US shale helps hike half-year revenue by 10% at Wood Group

Wood Group logoAberdeen-based John Wood Group – the British energy services company – is relying on its presence in the US shale industry to drive growth, after its production services business helped offset weakness in other divisions in the first half of the year.

The company expects full-year earnings before interest, tax and amortisation (EBITA) to increase from last year, led by its production services division, Wood Group PSN, which accounts for more than 60%of total revenue.

“Wood Group’s 1H 2014 (first half) results and the outlook for 2014 reflect the importance of its exposure to U.S. shale within (mainly) the PSN business,” Credit Suisse analysts said in a note.

The company’s primarily shale-related US onshore projects have brought in more than $500 million of revenue so far this year. Revenue from Wood Group PSN rose 22.4% to $2.34 billion in the first half of the year.

Wood Group PSN works on modification, enhancement and abandonment of mature oilfields, while the company’s engineering segment designs, builds and maintains oil and gas facilities and pipelines.

Wood Group said EBITA from production services rose 47%, but fell 9% in its higher-margin engineering services segment, hurt by a slowdown in upstream projects in some regions.

Activities broke even at the EBITA level reflecting a disappointing performance in Turbine JVs, together with losses on the Dorad contract in the period. However, Wood’s robust North Sea business benefitted from a number of contract renewals.

Total EBITA rose marginally to $243.9 million for the six months ended June 30 from $243.2 million a year earlier. Total revenue rose 10.3% to $3.80 billion.

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