US shale will drive growth for oil services giant Wood Group in the coming year but North Sea contracts for the Aberdeen firm are still “healthy”, chief executive Bob Keiller said.
The group yesterday unveiled “record” results for 2013 as pre-tax profits rose 14% to £247million on revenues of £4.3billion for 2013. But the firm signalled a weaker outlook for its core engineering division this year.
Wood Group recently increased its exposure to the onshore oil and gas market in the US with the £130million acquisition of Wyoming-based services firm Elkhorn in November – making the market a “hot spot” for Wood, Mr Keiller said.
But the firm warned that a slowdown in investment by oil majors would affect its offshore business.
“We anticipate growth in subsea & pipeline to be more than offset by a reduction in upstream, where we see good prospects although not of the scale of the significant offshore projects recently completed,” the company said.
But Mr Keiller insisted that the North Sea, which accounted for 40% of the Wood Group’s revenues in 2013, would remain stable this year due to a number of significant contract extensions.
“We saw healthy activity levels in the North Sea in 2013, and we see that heading into 2014,” said Mr Keiller.
“But it is fair to say we see lots of potential in the US shale based activities,” he added.
Mr Keiller, who completed his first full year as chief executive, also welcomed the prospect of the publication of a report by Sir Ian Wood, the company’s former chairman.
Sir Ian’s report, due to be published on Monday, is expected to call for greater collaboration in the ownership of North Sea assets.
“Anything that stimulates continued investment into the [North Sea] basin has to be a good thing for all of us involved in providing services there,” said Mr Keiller. “What we see typically is when we see a change of ownership in any form, people tend to want to invest.
“That investment trickles down to activity within the supply chain and that leads to jobs for the north-east, and the rest of Scotland and the UK.”
Mr Keiller also paid tribute to outgoing chairman Allister Langlands, citing his “extraordinary dedication and leadership over 23 years”.
Mr Langlands is being replaced by former SSE chief executive Ian Marchant in May.
Wood Group’s market capitalisation gained almost £170million yesterday after its share price closed 6.6% higher at 721.5p.