Wood Group Shows Recovery In US Shale On Rising Oil Prices

Reuters

Dec 14 (Reuters) - Oilfield services company John Wood Group Plc's CFO David Kemp said on Wednesday that the company showed modest recovery in some of its oil and gas markets, including U.S. shale and offshore oil exploration and drilling businesses.

U.S. shale is the largest contributor to company's operations and maintenance contracts in its west region, which includes the Americas. John Wood Group said a steady rise in rig count would help its assets in the Permian, Eagle Ford, Marcellus, Utica and Bakken basins as the market recovers in 2017.

The number of oil rigs operating in the United States rose for a fifth straight week to 477, reaching the highest level since January as a surge in crude prices continued to bring equipment back into operation, weekly data from oil and gas services company Baker Hughes showed.

U.S. shale production is set to recover from a five-month decline in January, the U.S. government said on Monday. Oil rose to an 18-month high on Monday after OPEC and some of its rivals reached their first deal since 2001 to jointly reduce output to tackle global oversupply, though prices slipped late in the day.

Wood Group, which counts BP Plc as one of its customers, said in August that it expected a 20 percent drop in full-year EBITA.

Full-year revenue was expected to be $5.18 billion, according to company-provided consensus on its website. Pretax profit was expected to be $247 million.

The company reiterated on Wednesday it would raise its 2016 dividend by double-digit percentage points.

Oil companies have cut back on spending for exploration drilling and maintenance, reducing demand for engineering firms such as Wood Group that provide services such as overhaul of compressors, pumps, generators and rotating equipment.

The company, founded in 1912 as a ship repair and marine engineering firm, said it expected earnings before interest, tax and amortisation (EBITA) to be in line with the company-provided consensus of $370 million for the full-year ended Dec. 31.

Wood Group's shares were up 1.6 percent at 929.5 pence by 1037 GMT on the London Stock Exchange.

(Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Amrutha Gayathri and Martina D'Couto)

Copyright 2017 Thomson Reuters. Click for Restrictions.

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