(Reuters) – Technip Energies (TE.PA) has renounced new business opportunities in Russia following its invasion of Ukraine, the head of the French oil and gas services provider said on Thursday, as its full-year margin guidance drove up shares.
“We have ceased to work on future business opportunities in Russia,” Arnaud Pieton said in an earnings statement, but added that the potential financial impact of the crisis was “contained”.
BP , Shell (SHEL.L) and ExxonMobil (XOM.N) are among the oil majors that have announced plans to exit positions and joint ventures in Russia amid crippling sanctions on the energy-rich nation for what it calls a “special operation” in Ukraine.
By the end of December, about 3.8 billion euros ($4.22 billion), or 23% of Technip Energies’ order backlog, was related to Russian projects in execution, said the firm, which specialises in engineering and technology for the energy sector.
Against this backdrop, the firm pointed to a strong balance sheet, positive project cash flows and contractual protections, allowing it to provide what analysts qualified as standout margin guidance.
“The 2022 margin guide stands out, particularly on an ex-Russia basis,” J.P. Morgan analysts wrote in a note to clients.
Technip Energies expects an adjusted core profit (recurring EBIT) margin of at least 6.5% in 2022, excluding an estimated EBIT contribution of less than 70 million euros from projects under execution in Russia.
Shares, which had lost more than a fifth since news of last week’s Russian invasion, soared more than 19% in morning trading to the top of France’s SBF 120 index (.SBF120), for their best day ever.
As Russia exports about 4 million to 5 million barrels per day of crude oil, the International Energy Agency (IEA) agreed on Tuesday to release 60 million barrels from emergency reserves to put a lid on market gains. read more
However, Goldman Sachs warned this would not be sufficient to bridge the shortfall in supply stemming from the Ukraine invasion or hold down prices.
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