Shares of Aberdeen-based oil and gas services giant Wood Group fell about 3% after it said its 2017 first half performance was “weaker than anticipated” and down on 2016 and that it is “more cautious on the full year outlook but anticipate a stronger second half.”
Earlier this month, shareholders of Wood Group and rival Amec Foster Wheeler approved Wood Group’s roughly £2.2 billion recommended all-share offer for Amec Foster Wheeler, which would create a much larger firm with a market capitalisation of around £4.6 billion.
The deal, though, remains subject to clearances from competition authorities in certain countries where both companies operate.
In a trading update for the six months to June 30, 2017, Wood Group, said: “In the first half we have seen continued challenges in our core oil & gas market with modest recovery only in certain areas.
“Robust activity in the West including improved performance in offshore greenfield project engineering and commissioning is being more than offset by weaker activity in the East, where we have seen a further reduction in projects & modifications work, particularly in the North Sea.
“The impact of the tougher pricing environment in 2016, partially offset by the enduring benefit of structural cost reductions achieved in the last two years, will result in a reduction in first half margin as expected.
“First half performance is down on 2016 and weaker than anticipated.
“We are more cautious on the full year outlook but anticipate a stronger second half.”
Meanwhile, Wood Group also said Husky Energy awarded it a multi-million dollar contract to complete detailed engineering for the topsides of White Rose, a concrete gravity-based structure wellhead platform planned for offshore eastern Canada.
The project includes procurement services and engineering design work.
Wood Group CEO Robin Watson said: “We are combining our global expertise and capabilities from St. John’s, Canada; Houston; Sandefjord, Norway; and Bogotá, Colombia to complete White Rose in the next 12 months with a clear focus on adding value and delivering cost savings and efficient project delivery.”