Oilfield services giant Wood Group remains cautious on the near-term outlook for the oil and gas market despite some signs of recovery.
The company on Tuesday posted a profit of $34.4 million for 2016, a 62 percent drop from a profit of $90 million in 2015. Revenue fell 15.7 percent to $4.9 billion, down from $5.8 billion a year earlier, as E&P players spent 20 percent less than in 2015.
Wood Group said the oil and gas market would continue to present challenges in 2017, adding that modest recovery and increased spending is expected only in selected areas such as U.S. onshore and greenfield offshore projects. This slight increase is expected to be largely offset by further reduction elsewhere, Wood Group said.
Working to cut costs, the company reduced its headcount by 18 percent in 2016.
“Despite challenging conditions in our core oil & gas market in 2016 the Group delivered financial performance in line with expectations. Results benefited from the robust management of utilization and costs and one off benefits. We enter 2017 as One Wood Group, repositioned to enhance customer delivery and we are encouraged by their support for our services, albeit in a competitive pricing environment. The oil & gas market continues to present challenges and we remain cautious on the near term outlook,” said Robin Watson, Chief Executive.
Wood Group in 2016 acquired two companies, the Australian piping player SVT, and the U.S. software specialist Ingenious.
The company’s CEO said there would be no change to Wood Group’s appetite or focus on M&A.
Watson said: “Opportunities have been less than anticipated in 2016 and we have remained disciplined as regard to potential targets. We continue to focus on opportunities that may better consolidate our offering or accelerate delivery against our strategic objectives, including broadening our end market exposure.
“The Group continues to benefit from a strong balance sheet and we are comfortable with the flexibility, diversity and maturity of our funding. Ongoing dividends, organic investment and M&A remain our preferred uses of cash.”
Offshore Energy Today Staff