Wood Group says oil project spending will rise in 2010

Published on Thursday 17 December 2009 20:38

WOOD Group, Scotland's largest oil services company, has predicted that spending on new projects will begin to grow again in the second half of 2010.

After reaching record highs in mid-2008, a plunge in the price of crude has seen oil companies slash new project budgets.

Wood has been hit by the downturn, with analysts forecasting that its profits this year will be about 20 per cent below those of 2008.

The Aberdeen-based group said yesterday that its development-related engineering business continued to be hit by delays, reducing volumes and margins, a trend it expected to continue at least until the start of 2010.

However, the company appeared to call the bottom of the oil services market, predicting an improvement on spending on new projects in the second half of next year.

"With our good prospect list, we believe activity should begin to recover in the second half of the year," Wood said in a statement.

Other parts of Wood's business are already seeing recovery, with its well support division boosted by a rise in the number of drilling rigs operating in the US.

Wood said its financial position remained strong, with underlying earnings set to meet market expectations.

Analysts at RBS are forecasting full-year earnings before interest, tax and amortisation of $345 million (214m).