Wood Group's trading in the year to date weaker than anticipated as oil prices stay low

 
Courtney Goldsmith
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Endangered Blue Whales Spotted Off California Coast
Trading remains tough in the oil and gas sector (Source: Getty)

Energy services firm Wood Group's performance so far in 2017 has been weaker than expected as low oil prices continue to weigh on the firm.

The group made the announcement ahead of its annual general meeting today.

Despite continuing challenges in the oil and gas market that have caused its year-to-date performance to be down compared with 2016, the firm said stronger performance is expected in the second half, so full-year guidance remains broadly unchanged.

A slowdown in North Sea projects and modifications work has hit the company's finances, offsetting improved activity levels in offshore greenfield project engineering and commissioning.

Wood Group said operations in the North Sea are seeing lower activity and the impact of competitive pricing on contracts renewed over the last 18 months.

In the US, the firm said rig count increases are encouraging. Although the US onshore shale market has modestly improved since the start of the year, it is still down on 2016.

"Overall, year-to-date performance has been weaker than anticipated," Wood Group said.

"However, recent awards and renewals demonstrate good customer support and we are seeing the enduring benefit of structural cost reductions achieved in 2016."

Read more: Wood Group boss: Is there room for four North Sea contractors?

The FTSE 250 group has been badly affected by the steep drop in oil prices which started at the end of 2014 as producers slashed their budgets to balance their books. In the firm's year-end results, it said customer spending has spiralled down 20 per cent.

The company is in the midst of a £5bn tie-up with Amec Foster Wheeler, which it said is expected to close in the second half of 2017.

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