Petrofac Limited (LON:PFC) highlighted US$3bn of new orders for 2019 as the oil and gas services group told investors that it continues to expect a drop in revenue next year, reflecting recent lower rates of contract wins.

Group revenue is expected to reach US$5.5bn for the year, with the engineering & construction (E&C) business due to generate US$4.4bn but its net margin expected at the lower end of guidance, however.

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“We remain on course to report good results for 2019 in line with prior guidance, which reflect solid operational performance across the business and continued progress delivering our strategy,” said chief executive Ayman Asfari.

“We are encouraged by the improving market outlook and our busy tendering pipeline, with US$39bn of bid opportunities scheduled for award by the end of 2020 in both core and growth markets.

“We have seen delays in E&C bidding processes in the second half of the year, which has further impacted new order intake following the previously announced loss of awards in Saudi Arabia and Iraq in the first half. However, we are well-placed on several opportunities.”

Asfari added: “Looking forward, the fundamentals of our business remain robust, with an improving market outlook, a strong competitive position and excellent customer relationships.

“We are therefore investing in maintaining our bench strength and technical capability to position Petrofac for a recovery in new orders in 2020 and future growth.”

Shares fell 5% to 380.5p by early afternoon on Tuesday.

Analyst Nicholas Hyett at Hargreaves Lansdown said: “It’s only a very brief trading update, but investors’ eyes will be drawn to the still shrinking order backlog… The lack of contracts to work on is starting to bite, and Petrofac’s impressive cost control efforts can only do so much to offset the headwind.”

“The good news is that the new business pipeline looks a lot healthier than this time last year. If Petrofac can deliver a reasonable hit rate on contract wins, then the improving market conditions could make 2020 a far more positive year than 2019. Only time will tell though.”