Upbeat trading update boost for Abbot shares

Published on Wednesday 11 January 2006 01:15

ABBOT Group, the Aberdeen-based oil services firm, saw its shares climb nearly 6 per cent yesterday after it issued a bullish view of the oil and gas sector, while revealing that the long-awaited sale of loss-making division Spear Technologies would go through before March.

The company said it expected oil prices to remain "well above" $35 a barrel throughout the year, accelerating investment in the industry and increasing demand for its own services. Abbot carries out drilling contacts worldwide, including Russia, Libya and the North Sea.

Chief operating officer Mike Salter said it was encouraging that the oil price "had not had a big impact on general economic activity", adding that demand for gas projects, particularly LNG, was creating opportunities.

Abbot unveiled new contracts yesterday worth $275 million (156m) in Russia and Saudi Arabia. The news came alongside an assurance to investors that it would produce full-year results in line with expectations, while it predicted improved full-year figures from 2007 onwards.

But the company continued to show its disgust for the recent tax hike on North Sea oil production, imposed by Chancellor Gordon brown in his Pre-Budget Report in December. Salter said: "We are now in an age of uncertainty. It is well documented that after previous examples of change, there has been a dip in activity."

Abbot generates just 15 per cent of its turnover from the North Sea, but that figure is set to fall as it moves into less mature markets. Salter said that the revenue figure of $100m (57m) would remain static, while the rest of the business was likely to grow.

Spear - an inspection company - is being sold to a North American company for an as-yet unknown sum. Abbot's shares closed up 15p at 280p.