Final Results - Part 1

Petrofac Limited
10 March 2008


                                PETROFAC LIMITED

               FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007

Petrofac Limited (Petrofac, the group or the Company), a leading international
provider of facilities solutions to the oil & gas production and processing
industry, today announces its results for the year ended 31 December 2007.

FINANCIAL HIGHLIGHTS

   • Revenue of US$2,440.3 million (2006: US$1,863.9 million), up 30.9%

   • EBITDA(1) of US$301.3 million (2006: US$198.3 million), up 51.9%

        - Engineering & Construction EBITDA of US$173.9 million, up 36.6%

        - Operations Services EBITDA of US$51.2 million, up 55.6%

        - Energy Developments EBITDA of US$82.8 million, up 106.5%

   • Net profit(2) of US$188.7 million (2006: US$120.3 million), up 56.9%

   • Backlog(3) at 31 December 2007 of US$4,441 million (2006: US$4,173
     million), up 6.4%

   • Return on capital employed(4) of 47.3% (2006: 45.7%)

   • Earnings per share (fully diluted) of 54.14 cents (2006: 34.87 cents),
     up 55.3%

   • Final dividend of 11.50 cents (5.71 pence(5)) per ordinary share taking
     dividends for the full year to 16.40 cents per ordinary share (8.15 pence),
     up 85.7%


OUTLOOK

For Petrofac, 2008 has started in the same vein as 2007 closed: with strong
demand for our services and a fine record of execution from our businesses and
we expect to deliver another year of good growth.

The level of backlog in the Engineering & Construction division provides good
visibility for current year revenue. We expect to announce further contract
awards in the coming months which, together with a healthy bidding pipeline in
our core markets, should underpin continued strong revenue growth in 2008 and
beyond with net profit margins being broadly maintained at recent levels.

We expect to see further good growth in the Operations Services division. We
have targeted net profit margins (on revenue excluding pass-through revenue(6))
of 5% in the Operations Services division in the medium-term and we expect to
make further progress towards that target in 2008.

2008 should see significant activity within our Energy Developments division. We
will undertake a further drilling programme in Permit PM304, offshore Malaysia,
where we are actively reviewing options for the next phase of the field's
development. We now expect first gas from the Chergui development in Tunisia
before the middle of the year. The development of the Don Area assets in the
UKCS proceeds apace with a further drilling campaign commencing in the first
half of this year. The refurbishment programme for the proposed production
vessel and installation of subsea infrastructure is proceeding and we are on
track to commence production in 2009. We continue to review further investment
opportunities and are hopeful of adding to the division's portfolio of
investments during the current year.

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

"We are delighted with the performance of the group over the year and are very
pleased to be able to report another strong set of financial results. We have
delivered strong revenue and net profit margin growth across all three
divisions. Operationally, we are performing well on our contract portfolio,
including the new projects commenced during the year. Our Energy Developments
operational assets performed well and we made good progress with our assets
under development, including the submission of final field development plans for
the Don Area assets. The demand for our services remains strong and given the
strength of our backlog, expected E&C contract awards and a healthy outlook in
terms of business development opportunities in our core markets, we are well
positioned for continued strong growth over the medium term."


Ends


Notes to Editors

Petrofac is a leading international provider of facilities solutions to the oil
& gas production and processing industry, with a diverse customer portfolio
including many of the world's leading integrated, independent and national oil &
gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC) and
is a constituent of the FTSE 250 Index.

Through its three divisions, Engineering & Construction, Operations Services and
Energy Developments, Petrofac designs and builds oil & gas facilities; operates,
maintains or manages facilities and trains personnel; and, where return criteria
are met and service revenue synergies identified, co-invests with clients and
partners. Petrofac's range of services allows it to help meet its customers'
needs across the life cycle of oil & gas assets.

With more than 9,500 employees, Petrofac operates out of four strategically
located international centres, in Aberdeen, Sharjah, Woking and Mumbai and a
further 20 offices worldwide. The predominant focus of Petrofac's business is on
the UK Continental Shelf (UKCS), Africa, the Middle East, the Commonwealth of
Independent States (CIS) and the Asia Pacific region.

For additional information, please refer to the Petrofac website at
www.petrofac.com.


For further information, please contact:


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

Bell Pottinger Corporate & Financial                 [phone]
Ann-marie Wilkinson
Olly Scott

(The attached is an extract from the group's Annual Report and Accounts for the
year ended 31 December 2007.)


Chairman's statement

Petrofac had another year of excellent performance in 2007. As a relatively
recently listed Company, we continued to mature organisationally and to develop
our business. Revenue grew by 31% to US$2,440 million during the year and net
profits increased by 57% to US$188.7 million.

Market overview

Although our customers range from national oil companies and major international
oil companies through to smaller independent companies they all face similar
challenges; how to bring new oil & gas production on stream in the face of
increasing rates of depletion in existing fields and growing world demand for
energy. As a consequence, demand for our services during the year has been very
strong and we expect this to continue for several years to come.

2007 was also a year in which our industry tried to reconsider the way it has
traditionally addressed the challenge of safety, following a number of
unfortunate incidents globally. Oil & gas production takes place in some
extremely hazardous and remote locations and involves processes and systems
which can interact in complex ways. With many plants worldwide operating beyond
their original designed lives, a better approach to ensuring the integrity of
facilities is required and I am pleased that Petrofac is playing its role in
this critical change. Safety is absolutely embedded within Petrofac's culture.
It is our responsibility to ensure the safety of every one of our employees on
every project worldwide; a responsibility which we take extremely seriously.

Our progress

In this positive market environment, we have continued to record important
achievements which differentiate Petrofac from our mainstream competitors. Our
businesses have again worked with considerable skill, delivering outstanding
financial results and working on some truly world class projects. They have also
continued to promote the service ethos which has always characterised our
business; we strive to meet and then surpass our customers' expectations. In
Energy Developments we have an investment division that offers an increasingly
interesting proposition to our customers. By co-investing alongside them on
projects where our core skills are deployed, we can manage risk better and help
build and operate complex infrastructure at lower cost.

The rapid, sustained organic growth we have experienced in recent years is both
exciting and rewarding - but it is also challenging. We are conscious of the
need to put in place the best processes to keep pace with our expansion while
also retaining the spirit of entrepreneurship that has driven our growth. We are
evolving into a large Company but the entrepreneurship at the heart of our
business remains vigorously intact. We have a highly-driven leadership team
supported by skilled managers and engineers, many of whom have grown along with
the Company.

Dividends

The Board is recommending a final dividend of 11.50 cents per ordinary share
with an equivalent of 5.71 pence per ordinary share which, if approved, will be
paid on 19 May to eligible shareholders on the register at 18 April 2008.
Together with the interim dividend of 4.90 cents, equivalent to 2.44 pence, this
gives a total dividend for the year of 16.40 cents per ordinary share, an
increase of 86% compared to 2006.

Corporate governance and social responsibility

We have continued to improve the way in which we run the Company, in line with
best practice. Our internal oversight processes have deepened and we have added
Board oversight of major risk issues through the formation of a new Risk
Committee.

We have increased our reporting of corporate social responsibility (CSR) issues,
both in this Report and also online, as stakeholders rightly demand more
information on how we impact the communities alongside which we operate. Some of
our operations are conducted in countries facing difficult and, often,
deep-seated problems and we are committed to using our influence, limited though
it may be in certain places, as a positive force helping to promote long-term
and sustainable solutions.

Our people

The quality of our people is the single greatest factor behind our success. Our
staff numbers rose from around 7,800 to 9,600(7) during 2007 as we continued to
invest in the talented, committed individuals who will keep us at the forefront
of our industry.

I would like to put on record the Board's thanks to all those who through their
experience, expertise and willingness to do their utmost on behalf of our
customers, have contributed so much to such an outstanding performance.

The Board

During the year your Board was expanded with the new appointments of Rijnhard
van Tets and Amjad Bseisu. They joined the Board following the 2007 Annual
General Meeting. There were no other changes during the year.

I extend the Board's thanks to our customers, shareholders, partners and
suppliers - as well as to our staff - for their continued support. Together, we
face the future with confidence.


Rodney Chase
Chairman



Group Chief Executive's review

I am pleased to be able to report a strong set of financial results for the year
ended 31 December 2007.
                                       2007            2006
                                       US$m            US$m
Revenue                               2,440.3        1,863.9       up 30.9%
EBITDA                                 301.3          198.3        up 51.9%
EBITDA margin                          12.3%          10.6%
Net profit                             188.7          120.3        up 56.9%
Net margin                             7.7%            6.5%
Backlog                                4,441          4,173        up 6.4%

Group revenue increased by 30.9% to US$2,440.3 million (2006: US$1,863.9
million) reflecting strong growth across all three divisions. EBITDA increased
by 51.9% to US$301.3 million (2006: US$198.3 million). Net profit increased by
56.9% to US$188.7 million (2006: US$120.3 million), representing a net margin of
7.7% (2006: 6.5%). At the close of 2007, the combined backlog of the Engineering
& Construction and Operations Services divisions was US$4,441 million (2006:
US$4,173 million).

ENGINEERING & CONSTRUCTION
                                        2007            2006
                                        US$m            US$m
Revenue                                1,414.9         1,081.3      up 30.9%
EBITDA                                  173.9           127.3      up 36.6.%
EBITDA margin                           12.3%           11.8%
Net profit                              137.1           95.4        up 43.7%
Net margin                              9.7%            8.8%
Backlog                                 2,540           2,228       up 14.0%



Results

High levels of activity on the division's lump-sum EPC contracts, particularly
in the second half of the year, and strong growth in the division's reimbursable
engineering business led to an increase in revenues of 30.9% to US$1,414.9
million (2006: US$1,081.3 million). Net margin increased from 8.8% in 2006 to
9.7% in 2007 due to the division's continued strength in execution performance.
Revenue growth and continued net margin improvement resulted in a net profit of
US$137.1 million, an increase of 43.7% from the prior year (2006: US$95.4
million). The key contributors to revenue in the lump-sum EPC business were the
Harweel project in Oman, the facilities upgrade project in Kuwait, the
Karachaganak fourth train (part lump-sum, part reimbursable) and the Salam and
Hasdrubal gas plant projects that were awarded in late 2006. The strong growth
in the division's reimbursable business was principally due to the award of the
Karachaganak Phase III FEED study and the division's 50%(8) share of the
Brownfield engineering business, which continued to grow in its core market of
the UKCS and also achieved strong international growth. The principal divisional
profit drivers were the projects referred to above, and additionally, the
Kashagan contracts. The Engineering & Construction division increased its number
of employees from approximately 2,700 at 31 December 2006 to approximately 3,800
at 31 December 2007, with strong growth in the Woking and Sharjah offices and
from the new Chennai office, which opened in April 2007.

The division's backlog increased to US$2.5 billion at 31 December 2007 (31
December 2006: US$2.2 billion) principally due to the In Salah gas compression
project award, the Kashagan third oil train award and scope increases for other
existing contracts.

Review of operations

Middle East and North Africa

The award of the Salam and Hasdrubal gas plant contracts in late 2006 signified
an increase in focus on the North Africa market for the EPC business. This trend
has continued into 2007 with the award of the In Salah gas compression project
in Algeria in late 2007 (see page 10). Over 60% of the division's revenue in
2007 was generated from lump-sum EPC contracts in the Middle East and North
Africa. Key developments during the year were:

   •First gas was achieved on the Kauther gas plant in Oman in November, two
    months ahead of expectation; the plant is currently undergoing commissioning
    ahead of initial operation by the Operations Services division
   •Substantial progress was made on the Harweel cluster development project
    for Petroleum Development Oman (PDO), the division's largest project to
    date; the scope of the project has continued to grow, with variation orders
    received to address agreed changes to the technical specifications
   •In Egypt and Tunisia, the contracts awarded in late 2006 are progressing
    well with significant progress on engineering and procurement activities and
    early construction activities underway at the Salam and Hasdrubal gas plants
   •The facilities upgrade project for Kuwait Oil Company (KOC) is
    progressing well with completion expected around the middle of 2008

Commonwealth of Independent States

The division continues to be heavily involved in the Kashagan and Karachaganak
programmes, two of Kazakhstan's three multi-billion dollar multi-phase
developments. Developments during the year included:

   •As noted on page 10, the division was successful in securing further work
    on the Kashagan project during the year with the award of an engineering and
    procurement contract for the third oil processing train
   •On the Karachaganak development, the division made good progress on the
    engineering, procurement and construction management (EPCM) services for the
    fourth train (awarded in January 2007) and has delivered much of the scope
    for the Phase III development FEED study awarded in June 2007 (see page 10)
   •In Russia, with the proposed change in ownership of TNK-BP's interests in
    the Kovykta projects through RUSIA Petroleum and the East Siberian Gas
    Company, the division has commenced demobilisation from these projects and
    has redeployed personnel within the group where appropriate; the Russian
    market remains an opportunity for the medium to long-term
   •The division was successful in securing a FEED study for the Kharyaga
    development in late 2007 which maintains its presence in the Russian market

A number of significant EPC and consultancy and engineering services contracts
were secured during 2007 and in early 2008:

Karachaganak fourth stabilisation and sweetening train, Kazakhstan

In January 2007, the division was awarded contracts for the engineering,
procurement, construction management and commissioning support for the
Karachaganak fourth stabilisation and sweetening train. The contract, scheduled
for completion in mid 2009, will be executed on a part lump-sum and part
reimbursable basis.


El Gassi field, Algeria

In February 2007, the division was awarded a contract by SonaHess, a joint
venture of Sonatrach and Hess, to engineer, procure and manage the construction
and commissioning of new facilities on an existing production site at the El
Gassi field in Algeria.


Karachaganak Phase III FEED, Kazakhstan

In June 2007, the division secured an award from Karachaganak Petroleum
Operating BV (KPO) for a FEED study for Phase III of the development of the
Karachaganak Processing Complex. The Phase III FEED, which is scheduled for
completion in the second half of 2008, is being executed on a reimbursable basis
involving more than 450 personnel and represents the division's largest FEED
study to date. The development will have a gas processing capacity of 4 billion
cubic feet per day. The division is working alongside KPO, its partners and with
NIPI Caspian Engineering and Research (CER). The division and CER will use a
jointly developed capability to increase long-term Kazakh development and Kazakh
content.


Kashagan third oil train, Kazakhstan

In late 2007, following on from the initial engineering and procurement and
construction management contracts for the Kashagan onshore facilities, the
division secured a US$185 million lump-sum project for the engineering and
procurement of a new Tranche 3 oil treatment plant.

In Salah gas development, Algeria

In December 2007, the division announced the award of a US$600 million lump-sum
EPC contract with In Salah Gas, an association between Sonatrach, BP and
StatoilHydro. The project includes the design and installation of additional
field compression facilities at three of the northern fields of REG, TEG and
Krechba, in order to maintain plateau production rates of 9 billion cubic metres
per year beyond 2009.


OPERATIONS SERVICES
                                       2007            2006
                                       US$m            US$m
Revenue                                911.0           729.2     up 24.9%
EBITDA                                 51.2            32.9      up 55.6%
EBITDA margin                          5.6%            4.5%
Net profit                             28.9            18.1      up 59.7%
Underlying net margin*                 4.7%            3.6%
Backlog                                1,901           1,945     down 2.3%

Results

Revenue for the Operations Services division increased by 24.9% to US$911.0
million (2006: US$729.2 million). Revenue excluding "pass-through" revenue
increased by 34.8% reflecting the commencement of the Dubai Petroleum contract,
the acquisition of SPD, new business in Petrofac Training and Brownfield
engineering, particularly in international markets, and a strong Sterling to US
dollar exchange rate(9). Net profit increased by 59.7% to US$28.9 million (2006:
US$18.1 million), representing a net margin on revenue excluding pass-through
revenue of 4.2% (2006: 3.6%). The underlying net margin*, adjusted to eliminate
amortisation and finance costs relating to acquisition intangibles and deferred
consideration, increased to 4.7% (2006: 3.6%) due principally to the
contribution from the Dubai Petroleum contract and the acquisition of SPD.

Operations Services' employee numbers grew from approximately 4,900 at 31
December 2006 to over 5,500 at 31 December 2007, due principally to the
commencement of the Dubai Petroleum contract, where approximately 600 staff were
recruited from the previous operator.

The division's backlog was US$1.9 billion at 31 December 2007 (2006: US$1.9
billion).

Review of operations

The Operations Services division achieved strong growth in 2007, due principally
to the commencement of the facilities and well operations management contract
with Dubai Petroleum, international growth in the Training and Brownfield
engineering businesses and the acquisition of SPD.

Facilities Management delivered good operational performance across its
portfolio of UKCS and international contracts; however, following a six month
period of transition, the highlight of the year was assumption of full turnkey
responsibility for the operation of Dubai Petroleum's offshore oil & gas
facilities in April 2007.  The new contract is the division's largest
international contract to date and is proceeding positively and in line with
expectations.  The financial returns on the Dubai Petroleum contract and the
majority of Facilities Management's operations management contracts are linked
to operational performance through KPI mechanisms.

In January 2007, the division acquired a majority interest in SPD, a specialist
provider of well operations services, in particular well project management,
well engineering optimisation, well engineering studies and consultancy
services. SPD's core operations are in Africa and Europe and for national and
international oil companies in the Middle East, including the provision of
services for the Dubai Petroleum contract. The Brownfield engineering and
Training businesses have continued to grow in their core market of the UKCS,
where the market remains buoyant, but the strongest growth has been generated in
international markets, often in relation to existing projects and/or with
existing customers of other parts of the group. Both Brownfield engineering and
Training have been successful in delivering services to Dubai Petroleum
following the commencement of the facilities management contract. Furthermore,
in early 2008, the group announced that Petrofac Training and Dubai Petroleum
are to make a joint investment in the Dubai Petroleum Training Centre. The
centre will provide a wide range of safety training to the energy and
construction industries, with technical courses planned for the future. The
centre is currently expected to open later in 2008. In addition to the
development of the training centre, Petrofac Training will provide Dubai
Petroleum with a managed training solution for its staff and contractors.

Energy Developments
                                       2007            2006
                                       US$m            US$m
Revenue                                132.8           62.1      up 113.8%
EBITDA                                 82.8            40.1      up 106.5%
EBITDA margin                          62.3%           64.6%
Net profit                             33.4            14.4      up 131.9%
Net margin                             25.1%           23.1%


Results

Divisional revenue and net profit more than doubled from the previous year to
US$132.8 million (2006: US$62.1 million) and US$33.4 million (2006: US$14.4
million) respectively, due predominantly to a full year contribution from the
Cendor field (2006 - 4 months) including the cost oil recovery period to the end
of March 2007. The net profit includes an impairment provision of US$8.7 million
against the division's investment in Permit NT/P68 and the recognition of a net
tax asset of US$11.3 million in relation to the trigger of a ring fence trade
allowing UKCS pre-trading expenditure to be recognised as a deferred tax asset
and the recognition of a net tax asset in relation to NT/P68 expenditure.


Review of operations

The highlight of the year for the Energy Developments' division was the
performance of the Cendor field which drove strong growth in the division's
revenue and profits. Good progress was made in the development of the division's
portfolio during 2007, as discussed below. Analysis of the division's oil & gas
reserve entitlements is presented for the first time on page 73.


Developed assets

Cendor PM304, Malaysia

The division has a 30% interest, as operator, in the Cendor field in Block
PM304, offshore Peninsular Malaysia. The other partners to the Production
Sharing Contract are: Petronas; PetroVietnam; and Kuwait Foreign Petroleum
Exploration Company (KUFPEC). The Cendor field averaged production of
approximately 14,300 barrels per day and has produced over 6.3 million barrels
of oil since first oil in September 2006. A five well drilling programme, funded
from existing cash flow, commenced in October 2007 and is expected to sustain
Cendor peak production for longer than originally planned and to develop
additional reserves. This further appraisal activity and the performance of the
field to date has resulted in the group increasing its estimate of gross
ultimate recovery of proven reserves from 24.6 million to 30.2 million barrels
during the year. Towards the end of 2008, the division will undertake a further
five well drilling programme within Block PM304 to appraise near field
development opportunities.


Ohanet, Algeria

The division, in joint venture with BHP Billiton (as joint venture operator),
Japan Ohanet Oil & Gas Co, and Woodside Energy (Algeria), has invested in excess
of US$100 million for a 10% share in a Risk Service Contract (RSC) with
Sonatrach, Algeria's national oil company. The US$1 billion Ohanet development
is located in the Illizi province of Algeria, southeast of Algiers and close to
the Libyan border. Petrofac's Engineering & Construction division carried out
the EPC contract for the gas processing facilities in joint venture with ABB
Lummus. The group's Operations Services division was also responsible for part
of the on-site commissioning works. First gas for export began flowing in late
2003. The Ohanet gas plant continued to perform well in 2007. Overall production
was higher than in 2006 at an average of approximately 16.4 million cubic metres
per day (m3/d) (2006: 14.6 m3/d) of gas for export, approximately 25,430 bpd
(2006: 24,240 bpd) of condensate and approximately 2,110 tonnes per day (2006:
2,770 tonnes per day) of liquefied petroleum gas (a combined oil equivalent of
153,500 bpd; 2006: 138,500 bpd). On average, the group earned its share of the
monthly liquids production by the 8th day of the month (2006: 11th), reflecting
the higher prevailing oil price in 2007. It is expected that the division will
earn its defined return by November 2011, at which point the contract will
terminate.


KPC refinery, Kyrgyzstan

The division owns a 50% share in the Kyrgyz Petroleum Company (KPC) which is
engaged in the refining of crude oil and the marketing of oil products from the
KPC refinery. The Operations Services division operates the refinery on behalf
of the joint venture partners on a reimbursable basis. During 2007, the refinery
produced an average of approximately 2,508 bpd (2006: 1,700 bpd) of principally
gasoline, diesel and fuel oil.


Assets under development

Chergui field, Tunisia

In February 2007, the division completed its acquisition of a 45% operating
interest in the Chergui concession, for a consideration of approximately US$31
million from Entreprise Tunisienne d'Activites Petrolieres (ETAP), the Tunisian
national oil company, which holds the remaining 55% interest. Under the terms of
the agreement, in addition to the US$31m consideration, Petrofac agreed to share
costs to complete the central production facilities, pipeline to shore and
associated infrastructure.


The construction of the facilities and pipeline is substantially complete, with
first gas due to flow in the first half of 2008. Plateau rates are expected to
be maintained for around four years with a further eight years of production
beyond that. Produced gas is to be sold to the national gas company, Societe
Tunisienne d'Electricite et Gaz (STEG), under the gas pricing formula fixed by
existing law, in which the price of gas is linked to FOB Med (free on board
Mediterranean) fuel oil prices.


Don Southwest and West Don, UKCS

In January 2008, the division announced that it had signed an agreement, as
operator, on behalf of itself and its co-venturers(10), with Sea Production
Limited, a wholly owned subsidiary of Northern Offshore Limited, for the
provision of the Northern Producer floating production facility. The Northern
Producer will receive and process production from the Don Southwest and West Don
fields in the North Sea, before offtake via offshore tanker or nearby
infrastructure.


The Northern Producer has a capacity of 55,000 barrels of oil per day and
associated gas, water injection and export processing facilities. Modifications
will be carried out in 2008 to extend the life of the vessel. The vessel will be
deployed between West Don and Don Southwest, with first oil expected in 2009.


Final field development programmes for both fields have been submitted to the
Department of Business Enterprise & Regulatory Reform. Approval is expected to
be received during the first half of 2008. The division's estimate of gross
recoverable proven reserves for the Don Area developments is 26.4 million
barrels, while its gross estimate of proven and probable reserves is 50.9
million barrels.


The Energy Developments division has contracted a semi-submersible drilling rig
for a seven well drilling programme on the Don Southwest and West Don fields
(see note 29 to the financial statements for details of the leasing commitment).
It is expected that the rig will come on contract towards the end of the first
half of 2008 and complete the programme by the end of the first quarter of 2009.


The division acquired an additional 2.0% unitised interest in the West Don field
in August 2007 in exchange for its 29% interest in Block 9/28a, containing the
Crawford field. Following an agreement in March 2007 on the unitisation of the
field with the owners of neighbouring Blocks 211/13b and 211/18a (First Oil,
Valiant, Nippon and Stratic) and with the additional interest acquired from the
Crawford asset swap referred to above, the division now owns a 27.70% operated
interest in the West Don field. The division has a 60% operated interest in the
Don Southwest field.


Permit NT/P68, Australia

Energy Developments entered into a farm-in arrangement with MEO Australia
Limited (MEO) in June 2007. Under the terms of the farm-in, the division is
funding 25% (subject to a cap) of the Heron-2 and Heron-3 wells in return for a
10% interest in the Permit. The division also acquired an option to secure an
interest in any LNG or methanol project that result from this investment.


The Heron-2 well was drilled in late 2007. Open-hole production testing of the
Elang/Plover formation was conducted and while it was confirmed that the Heron
North Plover sands did not contribute to the recorded flow due to blockages in
the well immediately above the Heron North Plover formation, the Elang sands did
flow gas to surface at a rate of approximately 6 million standard cubic feet per
day (mmscfd).


While logs suggest that significant hydrocarbons are present, the production
testing of the Epenarra Darwin formation only managed to produce minor flows of
hydrocarbons to the surface. The joint venture is presently reviewing the
Heron-2 well, 3D seismic and inversion data to support drilling of the Heron-3
appraisal well in late 2008 or early 2009. Due to the continuing uncertainties
surrounding the commercial outcome of this project, an impairment provision of
US$8.7 million has been made against this asset at 31 December 2007.


MEO commenced drilling a sole risk well at the nearby Blackwood Prospect (in
Permit NT/P68) in early 2008. The division has an option to participate in the
prospect after the well has been drilled, albeit at a substantial premium.


In addition to the prospects noted above, the division reviewed, and continues
to review, a range of upstream and energy infrastructure opportunities.


Ayman Asfari
Group Chief Executive



Chief Financial Officer's review
                                      2007         2006
                                      US$m         US$m
Revenue                             2,440.3      1,863.9    up 30.9%
Operating profit(11)                 248.5        169.5     up 46.6%
Operating margin                     10.2%         9.1%
EBITDA                               301.3        198.3     up 51.9%
EBITDA margin                        12.3%        10.6%
Net profit                           188.7        120.3     up 56.9%
Net margin                            7.7%         6.5%
Backlog                              4,441        4,173     up 6.4%


Group revenue increased by 30.9% to US$2,440.3 million (2006: US$1,863.9
million) reflecting strong growth across all three divisions. Although the
revenue from the Energy Developments division more than doubled due to the
contribution from the Cendor field, the increase was principally driven by the
Engineering & Construction and Operations Services divisions which contributed
95% of the group's revenue. The revenue increase in the Engineering &
Construction division was as a result of high levels of activity on lump-sum EPC
contracts, including those awarded in late 2006, and a significant increase in
manhours in the division's reimbursable engineering business. Growth in the
Operations Services division was primarily due to international growth
throughout the division, including the commencement of the Dubai Petroleum
contract and the acquisition of SPD Group.


Operating profit increased by 46.6% to US$248.5 million (2006: US$169.5
million), with all three divisions showing significant growth in operating
profit. Operating margins increased to 10.2% (2006: 9.1%), reflecting continued
improvement in operating margins in the Engineering & Construction division, a
significant improvement in the Operations Services division, primarily due to
the commencement of the Dubai Petroleum contract, and a greater proportion of
the group's operating profit coming from the high operating margins earned in
the Energy Developments division due principally to the full year contribution
from the Cendor field.


As a result of strong growth and good operational performance across all
divisions, net profit increased from US$120.3 million in the prior year to
US$188.7 million for the year ended 31 December 2007, an increase of 56.9%. The
net margin increased 1.2 percentage points to 7.7% (2006: 6.5%), broadly in line
with the increase in the group's operating margin.


EBITDA increased from US$198.3 million to US$301.3 million, representing an
EBITDA margin of 12.3% (2006: 10.6%). The increase in the group EBITDA margin
was due to the net impact of increased margins in Engineering & Construction and
Operations Services due to strong operational performance and an increase in the
proportion of 2007 EBITDA contribution to the overall group by the higher margin
earning Energy Developments division, driven by a full year contribution from
Cendor.


Despite a 36.6% increase in EBITDA in the Engineering & Construction division,
its share of group EBITDA decreased due to the very strong performance from the
rest of the group. The Energy Developments division contributed a greater
proportion of the group's EBITDA in 2007 due to a full year contribution from
Cendor. The Operations Services division marginally increased its contribution
to the group EBITDA due principally to the commencement of the Dubai Petroleum
contract and the acquisition of SPD. As a percentage of EBITDA, excluding the
effect of consolidation and elimination adjustments, Engineering & Construction
accounted for 56.5% (2006: 63.6%) of group EBITDA, Operations Services 16.6%
(2006: 16.4%) and Energy Developments 26.9% (2006: 20.0%).


The combined backlog of the Engineering & Construction and Operations Services
divisions increased from approximately US$4.2 billion at 31 December 2006 to
US$4.4 billion at 31 December 2007. A significant proportion of the Operations
Services division's backlog is denominated in Sterling and therefore benefited
from the slight depreciation of the US dollar against Sterling from the
beginning to the end of 2007. On a constant currency basis, group backlog
increased 5.0% compared to 31 December 2006.


The group's reporting currency is US dollars. During 2007, although there was
only a slight change in the year-end US dollar/Sterling exchange rates, there
was a significant depreciation of the US dollar against Sterling for much of the
year, and there was therefore a significant impact on the reported results of
the group's UK trading activities, principally within the Operations Services
division. The impact on the results of the Operations Services division is
discussed in end note 9. The table below sets out the average and year end
exchange rates for the US dollar and Sterling for the years ended 31 December
2007 and 2006 as used by the group for financial reporting purposes.

                                   2007                     2006
                                           US$/Sterling
Average rate for the              
year                               2.01                     1.85
Year end rate                      1.99                     1.96


Interest

Net interest receivable for the year was US$9.7 million (2006: US$2.1 million),
due principally to the group's higher average cash balances during 2007.


Taxation

An analysis of the income tax charge is set out in note 6 to the financial
statements.  The income tax charge as a percentage of profit before tax in 2007
was 26.9% (2006: 29.9%).  The decrease in the effective tax rate compared to the
prior year is due principally to:

   •A decrease in the effective tax rate for the Engineering & Construction
    division due to a higher proportion of its profits being earned in lower tax
    jurisdictions
   •A decrease in the effective tax rate for the Energy Developments division
    due to the trigger of a ring fence trade allowing UKCS pre-trading
    expenditure to be recognised as a deferred tax asset and the recognition of
    a net tax asset in relation to NT/P68 expenditure


Earnings per share

Fully diluted earnings per share increased from 34.87 cents per share in 2006 to
54.14 cents in 2007, an increase of 55.3%, reflecting the group's significant
increase in profitability in 2007.


Operating cash flow and liquidity

Cash generated from operations was US$370.8 million compared with US$328.6
million in 2006, representing 123.1% of EBITDA (2006: 165.7%). The increase in
net cash inflows was as a result of increased operating profit and a reduction
in net working capital utilisation during the year. The movement in net working
capital arose principally from timing differences at the year end in respect of
the customer billing and supplier payment positions on long-term engineering and
construction contracts.


Gearing ratio                           2007                  2006
                                   US$ million (unless otherwise stated)

Interest-bearing loans and              110.1                 117.2
borrowings (A)
Cash and short term deposits            581.6                 457.8
(B)
Net cash/(debt) (C = B - A)             471.5                 340.6
Total net assets (D)                    486.0                 324.9
Gross gearing ratio (A/D)               22.7%                 36.1%
Net gearing ratio (C/D)           Net cash position     Net cash position


The group maintained a broadly comparable level of interest-bearing loans and
borrowings at US$110.1 million (2006: US$117.2 million) on an increased equity
base, resulting in a decrease in the group's gross gearing ratio to 22.7% at 31
December 2007 (2006: 36.1%).


The group's total gross borrowings before associated debt acquisition costs at
the end of 2007 were US$112.4 million (2006: US$119.0 million), of which 39.3%
was denominated in US dollars (2006: 38.1%), 55.3% was denominated in Sterling
(2006: 56.0%) with the majority of the balance, 5.3%, denominated in Kuwaiti
Dinars (2006: 5.9%).


As detailed in note 31 to the financial statements, the group maintained a
balanced borrowing profile with 25.3% of borrowings maturing within one year,
54.5% maturing between one and five years and the remaining 20.2% maturing in
more than five years (2006: 22.3%, 40.6% and 37.1% respectively). The decrease
in the average duration of borrowings reflects the existing repayment terms of
group's facilities with the Royal Bank of Scotland/Halifax Bank of Scotland. The
borrowings repayable within one year include US$22.2 million of bank overdrafts
and revolving credit facilities (representing 19.7% of total gross borrowings,
see note 24 to the financial statements), which are expected to be renewed
during 2008 in the normal course of business (2006: US$20.4 million and 17.2% of
total gross borrowings).


The group's policy is to hedge between 60% and 80% of interest arising on
floating rate interest bearing loans and borrowings. At 31 December 2007, 69.1%
of the group's floating rate interest-bearing loans and borrowings were hedged
(2006: 64.8%). During the year the group has introduced a policy of hedging up
to 75% of its direct exposure to movements in the market price of oil on a
project-by-project basis. An analysis of the derivative instruments used by the
group to hedge this exposure is contained in note 31 to the financial
statements.


With the exception of Petrofac International Ltd, which undertakes the majority
of Petrofac's lump-sum EPC contracts and which, under its existing banking
covenants, is restricted from making cash payments to Petrofac Limited in excess
of 70% of its net profit in any one year, none of the Company's subsidiaries are
subject to any material restrictions on their ability to transfer funds in the
form of cash dividends, loans or advances to the Company.


Capital expenditure

Capital expenditure on property, plant and equipment during the year was
US$117.2 million (2006: US$59.4 million). The principal elements of capital
expenditure were:

   •construction of the new office building in Sharjah of US$22.0 million
   •financial completion of the acquisition of the Chergui gas field in
    Tunisia, and associated EPC costs, totalling US$54.1 million
   •capital expenditure on PM304 principally in relation to the drilling
    programme of US$11.5 million

Other capital expenditure included office furniture and equipment and plant and
equipment to support the growth in the Engineering & Construction and Operations
Services divisions.


Capital expenditure on intangible oil & gas assets during the year was US$49.7
million (2006: US$12.9 million) which was principally in respect of
pre-development expenditure on the Energy Developments' Don Area assets of
US$32.7 million and US$15.9 million on the division's NT/P68 investment,
offshore Australia. The accumulated expenditure in relation to the Don Area
assets was transferred from intangible oil & gas assets to oil & gas assets
within property, plant and equipment following sanction of the development in
late 2007.


Shareholders' funds

Total equity at 31 December 2007 was US$486.0 million (2006: US$324.9 million).
The main elements of the increase were the increase in retained earnings for the
year of US$149.9 million, the favourable movement in the group's fair value of
derivatives of US$41.7 million, less the net gain on the maturity of cash flow
hedges recognised in the income statement of US$22.2 million and an increase in
the cost of treasury shares held by the Company in relation to employee share
scheme awards of US$21.7 million.


Return on capital employed (ROCE)

The group maintained a high return on capital employed for the year ended 31
December 2007 of 47.3% (2006: 45.7%).


Dividends

The Company proposes a final dividend of 11.50 cents per share for the year
ended 31 December 2007 (2006: 6.43 cents), which, if approved, will be paid to
shareholders on 19 May 2008 provided they were on the register on 18 April 2008.
Shareholders who have not elected to receive dividends in US dollars will
receive a Sterling equivalent of 5.71 pence per share. Given the strong cash
generation of the business, the Board took the decision during the year to
increase the percentage of earnings to distribute by way of dividend to
approximately 30% of full year post tax profits (previously 25%).


Keith Roberts
Chief Financial Officer



End notes:


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


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


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


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


(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 2007 final dividend from US
dollars into Sterling is based upon an exchange rate of US$2.0146:£1, being the
Bank of England Sterling spot rate as at midday on 7 March 2008.


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


(7)     Includes agency and contract staff but excludes employees of joint
ventures.


(8)  Revenues and profits of the Brownfield engineering business are split
equally between the Engineering & Construction and Operations Services
divisions.


(9)  The majority of the Operations Services division's revenues are
denominated in Sterling. The average US dollar to Sterling exchange rate for
2007 was 2.01 compared to 1.85 in 2006. Eight percentage points of the growth in
revenue, excluding pass-through revenue, in Operations Services is attributable
to the movement in the US dollar to Sterling exchange rate.


(10)  he division's partners on the West Don field are: First Oil (19.28%),
Valiant Petroleum (17.27%), Stratic Energy (17.25%) and Nippon Oil Exploration &
Production (18.50%). The division's partner on the Don Southwest field is
Valiant Petroleum (40%).


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











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