Oil services companies Wood Group and Hunting announce results in the coming week, with shares both having not shown much evidence of any benefit from the recent stream of cash flowing in the energy sector.
Wood Group (John) PLC (LSE:WG.) has been trying to reinvent itself by buffering up its green credentials but like its fossil fuel customers its fortunes are still seemingly tied to the oil and gas cycle.
That should be a help recently with news today, for example, that the Middle East producers could bank a very handy £1trn windfall from the recent surge in the crude price.
How much of that comes Wood’s way remains to be seen, but while it is reinventing itself, including new chief executive Ken Gilmartin starting last month, having a book of customers flush with cash will do no harm.
Next week’s interims have already been largely mapped out by a trading update last month: underlying profit (adjusted EBITDA) should be about US$250mln, down from US$262mln, with Consulting and Projects offsetting a decline at the Operations division.
Revenue should be around US$3.2bn with the order book 18% higher year on year and up 5% in the year to date.
“We expect a stronger performance in the second half, helped by an improved performance in our Turbines joint ventures and stronger revenue growth, particularly in our Projects business.”
Meanwhile, shares in Hunting PLC (LSE:HTG) have been treading water for years and it’s hard to see that changing with next week’s interims as a bullish trading update in July had little impact.
A higher crude price has led to more wells coming on line, especially in the US, which is helping margins at the oilfield services specialist with Hunting able to pass through the higher raw material costs it is experiencing.
“With energy security and consumer pricing for fuel now at the top of most political agendas, the outlook for the global oil and gas industry is now extremely positive, with many commentators forecasting a strong multi-year upcycle,” said Jim Johnson, chief executive.
Half-year underlying profits [EBITDA] are expected to be in the range of US$16mln-18mln with the second quarter seeing a pickup on the first three months.
Hunting said supply chain issues for electronic components and material delivery for high-nickel content hampered its first half progress but this issue should ease as the year progresses.