Wood Group future-proofed after ‘challenging’ three years

The boss of oil service giant Wood Group has admitted that the last three years since the downturn have been “very challenging” due to a drop off in North Sea activity.

But chief executive Robin Watson said the company is now positioned to provide a stable future for its employees.

The energy services firm is poised to complete a takeover of Amec Foster Wheeler later this year, in what is seen as a landmark deal.

Mr Watson, speaking at Offshore Europe in Aberdeen, said: “The particular challenges that we have seen locally, that’s significant for us.

“The areas in which we are seeing an uptick in activity are our offshore engineering work that we do out of Houston, our onshore shale business, our automation business and actually in the Caspian and the east.

“Actually some parts of oil and as are recovering but the north Sea sector certainly remains a challenge for us, just in terms of the activity decline.

“As an industry we have lost 350,000 people in the last three years and Wood Group are no more immune to that decline than anyone else is.

“The job losses we’ve experienced are largely based on activity levels – the less you are doing in the field, the less support you need.”

“We have also, in the downturn, put in some new back office systems and done some shared services – so we have looked at making sure we are as efficient as possible .

“The reason we do that is to be competitive when we tender and try and secure work so we can give good, secure futures to the people that do work for us.

“There’s no doubt, the last three years have been very challenging for us and everyone working in the oil and gas sector.”

One of the big changes made, according to Mr Watson, is basin exposure – narrowing margins by going to areas where activity has not seen such a big drop off.

He said: “From our perspective, Wood Group over the last five years we have broadened our basin exposure significantly.

“Five years ago we were probably 45% plus reliant on the North Sea oil and gas sector. This year we are less than 20% in North Sea oil and gas.”

Mr Watson used the analogy of the Lewis and Clark expedition, who set out to search for a waterway stretching from the east to the west in the US.

He said: “Some months in however they discovered the Rockies and you cannot cross mountains with canoes. Being very resourceful individuals they traded the kit away and they successfully completed the expedition some 18 months later.

“The analogy I was using, in the oil and gas sector, no matter how well we’ve responded to the current downturn, and even no matter how well we think we’re positioned for the future, are we going to attempt to cross mountains with with canoes or are we best to just assess the situation and be thoughtful on the future perhaps being a bit different to the past.”