Interim Management Statement
John Wood Group PLC ("Wood Group")
Interim Management Statement
9 October 2008
Wood Group, the international energy services provider, issues the following
Interim Management Statement. A full year trading update will be provided on 17
December 2008.
Demand for our services and products remains high, despite the significant
current volatility in financial, commodity and currency markets. We believe
that our oil & gas customers' major development decisions are based on their
assessment of longer term oil prices, and they are committed to long term
investment programmes to sustain and enhance production. In power markets, gas
fired generation is taking an increasing share due to its relative
environmental benefits and this is leading to increased activity in the
maintenance and repair market.
Trading performance for the year to date has been strong and we expect our
growth to continue. Headcount has increased this year by over 3,000 to
approximately 28,000 at the end of September, with the increase mainly in
Engineering & Production Facilities.
In Engineering & Production Facilities, there is strong demand for our
engineering services, where we remain active across all areas. The key drivers
for our upstream, subsea and pipeline engineering activities are the high
levels of development spending by our clients; and for our downstream, process
and industrial activities, it is the spend on upgrading, debottlenecking and
legislative compliance programmes. Recent examples of contract awards include
front end design work for the topsides, subsea flowlines and pipelines for
ConocoPhillips' Ekofisk development in the Norwegian sector of the North Sea,
the topsides for Hess Corporation's Pony development in the deepwater Gulf of
Mexico and detailed topsides design for MODEC on the first FPSO to be installed
in the Jubilee field development offshore Ghana. As part of our ongoing
strategy to expand and enhance our capabilities in the fast growing subsea and
deepwater markets, we acquired MCS, a global subsea engineering consultancy
with a market leading position in riser & mooring design, and a leading
offering of advanced engineering and software solutions to the subsea industry.
In Production Facilities, our markets remain strong both in the North Sea,
where we are seeing ongoing activity on tieback and production enhancement
projects, and in other international locations, where there is a drive to
increase efficiency of production operations. Our North Sea market position has
been enhanced by our selection as duty holder for a number of North Sea fields
and this new business will make a good contribution in 2009. In the period, we
enhanced our capacity for future growth in the Middle East by entering into a
joint venture with Consolidated Contractors Company (CCC) and we have expanded
our capability in safety and emergency response training with the acquisition
of M&O Global.
In Well Support, our Electric Submersible Pump artificial lift activities
benefit from our clients' spending to enhance and prolong production from
existing oilfields. Our Pressure Control business in North America has seen
robust volumes from a number of the major unconventional shale developments now
being exploited, and has continued to successfully grow its business round the
world. Logging Services continues to see strong demand for its services, both
in the US and in Latin America. We are continuing our investment programme to
increase capacity and to deliver future growth, including manufacturing
investment in China and Mexico and new product development.
In Gas Turbine Services, oil & gas production focused activities continue to
see good demand due to high turbine running hours. Demand for power &
industrial related activities also remains robust, driven by continuing good
activity in the US, strong demand in Latin America and Canada, and the ongoing
growth in the Eastern Hemisphere. We continue our focus on improving margins
through various initiatives, including increasing the amount of revenue under
longer term contracts, internal restructuring and developing new product and
service capabilities.
Our overall funding position remains strong, with bank facilities of around
$1bn committed to July 2010. We anticipate a good working capital performance
in the second half, which will drive strong operating cash flow for the year.
Despite the significant current volatility in financial, commodity and currency
markets, demand for our services and products remains high, trading performance
for the year to date has been strong and we expect our growth to continue.
Information:
Wood Group 01224 851 000
Alan Semple
Nick Gilman
Carolyn Smith
Brunswick 020 7404 5959
Patrick Handley
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