Aberdeen-based group said it will also “apply tougher filters” when looking to make “value adding acquisitions” in response to low oil prices

Energy services giant Wood Group plans to cut spending by $30 million (£19.5 million) this year in response to low oil prices.

Reporting preliminary results for the 2014 year to December, the group said it is “taking a number of actions in the lower price environment”.

It plans to work with customers to help reduce costs and increase efficiencies, implement a range of “short term and longer term actions” to manage and reduce cost, increase its “focus on credit risks” and “apply tougher filters” when looking to make “value adding acquisitions”.

The Aberdeen-based group notes total revenues for the 2014 year rose 7.8 per cent to $7.61 billion (£4.96 billion) and earnings before interest, tax and amortisation (EBITA) rose 3.1 per cent to $549.6 million (£357.8 million).

Group profit before tax and exceptional items for the year rose 2.8 per cent to $424.2 million (£276.3 million).

The strongest performing division was Wood Group PSN (WGPSN), which delivered earnings growth of 30.4 per cent, driven by US shale and contract renewals in the UK North Sea.

Revenues from WGPSN, which provides services to optimise and extend assets, rose 16 per cent to $4.63 billion (£3.02 billion), “primarily attributable to performance in the Americas, led by higher margin US shale related activity,” the group said.

WGPSN also secured contract renewals in the UK North Sea worth in excess of $1.5 billion (£0.98 billion) in the 2014 year.

Wood Group said: “We have seen a continued focus by customers on their costs in the North Sea and have responded by delivering a number of solutions including implementing two cuts to contractor rates in May and December, which together reduce these costs to customers by around 20 per cent.”

Wood Group Engineering, which provides engineering services to the upstream, subsea & pipeline, downstream, chemical, process & industrial and clean energy sectors, saw revenues rise 7.3 per cent to $2.13 billion (£1.39 billion).

However, earnings from the division were down 5.7 per cent to $232 million (£151 million), with performance overall “impacted by the anticipated lower contribution from Upstream, which saw growth in onshore activity but was impacted by a reduction in US offshore and in Canadian oil sands”.

In turbine activities, total revenues dipped 21.5 per cent per cent to $849.7 million (£553.4 million) and total EBITA dropped 58.8 per cent to $33.3 million (21.6 million), $80.8 million (£52.6 million) in 2013.

Commenting on the 2014 year performance, Wood Group chairman Ian Marchant, said: “The Group performed well in 2014, delivering in line with expectations against a backdrop of a steep decline in oil price towards the end of the year.

“We will continue to help customers increase productivity in their new projects and existing operations.

“In line with our focus on customer efficiency, we are also implementing internal cost and efficiency measures to ensure we remain competitive.

“We will remain a reimbursable, asset light business with a balance of opex and capex activities, a broad range of longer two term contracts and significant customer and geographic diversification.

“As we look to 2015, we expect financial performance to demonstrate the quality of our people and the relative resilience of our business in a challenging market, and we will see the full year benefit from completed acquisitions.”

Source: www.dailyrecord.co.uk

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