Wood Group bullish in face of crude slide

Published on Wednesday 13 May 2009 21:39

OIL services heavyweight Wood Group gave a robust trading outlook yesterday, saying it was coping with the slump in crude prices.

The Aberdeen-based company, which employs 28,000 staff, said market conditions remained similar to those at the start of the year, and its performance had been in line with expectations.

In a statement issued at the firm's annual meeting, chairman Sir Ian Wood highlighted the group's "wide international spread and high-quality customer base".

He said Wood Group continued to expect a 10-15 per cent fall in global exploration and production spending and a decrease in service company activity. But he told investors: "Although some projects are subject to delays, larger customers are generally continuing to make major project decisions based on oil and gas prices increasing in the medium term."

Oil prices have tumbled from last summer's highs of almost $150 a barrel, hitting lows below $40 before a partial rebound to current levels of about $60.

The decline has hit investment in new exploration projects and the demand for many support services.

Wood added: "Across the group we have implemented a range of efficiency and cost reduction measures, particularly in areas of business where activity has reduced."

Barclays Capital analyst Mick Pickup said: "We see Wood Group as one of the key investments in the sector at present."