US Shale Presence Helps John Wood Group's Core Profit
Aug 19 (Reuters) – John Wood Group Plc, a British energy services company, is banking on its presence in the U.S. shale industry to drive growth, after its production services business helped offset weakness in other divisions in the first half of the year.
Shares in the company rose 6 percent, making the FTSE-250 component one of the top five percentage gainers on the index on Tuesday morning.
The company expects full-year earnings before interest, tax and amortisation (EBITA) to increase from last year, led by its production services division, Wood Group PSN, which accounts for more than 60 percent of total revenue.
"Wood Group's 1H 2014 (first half) results and the outlook for 2014 reflect the importance of its exposure to U.S. shale within (mainly) the PSN business," Credit Suisse analysts said in a note.
The company's primarily shale-related U.S. onshore projects have brought in more than $500 million of revenue so far this year. Revenue from Wood Group PSN rose 22.4 percent to $2.34 billion in the first half of the year.
Wood Group PSN works on modification, enhancement and abandonment of mature oilfields, while the company's engineering segment designs, builds and maintains oil and gas facilities and pipelines.
Wood Group said EBITA from production services rose 47 percent, but fell 9 percent in its higher-margin engineering services segment, hurt by a slowdown in upstream projects in some regions.
Total EBITA rose marginally to $243.9 million for the six months ended June 30 from $243.2 million a year earlier.
Total revenue rose 10.3 percent to $3.80 billion.
The company, which competes with Amec Plc, raised its interim dividend by 25 percent to 8.9 cents.
Shares in the Aberdeen, Scotland-based company rose 4.6 percent to 786 pence at 0953 GMT on the London Stock Exchange. They touched a high of 796.5 pence earlier in the session.
(Reporting by Abhiram Nandakumar in Bangalore; Editing by Gopakumar Warrier)
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