Wood Group Posts 2008 Pre-Close Update for Global Oilfield Services
Wood Group has issued the following pre-close update for the year ending December 31, 2008. The announcement of the preliminary results for the year will be made on March 3, 2009.
Trading performance in 2008 has been strong and EBITA1 for the year is anticipated to be in line with expectations.
In Engineering & Production Facilities, we have seen strong demand for our Engineering services and have a healthy workload. In upstream, we continue to be a global market leader in topsides engineering, with recent wins including the ConocoPhillips Ekofisk development in the Norwegian sector of the North Sea and topsides design for Modec for the first FPSO for the Jubilee field development offshore Ghana. In subsea & pipeline engineering, we have reinforced our position as the leading subsea and pipeline engineering consultancy with further contract wins and with the acquisition of MCS, a global market leader in riser and mooring design. In downstream, we have been active on a wide range of projects related to legislative requirements and debottlenecking. Our developing international presence includes the award of a major new contract with Masdar in Abu Dhabi to provide front end engineering and design services (FEED) to the world's leading carbon capture and sequestration project, providing us with a key strategic position in this important new market.
Within Production Facilities, demand for our production support services continues to be driven by our clients' focus on maintaining production levels, ensuring asset integrity, and developing their operations in new markets. In the North Sea, during 2008 we won the duty holdership of a range of assets, including the recent award of a major contract with TAQA for five former Shell fields. In international markets, we have built strong positions in areas such as Algeria, Equatorial Guinea and Trinidad & Tobago. We have also 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 continue to benefit from our clients' spending to enhance and prolong production from existing oilfields. In Pressure Control and Logging Services
2008 has seen strong activity, although the expected reduction in US gas drilling will impact future demand in our gas development related activities, which represent around 6% of group revenue.
In Gas Turbine Services, our oil & gas production related activities, which account for about a third of the division's revenue, continue to perform well. In our Gas Turbines business, we are maintaining our focus on a range of initiatives to increase our differentiation and to increase our margins over time, including increasing the amount of revenue under longer term contracts, internal restructuring and developing new products and service capabilities. Enquiry levels in our fast track power business continue to be good, although we are seeing delays in the timing of certain projects.
Our overall funding position is strong, with bank facilities of around $1billion committed to July 2010. We expect to deliver an improved working capital performance in the second half of 2008 which will drive strong operating cash flow.
Looking to 2009, the global economic recession and significant fall in the oil price are resulting in a more uncertain and challenging outlook. Indications are that there will be a reduction in spending by clients, with a consequential impact on service company activity. Our strong order book, our focus on production support and longer term capital projects, our good international spread and our high quality customer base will stand us in good stead in this more challenging market.
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