OIL services giant Wood Group has posted a slump in half-year profits, blaming challenging conditions in the North Sea.
The Aberdeen-headquartered company, which is in the process of acquiring Glasgow-based rival Amec Foster Wheeler, reported a 77 per cent fall in pre-tax profit to $13.5 million (£10.5m) in the six months to June 30, while revenue fell 10 per cent to $1.9 billion (£1.4bn).
Chief executive Robin Watson said: “First-half performance was down on 2016, reflecting the different market conditions across our business.
“Robust performance in ALCS [Asset Life Cycle Solutions] West and growth in STS [Specialist Technical Solutions] was offset by a weaker performance in ALCS East where the North Sea market is particularly challenging.”
Wood Group also booked $47.6m of exceptional costs, more than half of which was linked to its proposed £2.2bn takeover of Amec.
However, the firm’s full-year outlook is unchanged and it anticipates a stronger second-half performance.
The Amec deal received a boost earlier this month when the Competition and Markets Authority (CMA) said proposals put forward by the firms could help allay antitrust concerns, meaning it will avoid a full-blown probe.
Watson added: “In June, shareholders overwhelmingly approved our offer for Amec Foster Wheeler which will accelerate our strategy to create a global leader in project, engineering and technical services across a broad range of industrial sectors, the largest of which will be oil and gas.
“We remain on track to complete the transaction in the fourth quarter.”
Meanwhile, French energy company Total has agreed to buy Denmark-based Maersk’s oil business in a $7.45bn (£5.8bn) deal.
The move, which will also require approval from regulators will see Total take control of Maersk’s assets in the UK sector of the North Sea, including the Culzean gas field.
Overall, Total will a business with one billion barrels reserves, around 80 per cent of which are in the North Sea.
Total chairman and chief executive Patrick Pouyanne said: “The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark.”
However, Pouyanne hinted that the purchase will lead to job losses. He said: “There are 700 staff on both sides in Total UK and Maersk UK with more or less same size of assets. Obviously we’ll merge these two subsidiaries.
“At the end of the day, we will have the opportunity to do some rationalisation.”
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