Wood Group Anticipates Good Operating Cash Flow for 2009
Wood Group, the international energy services provider, has issued the following Interim Management Statement. A full year trading update will be provided on December 17, 2009.
Market conditions remain broadly consistent with those outlined in our half year results statement issued on August 26, 2009, and we are continuing to benefit from a robust performance from our production support related activities, which make up around 55% of revenue across the Group's three divisions.
In our development related Engineering activities, we are continuing to see delays both in the pace at which projects are being progressed and in further awards and, although we have a good prospect list, these two factors will continue to impact both activity and margins. Volumes in subsea and pipelines have remained robust and we have recently secured a three year project management contract for a gas storage development offshore Spain.
In Production Facilities, we have seen good opex related activity across our longer term contracts in the North Sea, including work on the new awards secured in the second half of 2008, and we have recently announced a new three year contract with Chevron to support their North Sea assets. In international markets, we have continued our investment to build up our Australian hub and have recently been selected to provide operations, maintenance and modifications to two Peregrino wellhead platforms in Brazil. We announced the acquisition of Baker Energy for $38m on October 1. Baker Energy provides a broad range of operations & maintenance services to oil & gas operators, both onshore and offshore. The company has a strong presence in the US, including a market leading position in deepwater activity, and operates in various countries in Africa and Asia Pacific. Baker Energy will be integrated with our existing Production Facilities operations.
In Well Support, our Electric Submersible Pumps business continues to make good progress in developing its international activities, including securing a new contract in Colombia and increased activity in Kuwait and Chad. For Pressure Control and Logging Services US gas related activities, the US rig count appears to have stabilised and is expected to increase into 2010 which should provide positive momentum for our businesses. We retain our focus on expanding Pressure Control's business globally, recently strengthening our position in Mexico and the Middle East.
In Gas Turbine Services, demand for our aftermarket services in oil & gas, and power & industrial applications has generally remained robust and we recently secured a number of operations & maintenance agreements, including a five year agreement with Brick Power and a nine year agreement with J Power, both in the US. In our fast track power package activities, we continue to see strong enquiry levels, but the timing of awards continues to be delayed.
Our financial position remains strong and we anticipate good operating cash flow for the year. Overall, we believe our 2009 performance will be in line with expectations. We remain confident in the medium and longer term fundamentals for our business, and believe that our market leading services and products will enable us to resume good growth as energy markets recover.
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