International energy service provider Wood Group said yesterday that demand for its services and products remained high, despite significant volatility in financial, commodity and currency markets.
The Aberdeen-based company added in an interim management statement that its trading performance for the year to date had been strong and it expected its growth to continue.
Shares in the firm closed last night up 10% at 277.75p.
The group now employs about 28,000 people worldwide, including more than 3,000 posts added so far in 2008, with the increase mainly in engineering and production facilities.
As previously reported, Wood has added about 400 jobs in the Granite City since the end of last year.
The company employs about 4,000 people – both offshore and onshore – from sites in the north-east.
Wood’s pre-tax profits for 2007 surged 42% to £131million, while turnover was up 28% to £2.238billion.
Market consensus for 2008 is for earnings before interest, taxes, depreciation and amortisation of about £220million.
Wood Group said yesterday: “We believe that our oil and gas customers’ major development decisions are based on their assessment of longer-term oil prices, and they are committed to long-term investment programmes to sustain and enhance production.
“In power markets, gas-fired generation is taking an increasing share due to its relative environmental benefits and this is leading to increased activity in the maintenance and repair market.”
Analysts said the statement was positive and had boosted investor faith in the oil service sector, which had flagged in the face of declining oil prices and wider global economic concerns.
Oriel Securities analyst Andrew Whittock said: “I would have thought the statement this morning gave some confidence that the 12-month outlook for oil service shares is still quite attractive and favourable.
“Investors have been worried that falling oil prices would lower demand for oil services and would put pressure on margins.”
Paul Singer, equity analyst at Barclays Wealth, said Wood was its preferred major UK oil service stock, adding: “The company has a strong market position and offers good growth opportunities.”
The Aberdeen group said that, in engineering and production facilities, there was strong demand for engineering services.
It added: “The key drivers for our upstream, subsea and pipeline engineering activities are the high levels of development spending by our clients; and for our downstream, process and industrial activities it is spending on upgrading, ‘de-bottlenecking’ and legislative compliance programmes.”
Wood said that, in production facilities, its markets remained strong both in the North Sea, where it was seeing activity continuing on tieback and production-enhancement projects, and in other international locations, where there was a drive to increase efficiency of production operations.
It added: “Our North Sea market position has been enhanced by our selection as dutyholder for a number of North Sea fields and this new business will make a good contribution in 2009.”
The company said that, in well support, its electric submersible pump artificial-lift activities benefited from clients spending to enhance and prolong production from existing oil fields.
“Our pressure-control business in North America has seen robust volumes from a number of the major unconventional shale developments now being exploited, and has continued to successfully grow its business round the world.”
Wood said that, in gas-turbine services, oil and gas production-focused activities continued to see good demand as a result of high turbine running hours.
Demand for power and industrial related activities also remained robust, driven by continuing good activity in the US, strong demand in Latin America and Canada, and growth in the eastern hemisphere.