International Energy Services company, the John Wood Group (LSE: WG.) updated investors ahead of December’s full year trading results. Conditions remain broadly in-line with pervious management guidance, with a ‘robust’ in its production support operation.
Wood Group is an international energy services company with approximately $5 bn sales, employing approximately 27,000 people worldwide and operating in 50 countries.
In their development related Engineering activities, Wood Group are continuing to experience delays in the service cycle effecting both the pace of progress in current projects and in the award process relating to new projects. Although Wood Group has a good prospect list, the two factors will continue to impact both activity and margins. Volumes in subsea and pipelines have remained robust and we have recently secured a three year project management contract for a gas storage development offshore Spain.
In Production Facilities related activity remains strong across longer term contracts in the North Sea, including work on the new awards secured in the second half of 2008. Wood Group recently announced a new three year contract with Chevron to support their North Sea assets.
In international markets Wood Group continued their investment in the ‘Australian hub’. Meanwhile in Brazil they have been selected to provide operations, maintenance and modifications to two Peregrino wellhead platforms in Brazil.
Earlier this month Wood Group announced the acquisition of Baker Energy for $38m. Baker Energy provides a broad range of operations & maintenance services to oil & gas operators, both onshore and offshore. The company has a strong presence in the US, specialising in deepwater activity. Baker Energy will be integrated with our existing Production Facilities operations.
The Well Support division, continues to make good progress in developing its international activities. The Electric Submersible Pumps business has made particularly good progress with a new contract in Colombia and increased activity in Kuwait and Chad. Wood Group maintains its focus on expanding Pressure Control's business globally, recently strengthening our position in Mexico and the Middle East.
In Gas Turbine Services, demand remained robust, the group recently secured a number of operations & maintenance agreements, including a five year agreement with Brick Power and a nine year agreement with J Power, both in the US.
According to Wood Group, their financial position remains strong, with good operating cash flow for the year anticipated. Overall 2009 performance is projected to be in line with expectations.