John Wood Group's shares fell in morning trading after the firm revealed a reduction in projects and modifications work, particularly in the North Sea, in a trading update for the six months to 30 June.
The FTSE 250 oilfield services firm's shares dropped 3.26 per cent to 639p in morning trading.
Wood Group noted continued challenges in its core oil and gas market, explaining that activity was impacted by the tougher pricing environment in 2016, which will result in a reduction in the first-half margin.
"First-half performance is down on 2016 and weaker than anticipated. We are more cautious on the full-year outlook but anticipate a stronger second half," Wood Group said.
The company, which provides services to oil producers like BP, said activity in the US shale market improved from the beginning of the year.
However, in the eastern hemisphere, results for the first half were "materially" down on the previous year.
Lower oil prices mean explorers and producers are slashing spending budgets, which is bad news for services firms like Wood Group.
Earlier this month, Wood Group's shareholders approved a merger with Amec Foster Wheeler.
Wood Group’s £2.2bn takeover of Amec, agreed in March, is expected to complete in the fourth quarter of this year.