$500m deal secures North Sea jobs for Wood Group

Energy services firm Wood Group hailed its first major UK contract of 2014 today with a $500 million (£300m) extension from Talisman Sinopec that secures hundreds of jobs.

Wood Group said the deal allowed it to retain 550 British jobs, both onshore and offshore. Picture: Getty

The Aberdeen-headquartered firm said its PSN division, which provides operational support to energy firms, would continue to work with Talisman Sinopec for a further five years on what is one of the largest contracts in its portfolio. The deal also includes options to extend the contract for up to four more years.

PSN will provide engineering services to its client’s 11 assets in the UK North Sea, including carrying out modifications to the oil platforms. It will also carry out work onshore at the Flotta oil terminal on Orkney for the joint venture between Talisman and Sinopec, which was formed to invest in the UK.

Wood Group said the deal allowed it to retain 550 British jobs, both onshore and offshore.

It is one of two major contracts PSN has with Talisman Sinopec. The other is for the provision of operations and maintenance services to the same 12 assets.

Dave Stewart, UK managing director of PSN, said: “We have worked with this key client for ten years and this award is testament to the relationship we have developed.

“Our Talisman Sinopec Energy UK project now employs 1,300 personnel onshore and offshore, making it one of the largest projects in our global portfolio. Securing this contract is a great way to kick off 2014.”

Wood Group now employs more than 12,000 people in the UK. Last year it noted that strong growth at its PSN arm was making up for a slowdown in its core engineering business.

Last year PSN saw nine North Sea contracts extended. In December, it was also awarded its first contract from BG Group.

Broker Investec said that it was unlikely to change its financial forecasts for Wood Group based on a contract extension.

Last week, Investec re-iterated its “buy” rating on Wood Group after the firm reported a 14 per cent increase in annual profits, to $412.8m.

The energy services firm admitted that it faced a tougher year ahead as oil companies scaled back their spend on exploration and production, but said its medium-term outlook should be secure as it benefits from both operational and capital expenditure.

The firm, which snapped up US construction services provider Elkhorn for $215m last year, also indicated that it was still on the acquisition trail.