Wood says deals would allow firm to focus better

Published on Saturday 19 February 2011 21:57

SIR Ian Wood, chairman of Wood Group, hailed the sale of a third of its business and the acquisition of rival PSN as "the two biggest steps" in the history of the firm, as pre-tax profits for the year were down slightly but in line with consensus estimates.

The Aberdeen-based firm said it would focus on building its business in three "market-leading positions" following the $955m acquisition of rival PSN in December and the sale of its well services division for $2.8bn to American industrial giant GE last week.

He said the deals demonstrated that Wood Group was "not the Aberdeen, Wood family-associated business" but a "very large oil and gas services company with global aspirations".

Sir Ian said that the PSN acquisition put the firm "slap bang at the top of the first division" in production services industry worldwide.

He said he had come under heavy questioning about why the firm sold its profitable well services business. The latest figures showed revenues had grown over 16 per cent to $947.1 million and had also seen earnings before exceptionals (ebitda) improve by more than 70 per cent to $128.1m.

He said: "It is a fine business, which has grown very well in the last 15 years, but it is working in a market against really vast players such as Schlumberger and Haliburton - who are way up in the first division."

He added that to have grown Wood Group's business to rival top players "would have required a huge amount of investment".

The firm said it would continue to expand its focus on international markets such as Angola, Brazil, Canada, Malaysia and Saudi Arabia, while business in the North Sea has slowed.

Sir Ian said the firm currently had no operations in Libya or Tunisia but that the current political turbulence in across the Arab world were troubling for the sector.

He said: "Part of our skill is to assess and mitigate the risk as part of what could go wrong.

"We really hope the Middle East situation settles down quite quickly and we can go back to a more normal time.

"We don't rub our hands with glee - we would much prefer stability," added Wood.

Pre-tax profits for 2010 fell 4 per cent to $254.6m in 2010, while revenues grew 2.8 per cent to $5 billion. The company confirmed the Aberdeen-based oil and gas services firm would return at least $1.7 billion to shareholders once the sale of its well services division was complete this year.Sir Ian said the sale of the division earlier this month would "effectively finance" the acquisition of PSN, as well as see shareholders get cash back on the deal.

Trading in Wood Group shares fell slightly to 642.5p, having gained 13 per cent since the company said it was selling the well support unit.

The firm also announced that John Ogren, a non-executive director who has been on the board since 2001, will retire at the 2011 annual general meeting.