Shares of Glasgow-based global engineering giant Weir Group rose about 7% on Wednesday after CEO Jon Stanton told investors the group plans to become “a mining technology pure play” and plans to sell its oil and gas businesses “at the right time.”

Announcing results for the year to December 31, 2019, Weir said it took a £546 million impairment in its North American oil and gas business. 

Weir reported a £372 million pre-tax loss, down from an £86 million profit in the previous year. Revenues rose 7% on a constant currency basis to £2.66 billion.

Stanton said: “Since becoming CEO in 2016, the group’s clearly stated priority for capital allocation has been on extending our premium mining technology positions. 

“We have made good progress, including the acquisition and successful integration of ESCO, the sale of Flow Control and continued strengthening of Minerals. 

“The Oil & Gas division shares many of the same underlying characteristics as Minerals and ESCO, but its market dynamics have changed with shorter cycles and higher levels of volatility leading to a very different financial profile to our mining businesses. 

“As a result, we have recognised a £546m impairment in our North American Oil & Gas business. 

“Our focus is now on becoming a mining technology pure play and we are looking for opportunities to maximise value from the Oil & Gas division at the right time. 

“Today, the market backdrop is a challenge, so we will continue to manage the business with a long-term perspective, including taking continued action to optimise our footprint for current market conditions whilst still investing in technology to drive market share gains and support long-term value. 

“However, we are taking actions so that whenever we identify a clear solution to drive value for our shareholders, we will be ready and able to capitalise.”

Weir shares rose about 7% to around £13.40 to give the Glasgow firm a current stock market value of around £3.2 billion.

Stanton added: “North American oil and gas market conditions deteriorated significantly through the year and we undertook a major cost reduction programme in response. 

“While the long-term prospects for shale remain positive, current market dynamics mean it now has a very different investment case to our premium mining technology positions. 

“We are therefore taking actions so that we can maximise value for shareholders whenever the right opportunity is identified. 

“Looking to the year ahead, there is uncertainty over the impact of coronavirus (COVID-19) on the global economy and demand for natural resources. 

“Assuming underlying demand does not change, we expect further good constant currency growth in our mining-focused businesses to be offset by the continued challenges in North American oil and gas markets.”