Wood Group, the international energy services company, issues the following pre-close trading update for the year to 31 December 2011. Full year results for the year will be announced on 6 March 2012.
Overall, the Group expects to deliver good growth, with performance for the year in line with expectations.
Conditions in oil & gas markets remain strong, with commodity prices at favourable levels for the customers. They are not witnessing any material change in customer behaviour as a consequence of volatility in financial markets, and we remain confident in the longer term prospects for oil & gas and gas fired power generation.
In Engineering, they have continued to see good growth and our order book remains strong. In upstream, they are active on a number of contracts, including the Chevron Jack/St Malo, Hess Tioga and Noble Alen projects, in addition to Anadarko Lucius awarded in the second half. Subsea & Pipelines continues to perform well, notably in the UK and in Australia where a recent important deepwater project was secured for Hess. In downstream, the market remains soft and performance has remained in line with the previous year.
In Wood Group PSN, integration is progressing well. Demand for the activities remains strong in the North Sea, where they recently extended the operations & maintenance and engineering modifications contracts with Talisman. In North America, they have seen good activity levels offshore Gulf of Mexico and in the onshore market, driven by strong activity in the shale regions. Internationally, they continue to be active in a large number of markets, including Brunei, Kazakhstan, Nigeria and Russia, where they extended the contract with Sakhalin Energy. Performance in the second half will, however, be below expectations due to losses on two Wood Group Production Facilities contracts; a continuing slower than expected start up in the significant contract with Petroleum Development Oman (“PDO”) and forecast losses on a downstream project in Colombia. Action has been taken to improve performance in both these areas in 2012.
In GTS, Maintenance activities are expected to deliver an improved second half performance, despite relatively weak conditions in the power sector. They have taken steps to develop the long term maintenance service offering, including the formation of a strategic alliance with Pratt & Whitney Power Systems to service the GE Frame 7FA turbine aftermarket. In Power Solutions, good progress on the Dorad and GWF contracts has resulted in a meaningful second half profit contribution and these contracts continue to provide good visibility into 2012 and 2013.
Wood Group full year results will include a significant net exceptional gain of over $2bn. This reflects the gain on sale of the Well Support division, net of certain charges including those related to acquisitions, disposals, integration, restructuring and political disruption.
Their robust balance sheet and anticipated strong second half cash flow provide a good platform for the Group’s future development.
Overall, performance for 2011 is anticipated to be in line with expectations, with Engineering and GTS ahead of expectations and Wood Group PSN behind expectations. They anticipate good growth in all divisions in 2012 and remain confident in the longer term fundamentals for oil & gas and gas fired power generation and the prospects for the Group’s market leading services.
[mappress] Subsea World News Staff , December 15, 2011; Image: Wood Group