Petrofac Limited (LSE:PFC) shares soared 60% after announcing it has been awarded a multi-year framework agreement by Dutch group TenneT worth around €13bn, in partnership with Hitachi Energy.
The deal, the biggest in Petrofac’s history, covers six projects. Each project comprises the engineering, procurement, construction and installation of an offshore HVDC transmission station, onshore converter station and associated infrastructure.
Peel Hunt pointed out: "The lack of previous contract awards has left Petrofac's stock extremely depressed."
"A contract of this size, alongside the framework agreement, should significantly enhance the group's ability to meet 2023 estimates and refinance the debt facilities, which are due to expire in 4Q23," the broker added.
Each project will be executed under a standalone contract valued at over €2bn, split equally between Petrofac and Hitachi Energy.
The agreement includes an initial commitment to deploy six record-breaking renewable integration systems, five of which will connect offshore wind farms to the Dutch grid and the sixth to the German grid. Each of these connection systems has a capacity of 2GW and a voltage level of 525 kilovolt – a world-first for offshore wind.
The first contract under the framework, for the Ijmuiden Ver Alpha project, was awarded with immediate effect. The second, Nederwiek 1, is expected to be awarded later in the year. The framework also includes projects Doordewind 1, Doordewind 2, Nederwiek 3 and LanWin5, expected to be awarded over a 2024-2026 timeframe.
In a statement, Sami Iskander, Petrofac’s chief executive, said: “By combining Petrofac’s industry-leading EPCI expertise and Hitachi Energy’s well proven technology, we look forward to supporting TenneT to connect larger, more effective wind farms to deliver affordable clean energy for millions of European homes.”
Petrofac and Hitachi Energy began working together in June 2022, to provide joint grid integration and associated infrastructure solutions to support TenneT’s 2GW Programme.