LONDON, Feb. 24 (UPI) -- Costs tied to developing the Laggan-Tormore gas project in the North Sea ate into profits for full-year 2015, British services company Petrofac said.
The company recorded a net profit of $440 million before accounting for the extra costs associated with the project near the Shetland Islands. The profit translated to $9 million after the loss.
"Our results for 2015 were adversely affected by the Laggan-Tormore project on Shetland," Petrofac Chief Executive Ayman Asfari said in a statement.
The company in April warned of a loss last year after the final commercial settlement of the Laggan-Tormore client, Total. At the time, Petrofac said it expected to take no further profit or loss through third quarter 2015.
Adverse weather conditions in the North Sea delayed development by about a month last year, which in part led to a substantial increase in man-hours. Asfari said the additional charge of around $195 million, as predicted in April, was a deep disappointment to his company.
"With the plant now successfully operational, these issues are finally behind us," he said in his latest statement.
Petrofac's woes come as the North Sea energy sector faces a bleak future. A report from Oil & Gas U.K. finds exploration activity offshore is at an all-time low and there are no signs of improvement. Less than $1.4 billion in spending on new projects is expected in 2016, compared with an average of around $7 billion in the last five years.
Nevertheless, Petrofac said it would play to its strengths for 2016 after building securing new North Sea contracts from companies like Italian natural gas giant Eni and British company Centrica. Highlights outside the region include a $100 million one-year extension to help crude oil development in southern Iraq.