Oil and gas services firm Wood Group today unveiled plans to expand its presence in America’s onshore shale market with the acquisition of engineering company Elkhorn.
The deal, for an undisclosed sum, is expected to complete by the end of this year and will see Wyoming-based Elkhorn – which employs 2,200 people and generated sales of about $250 million (£156m) last year – become part of Wood Group’s PSN subsidiary.
Wood Group PSN chief executive Robin Watson said: “The acquisition of Elkhorn is an important part of our US shale strategy and will expand our service portfolio for our US onshore customers.
“Elkhorn’s services and geographic presence are complementary to Wood Group PSN’s existing shale business.”
Elkhorn chief executive Sean Sullivan said the deal would benefit customers and staff of both companies.
“Elkhorn has achieved good growth over recent years, and we anticipate that in strong markets and with Wood Group’s support we will see this continue,” he said.
In January, Watson had outlined to The Scotsman his ambitions to increase the group’s presence in the shale market as he took over the reins at the PSN unit from Wood Group chief executive Bob Keiller.
Watson, right, joined Wood in 2010 following a 23-year career in the oil and gas industry, with companies including ExxonMobil and Petrofac.
Shale gas has transformed the energy market in the US, bringing down the price of power and encouraging manufacturers to invest in new production facilities.
But “fracking” – the method by which shale gas is extracted – has sparked controversy.
Glasgow-based Weir Group has already enjoyed success supplying pumps and valves to the shale gas industry.
Earlier this month, Wood Group cited the shale oil and gas industry in the US for helping it deliver “good growth” for the current year.
The Aberdeen-based firm, which posted a 16.6 per cent jump in first-half profits to $186.6m in August, said its engineering division remained on track to deliver earnings growth of between 10 and 15 per cent for the full year, boosted by onshore pipeline work for the shale sector.
Wood Group recently revealed that it generates about $500m in revenues by supporting production from shale fields in the US, and said the booming industry was leading the growth as its PSN division, with more than 1,900 staff employed in the shale arena.
Overall, the group, which employs around 43,000 people worldwide, said its full-year results should be in line with expectations, adding: “We anticipate improved operating cash flow in the second half, and our strong balance sheet provides a good platform for growth.”
Shares in Wood Group tonight closed up 0.5p at 777p.