production and refining projects. The interim condensed consolidated financial statements of the group for the six months ended 30 June 2011 were authorised for issue in accordance with a resolution of the Board of Directors on 19 August 2011.

2 Basis of preparation and accounting policies

Basis of preparation

The interim condensed consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and available-for-sale financial assets that have been measured at fair value. The presentation currency of the interim condensed consolidated financial statements is United States dollars (US$) and all values in the interim condensed consolidated financial statements are rounded to the nearest thousand dollars (US$’000) except where otherwise stated.

• A variation order on a contract in the Engineering & Construction reporting segment was agreed in the first half of 2010 but was not reflected in the interim results, leading to an understatement in revenue (US$35,200,000), cost of sales (US$3,170,000) and income tax expense (US$5,977,000). Furthermore, the group’s income tax expense was adjusted by US$1,436,000 to reflect the impact of this adjustment on the interim group tax charge

Accounting policies

The accounting policies and methods of computation adopted in the preparation of these interim condensed consolidated financial statements are consistent with those followed in the preparation of the group’s financial statements for the year ended 31 December 2010, except as noted below.

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 2011. The principal effects of the adoption of the relevant new and amended standards and interpretations are discussed below:

Statement of compliance

The interim condensed consolidated financial statements of Petrofac Limited and all its subsidiaries for the six months ended 30 June 2011 have been prepared in accordance with IAS 34 ‘Interim Financial Statements’ and applicable requirements of Jersey law. They do not include all of the information and disclosures required in the annual financial statements and should be read in conjunction with the consolidated financial statements of the group as at and for the year ended 31 December 2010. Certain comparative information has been restated in the current period presentation as outlined below.

Restatements

The following restatements were made in the 2010 comparatives:

• The directors have re-considered 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, US$13,426,000 included in non-controlling interests in the statement of financial position at 1 January 2010 was reclassified to trade and other payables (US$9,226,000) and other reserves (US$4,200,000)

IAS 24 ‘Related Party Transactions (Amendment)’ the

definition of a related party has been clarified and the new definitions emphasise a symmetrical view of related party relationships as well as clarifying in which circumstances persons and key management personnel affect related party relationships of an entity. Further, the amendment exempts the entity from disclosing general related party disclosures for transactions with a government and entities that are controlled, jointly controlled or significantly influenced by the same government as the reporting entity. The adoption of the amendment did not have any impact of the financial position or performance of the group.

IAS 32 ‘Financial Instruments (Amendment)’ the

amendment alters the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain options or warrants as equity instruments. The amendment is applicable if the rights are given pro rata to all existing owners of the same class of an entity’s non derivative equity instruments, to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. The amendment has had no effect on the financial position or performance of the group.

• The amount of US$3,662,000 shown as attributable to non controlling interests in the 2010 income statement has been reclassified to cost of sales. US$5,381,000 shown within other comprehensive income has been shown as attributable to Petrofac. In the statement of financial position, the same amount was reclassified from non controlling interests to trade and other payables

Notes to the interim condensed consolidated financial statements

23 Petrofac Interim report 2011

3 Segment information

The following tables represent revenue and profit information relating to the group’s primary business segments for the six months ended 30 June 2011.

Included within the Engineering, Training Services and Production Solutions segment are three diverse businesses none of which have ever met the quantitative thresholds set by IFRS 8 ‘Operating Segments’ for determining reportable segments.

The consolidation adjustments and corporate columns include certain balances which due to their nature are not allocated to segments.

segments.
			Engineering,
			Training
		Offshore	Services &			Consolidation
	Engineering &	Engineering &	Production	Energy	Corporate	adjustments &
	Construction	Operations	Solutions	Developments	& others	eliminations	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Six months ended 30 June 2011
(unaudited)
Revenue
External sales	1,875,561	558,111	117,724	159,685	–	–	2,711,081
Inter-segment sales	28,167	22,931	75,812	–	–	(126,910)	–
Total revenue	1,903,728	581,042	193,536	159,685	–	(126,910)	2,711,081
Segment results	235,810	39,234	14,247	23,158	(210)	(8,353)	303,886
Unallocated corporate costs	–	–	–	–	(5,426)	–	(5,426)
Proft/(loss) from operations before tax and fnance income/(costs) 235,810		39,234	14,247	23,158	(5,636)	(8,353)	298,460
Share of losses of associates	–	–	–	(687)	–	–	(687)
Finance costs	–	(28)	(311)	(1,526)	(1,763)	206	(3,422)
Finance income	4,891	209	199	16	438	(510)	5,243
Proft/(loss) before
income tax	240,701	39,415	14,135	20,961	(6,961)	(8,657)	299,594
Income tax(expense)/beneft	(34,584)	(7,646)	(1,018)	(13,247)	3,355	–	(53,140)
Non-controllinginterests	(168)	–	–	–	–	–	(168)
Proft/(loss) for the period
attributable to Petrofac
Limited shareholders	205,949	31,769	13,117	7,714	(3,606)	(8,657)	246,286
Other segment information
Depreciation and amortisation	12,642	2,027	3,899	15,711	245	(330)	34,194
Other long-term employment benefts 7,728		169	304	36	50	–	8,287
Share-basedpayments	5,356	1,037	765	1,086	1,666	–	9,910

24 Petrofac Interim report 2011

Notes to the interim condensed consolidated financial statements continued

3 Segment informationcontinued	3 Segment informationcontinued
			Engineering,
			Training
		Offshore	Services &			Consolidation
	Engineering &	Engineering &	Production	Energy	Corporate	adjustments &
	Construction	Operations	Solutions	Developments	& others	eliminations	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
	Restated				Restated
Six months ended 30 June 2010
(unaudited)
Revenue
External sales	1,622,694	325,537	111,339	106,258	–	–	2,165,828
Inter-segment sales	–	1,641	50,166	–	–	(51,807)	–
Total revenue	1,622,694	327,178	161,505	106,258	–	(51,807)	2,165,828
Segment results	242,722	5,774	13,582	37,104	(734)	204	298,652
Gain on EnQuest demerger	–	–	–	125,569	–	–	125,569
Unallocated corporate costs	–	–	–	–	(7,712)	–	(7,712)
Proft/(loss) from operations before tax and fnance income/(costs) 242,722		5,774	13,582	162,673	(8,446)	204	416,509
Finance costs	–	(425)	(619)	(2,400)	(3,531)	2,395	(4,580)
Finance income	5,001	97	86	112	2,148	(2,395)	5,049
Proft/(loss)before tax	247,723	5,446	13,049	160,385	(9,829)	204	416,978
Income tax(expense)/income	(42,132)	(1,492)	91	(17,269)	(443)	–	(61,245)
Non-controllinginterests	901	–	(99)	–	–	–	802
Proft/(loss) for the period
attributable to Petrofac Limited
shareholders	206,492	3,954	13,041	143,116	(10,272)	204	356,535
Other segment information
Depreciation and amortisation	17,056	1,211	7,913	32,729	151	(329)	58,731
Other long-term employment benefts 6,005		1,109	134	30	51	–	7,329
Share-basedpayments	3,292	968	463	561	1,254	–	6,538
			Engineering,
			Training
		Offshore	Services &			Consolidation
	Engineering &	Engineering &	Production	Energy	Corporate	adjustments &
	Construction	Operations	Solutions	Developments	& others	eliminations	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Year ended 31 December 2010
(audited)
Revenue
External sales	3,232,174	710,080	223,748	188,215	–	–	4,354,217
Inter-segment sales	21,732	11,821	131,538	–	–	(165,091)	–
Total revenue	3,253,906	721,901	355,286	188,215	–	(165,091)	4,354,217
Segment results	438,867	24,506	26,590	66,290	(900)	(3,362)	551,991
Gain on EnQuest demerger	–	–	–	124,864	–	–	124,864
Unallocated corporate costs	–	–	–	–	(13,405)	–	(13,405)
Proft/(loss) from operations before tax and fnance income/(costs) 438,867		24,506	26,590	191,154	(14,305)	(3,362)	663,450
Share of loss of associate	–	–	–	(131)	–	–	(131)
Finance costs	–	(968)	(696)	(3,121)	(3,659)	3,313	(5,131)
Finance income	9,741	209	525	348	2,699	(3,313)	10,209
Proft/(loss)before tax	448,608	23,747	26,419	188,250	(15,265)	(3,362)	668,397
Income tax(expense)/beneft	(75,550)	(6,519)	1,144	(31,895)	2,275	–	(110,545)
Non-controllinginterests	(35)	–	–	–	–	–	(35)
Proft/(loss) for the year attributable
to Petrofac Limited shareholders	373,023	17,228	27,563	156,355	(12,990)	(3,362)	557,817

Notes to the interim condensed consolidated financial statements

25 Petrofac Interim report 2011

			Engineering,
			Training
		Offshore	Services &			Consolidation
	Engineering &	Engineering &	Production	Energy	Corporate	adjustments &
	Construction	Operations	Solutions	Developments	& others	eliminations	Total
	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000	US$’000
Other segment information
Depreciation and amortisation	35,384	2,835	8,076	49,816	367	(575)	95,903
Other long-term employment benefts 10,435		613	1,581	54	87	–	12,770
Share-basedpayments	7,693	1,167	1,896	1,121	2,907	–	14,784

The significant movements in total group assets as at 30 June 2011 compared to total assets as at 31 December 2010 are primarily in the following segments:

	Engineering &	Energy
	Construction	Developments
	US$’000	US$’000
Total assets as at 30 June 2011	3,780,018	563,435
Total assets as at 31 December 2010	3,008,719	322,437

Increase in Engineering & Construction segment assets during the period is primarily due to increase in cash and cash equivalents of US$833,255,000 mainly as a result of advances received on EPC contracts.

Increase in Energy Developments segment assets during the period is primarily due to additions to property, plant and equipment of US$138,961,000 mainly relating to the purchase of Floating Production Storage and Offloading Vessels (FPSOs) (see note 9) and recognition of a receivable on the Berantai RSC contract in Malaysia of US$79,745,000 and a receivable from joint venture partners for the purchase of the FPSO Berantai (formerly the East Fortune) of US$30,103,000.

4 Revenues

	Six months endedSix months ended	Six months endedSix months ended	Year ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	US$’000	US$’000	US$’000
		Restated
Renderingof services	2,651,110	2,078,445	4,202,371
Sale of crude oil &gas	~~55,827~~	85,012	146,075
Sale ofprocessed hydrocarbons	4,144	2,371	5,771
	2,711,081	2,165,828	4,354,217

Included in revenues from rendering of services are Offshore Engineering & Operations, Engineering Services, Training Services and Production Solutions revenues of a ‘pass-through’ nature with zero or low margins amounting to US$111,274,000 (six months ended 30 June 2010: US$95,011,000; year ended 31 December 2010: US$227,974,000).

5 Cost of sales

Also included in cost of sales are forward points and ineffective portions on derivatives designated as cash flow hedges and gains on undesignated derivatives of US$1,150,000 (six months ended 30 June 2010: US$3,175,000 gains; year ended 31 December 2010: US$3,409,000 losses).

26 Petrofac Interim report 2011

Notes to the interim condensed consolidated financial statements continued

6 Income tax

Income tax expense is recognised based on management’s best estimate of the annual income tax rate applied to the pre tax income of the interim period.

The major components of the income tax expense are as follows:

The major components of the income tax expense are as follows:
	Six months endedSix months ended			Year ended
	30 June	30 June		31 December
	2011	2010		2010
	Unaudited	Unaudited		Audited
	US$’000	US$’000		US$’000
		Restated
Current income tax
Current income tax charge	65,485	59,921		115,199
Adjustments in respect of current income tax ofpreviousperiods	(158)	(3,495)		(2,843)
Deferred income tax
Relatingto origination and reversal of temporarydifferences	(11,789)	5,484		907
Adjustments in respect of deferred income tax ofpreviousperiods	(398)	(665)		(2,718)
	53,140	61,245		110,545

The group’s effective tax rate for the six months is 17.7% (excluding the 2010 gain from the demerger; six months ended 30 June 2010: 21.0%; year ended 31 December 2010: 20.3%).

Excluding the gain from the demerger, the effective tax rate has decreased from the comparable 2010 period and the year ended 31 December 2010. The effective tax rate for the group for the year to 31 December 2011 is expected to be 21.7%. However, due to the timing of profit recognition on Engineering & Construction contracts between the first half and second half of the year, a lower tax charge and effective tax rate is acknowledged in the first half of 2011.

If the consequences of the timing issues noted above are accounted for, the effective tax rate for 2011 for the group is expected to be greater than the effective tax rate in the comparable 2010 periods. This is a result of changes in the overall mix of taxable jurisdictions within which Engineering & Construction operate.

In March 2011, the UK Government announced its intention to reduce the UK corporation tax rate from 28% to 26% effective from 1 April 2011 and then to further reduce the UK corporation tax rate to 23% over the course of the next three years. As of 30 June 2011, the initial tax rate change to 26% was substantively enacted and the deferred tax asset and liabilities are disclosed at the new rate. The deferred tax assets and liabilities would have reduced by approximately US$1,142,000 and US$17,000 respectively, had the further changes to the corporation tax rate down to 23% been substantively enacted as of the said date.

Notes to the interim condensed consolidated financial statements

27 Petrofac Interim report 2011

7 Earnings per share

Basic earnings per share amounts are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

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 period, 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:

		Six months endedSix months ended	Six months endedSix months ended	Six months endedSix months ended	Year ended
		30 June	30 June		31 December
		2011	2010		2010
		Unaudited	Unaudited		Audited
		US$’000	US$’000		US$’000
			Restated
Net proft attributable to ordinary shareholders for basic
and diluted earningsper share excluding gain on EnQuest demerger		246,286	230,966		432,953
Net proft attributable to ordinary shareholders for basic
and diluted earningsper share including gain on EnQuest demerger		246,286	356,535		557,817
Weighted average number of ordinaryshares for basic earningsper share		338,703	338,817		338,867
Effect of dilutedpotential ordinarysharesgranted under share-basedpayment	schemes	4,134	4,314		4,493
Adjusted weighted average number of ordinaryshares for diluted earningsper share		342,837	343,131		343,360

8 Dividends paid and proposed

8 Dividends paid and proposed
	Six months endedSix months ended			Year ended
	30 June	30 June		31 December
	2011		2010	2010
	Unaudited	Unaudited		Audited
	US$’000	US$’000		US$’000
Declared and paid during the period
Equitydividends on ordinaryshares:
Final dividend for 2009: 25.10 centsper share	–	85,291		85,291
Interim dividend for 2010: 13.80 centsper share	–		–	46,757
Final dividend for 2010: 30.00 centsper share	101,788		–	–
	101,788	85,291		132,048

The Company proposes an interim dividend of 17.40 cents per share which was approved by the Board on 19 August 2011 for payment on 21 October 2011.

9 Property, plant and equipment

Increase in property, plant and equipment during the period mainly comprises of the purchases and upgrade of the FPSO Berantai, the Jasmine Venture FPSO (renamed FPF3) and the Cossack Pioneer FPSO (renamed FPF4) for a combined cost of US$135,465,000.

28 Petrofac Interim report 2011

Notes to the interim condensed consolidated financial statements continued

10 Goodwill

The net increase in the goodwill balance in the current period mainly represents unrealised foreign exchange gains on translation of US$2,546,000 with the balance being the payment of additional deferred consideration in respect of the SPD Group Limited and Caltec Limited acquisitions.

11 Investment in associates and available-for-sale financial assets

During the period an additional investment of US$50,000,000 was made in Seven Energy International Limited (Seven Energy) which increased the group’s shareholding in the company from 15% to 20% which has resulted in the group exercising significant influence over the financial and operating policy decisions of Seven Energy. As a result the available-for-sale financial asset with a carrying value of US$101,251,000 at 31 December 2010 has been reclassified as an investment in associate from 10 June 2011. The movement in investment in associates during the period is as follows:

	US$’000
As at 1 January2011	16,349
Transfer from available-for-sale fnancial assets	101,251
Additional investment in Seven Energy,includingtransaction costs	50,359
Share of loss in associates	(687)
	167,272

12 Derivative financial instruments

The movement during the period is due to changes in the fair value of derivative financial instruments which the group uses to hedge its risk against foreign currency exposure on sales, purchases and borrowings that are entered into in a currency other than US dollars and exposure to oil price revenue fluctuations.

During the period the group entered into various fuel oil swaps for hedging gas production of 12,700MT with maturities ranging from January 2012 to May 2012. In addition, two crude oil swaps were also entered into for hedging oil production of 16,800 bbl with maturities from January 2012 to February 2012.

During the period the group entered into the following foreign exchange forward contracts designated as cash flow hedges:

Currencies	Sales Purchases
	Foreign currency US$ Foreign currency US$ amount equivalent amount equivalent ’000 US$’000 ’000 US$’000
Euro	153,925 218,639 311,400 425,422
Sterling	– – 72,800 118,668
UAE Dirhams	3,307,095 900,000 1,652,850 450,000

13 Cash and cash equivalents

For the purposes of the interim condensed consolidated cash flow statement, cash and cash equivalents comprise the following:

	30 June	30 June	30 June	31 December
	2011		2010	2010
	Unaudited	Unaudited		Audited
	US$’000	US$’000		US$’000
Cash at bank and in hand	359,846	215,356		244,018
Short-term deposits	1,488,403	859,497		818,987
Cash and short-term deposits	~~1,848,249~~	1,074,853		1,063,005
Bank overdrafts	(29,595)	(29,218)		(28,908)
	1,818,654	1,045,635		1,034,097

Notes to the interim condensed consolidated financial statements

29 Petrofac Interim report 2011

14 Treasury shares and share-based payments

During the period, the Company acquired 1,950,000 (30 June 2010: 2,122,786; 31 December 2010: 2,122,960) of its own shares at a cost of US$47,387,000 (30 June 2010: US$37,016,000; 31 December 2010: US$36,486,000) for the purpose of making awards under the group’s employee share schemes and these shares have been classified in the balance sheet as treasury shares within equity. In addition during the period 2,407,103 shares (including 288,408 accrued dividend shares) with a cost of US$31,013,000 were transferred out of the Employee Benefit Trust on vesting of various employee share scheme awards as shown below.

The following table shows the movements in the number of shares held under the three group employee share schemes excluding the 8% EnQuest demerger uplift adjustment and rolled up dividends:

the 8% EnQuest demerger uplift adjustment and rolled up dividends:
	Deferred Bonus	Performance	Restricted
	Share Plan*	Share Plan	Share Plan
	Number	Number	Number
Outstandingat 1 January2011	4,082,311	1,350,189	1,003,712
Granted duringtheperiod	1,491,820	482,379	134,394
Vested duringtheperiod	(1,648,147)	(419,379)	(21,007)
Forfeited duringtheperiod	(72,482)	–	–
Outstandingbut not exercisable at 30 June 2011	3,853,502	1,413,189	1,117,099

Made up of following awards:

2007	–	–	105,932
2008	–	–	644,535
2009	1,362,436	540,532	36,658
2010	1,008,528	390,278	195,580
2011	1,482,538	482,379	134,394
	3,853,502	1,413,189	1,117,099

• Includes invested and matching shares.

The fair value of the equity-settled awards granted during the period ended 30 June 2011 in respect of the Deferred Bonus Share Plan were estimated based on the quoted closing market price of 1,426 pence per Company share at the date of grant with an assumed vesting rate of 98.0% per annum over the vesting period of the plan.

The fair value of the non-market based equity-settled awards granted during the period ended 30 June 2011 representing 50% of the total Performance Share Plan award were estimated based on the quoted closing market price of 1,426 pence per Company share at the date of grant with an assumed vesting rate of 95.0% per annum over the three year vesting period of the plan. The remaining 50% of these awards which are market performance based were fair valued by an independent valuer at 788 pence per share 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:

Expected share price volatility (based on median of comparator group’s three-year volatilities)	51.0%
Share price correlation with comparator group	43.0%
Risk-free interest rate	1.7%
Expected life of share award	three years

The fair value of the equity-settled awards granted at various dates during the period ended 30 June 2011 in respect of the Restricted Share Plan were based on an average market price of 1,398 pence with an assumed vesting rate of 95.0% per annum over the vesting period of the plan.

The group has recognised an expense in the income statement for the period to 30 June 2011 relating to employee share-based incentives of US$9,910,000 (six months ended 30 June 2010: US$6,538,000; year ended 31 December 2010: US$14,784,000) which has been transferred to the reserve for share-based payments along with US$16,906,000 of the remaining bonus liability accrued for the year ended 31 December 2010 (30 June 2010: US$12,750,000; 31 December 2010: US$12,750,000) which has been voluntarily elected or mandatorily obliged to be settled in shares granted during the period.

30 Petrofac Interim report 2011

Notes to the interim condensed consolidated financial statements continued

15 Other reserves
Net	unrealised
gains/(losses)
on available-for- sale fnancial		Net unrealised (losses)/gains	Foreign currency	Reserve for share-based
	assets	on derivatives	translation	payments	Total
	US$’000	US$’000	US$’000	US$’000	US$’000
Balance at 1 January2011	70	(2,797)	(19,418)	56,873	34,728
Foreign currencytranslation	–	–	9,934	–	9,934
Disposal of available-for-sale fnancial assets	(70)	–	–	–	(70)
Netgains on cash fow hedges recycled in theperiod	–	5,980	–	–	5,980
Net changes in fair value of derivatives and fnancial assets designated as cash fow hedges	–	14,055	–	–	14,055
Share-basedpayments charge(note 14)	–	–	–	9,910	9,910
Transfer duringtheperiod(note 14)	–	–	–	16,906	16,906
Shares vested duringtheperiod(note 14)	–	–		(27,250)	(27,250)
Deferred tax on share-basedpayments reserve	–	–	–	(3,660)	(3,660)
Balance at 30 June 2011(unaudited)	–	17,238	(9,484)	52,779	60,533
Balance at 1 January2010	74	32,773	(64,328)	56,875	25,394
Foreign currencytranslation	–	–	(10,247)	–	(10,247)
Foreign currency translation recycled to income statement
in theperiod on EnQuest demerger	–	–	45,818	–	45,818
Disposal of available-for-sale fnancial assets	(74)	–	–	–	(74)
Netgains on cash fow hedges recycled in theperiod	–	(14,409)	–	–	(14,409)
Net changes in fair value of derivatives and fnancial assets designated as cash fow hedges	–	(35,470)	–	–	(35,470)
Share-basedpayments charge(note 14)	–	–	–	6,538	6,538
Transfer duringtheperiod(note 14)	–	–	–	12,750	12,750
Shares vested duringtheperiod	–	–	–	(24,895)	(24,895)
Deferred tax on share basedpayments reserve	–	–	–	(2,078)	(2,078)
Balance at 30 June 2010(unaudited)	–	(17,106)	(28,757)	49,190	3,277
Balance at 1 January2010	74	32,773	(64,328)	56,875	25,394
Foreign currencytranslation	–	–	(908)	–	(908)
Foreign currency translation recycled to income statement
in theperiod on EnQuest demerger	–	–	45,818	–	45,818
Net changes in fair value of available-for-sale fnancial assets	70	–	–	–	70
Disposal of available-for-sale fnancial assets	(74)	–	–	–	(74)
Netgains on cash fow hedges recycled in theyear	–	(16,612)	–	–	(16,612)
Net changes in fair value of derivatives and fnancial assets designated as cash fow hedges	–	(18,958)	–	–	(18,958)
Share-basedpayments charge(note 14)	–	–	–	14,784	14,784
Transfer duringtheyear(note 14)	–	–	–	12,750	12,750
Shares vested duringtheyear	–	–	–	(26,170)	(26,170)
Deferred tax on share-basedpayments reserve	–	–	–	(1,366)	(1,366)
Balance at 31 December 2010(audited)	70	(2,797)	(19,418)	56,873	34,728

Notes to the interim condensed consolidated financial statements

31 Petrofac Interim report 2011

16 Capital commitments

At 30 June 2011 the group had capital commitments of US$232,383,000 (31 December 2010: US$90,416,000; 30 June 2010: US$10,744,000).

Included in the above are commitments relating to expenditure on the FPSO Berantai in Malaysia of US$161,972,000 (31 December 2010: US$52,800,000; 30 June 2010: US$nil), expenditure on the Ocean Legend MOPU of US$34,200,000 (31 December 2010: US$nil; 30 June 2010: US$nil), additional appraisal and development well costs on the Cendor project in Malaysia of US$6,844,000 (31 December 2010: US$7,269,000; 30 June 2010: US$nil), additional expenditure on the Chergui gas field of US$4,683,000 (31 December 2010: US$nil; 30 June 2010: US$nil), commitments in respect of the Ticleni Production Enhancement contract in Romania US$16,906,000 (31 December 2010: US$21,046,000; 30 June 2010: US$nil) and commitments in respect of IT projects of US$6,332,000 (31 December 2010: US$9,281,000; 30 June 2010: US$8,400,000).

17 Related party transactions

The following table provides the total amount of transactions which have been entered into with related parties:

		Sales	Purchases	Amounts	Amounts
		to	from	owed	owed
		related	related	by related	to related
		parties	parties	parties	parties
		US$’000	US$’000	US$’000	US$’000
Joint ventures	Six months ended 30 June 2011(unaudited)	90,661	96,232	330	18,060
	Six months ended 30 June 2010(unaudited)	36,638	22,876	292	712
	Year ended 31 December 2010(audited)	101,370	88,796	327	11,098
Keymanagement	Six months ended 30 June 2011(unaudited)	–	486	–	145
personnel	Six months ended 30 June 2010(unaudited)	–	561	–	365
interests	Year ended 31 December 2010(audited)	–	1,688	–	612

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 at 30 June 2011 will be settled in cash.

Purchases in respect of key management personnel interests of US$428,000 (six months ended 30 June 2010: US$561,000; year ended 31 December 2010: US$1,601,000) 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 Chief Executive of the Company is a beneficiary.

Also included in purchases in respect of key management personnel interests is US$58,000 (six months ended 30 June 2010: US$nil; year ended 31 December 2010: US$87,000) relating to client entertainment provided by a business owned by a member of the group’s key management.

Compensation of key management personnel

Compensation of key management personnel
	Six months endedSix months ended			Year ended
	30 June	30 June		31 December
	2011		2010	2010
	Unaudited	Unaudited		Audited
	US$’000	US$’000		US$’000
Short-term employee benefts	3,539		3,132	11,870
Other long-term employment benefts	79		71	142
Share-basedpayments	~~2,426~~		1,976	3,827
Feespaid to non-executive directors	394		276	581
	6,438		5,455	16,420

Statement of directors’ responsibilities

The directors confirm that, to the best of their knowledge, the condensed set of financial statements on pages 15 to 31 have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, and that the interim management report on pages 4 to 14 includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8.

The directors of Petrofac Limited are listed in the Petrofac Annual Report and Accounts 2010.

By order of the Board

==> picture [43 x 19] intentionally omitted <==

==> picture [36 x 19] intentionally omitted <==

Ayman Asfari Group Chief Executive 19 August 2011

Keith Roberts Chief Financial Officer 19 August 2011

32 Petrofac Interim report 2011

Independent review report to Petrofac Limited

Introduction

We have been engaged by Petrofac Limited (‘the Company’) to review the interim condensed consolidated financial statements in the Interim report for the six months ended 30 June 2011 which comprises the Interim condensed consolidated income statement, the Interim condensed consolidated statement of comprehensive income, the Interim condensed consolidated statement of financial position, the Interim condensed consolidated cash flow statement, the Interim condensed consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.

Directors’ Responsibilities

The interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the interim condensed consolidated financial statements in the interim report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the Interim condensed consolidated financial statements in the interim report for the six months ended 30 June 2011 are not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom’s Financial Services Authority.

Ernst & Young LLP London 19 August 2011

As disclosed in note 2, the annual consolidated financial statements of Petrofac Limited are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. The condensed consolidated financial statements included in this interim report have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”.

Shareholder information At 30 June 2011

Petrofac shares are traded on the London Stock Exchange using code ‘PFC.L’.

Registrar

Capita Registrars (Jersey) Limited 12 Castle Street St Helier Jersey JE2 3RT

Company Secretary and registered office

Ogier Corporate Services (Jersey) Limited Ogier House The Esplanade St Helier Jersey JE4 9WG

UK Transfer Agent

Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU

Legal Advisers to the Company Freshfields Bruckhaus Deringer LLP 65 Fleet Street London EC4Y 1HS

Auditors

Joint Brokers

Goldman Sachs Peterborough Court 133 Fleet Street London EC4A 2BB

JP Morgan Cazenove 10 Aldermanbury London EC2V 7RF

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

Financial calendar
23 September 2011	Interim dividend record date
21 October 2011	Interim dividendpayment
31 December 2011	2011 fnancialyear end
5 March 2012	2011 fullyear results announcement

Dates correct at time of print, but subject to change.

The group’s investor relations website can be found through www.petrofac.com

Petrofac Services Limited 117 Jermyn Street London SW1Y 6HH United Kingdom

T +44 20 7811 4900 F +44 20 7811 4901

www.petrofac.com

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