Weir Group shares jump as it raises full-year guidance on an upswing in the North American oil market

 
Courtney Goldsmith
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Weir Group is benefiting from the US shale boom (Source: Getty)

Shares in Weir Group rose nearly eight per cent this morning after the company noted a stronger than expected recovery in North American markets will result in higher revenue and operating profit in its oil division.

The engineering giant, which has a strong presence in North America and the Middle East, said higher levels of frack fleet utilisation and a significant tightening of industry capacity benefited its oil and gas division.

In a trading update for the full 2017 year, the company announced it delivered low double-digit operating margins in the first half.

Assuming the supportive market conditions continue, Weir, which makes pipes and valves for the energy and mining sectors, will deliver operating profits and revenues above the upper end of analysts' estimates.

Weir had previously noted a "significant increase" in North American onshore oil and gas activity in the first quarter due to the boom in shale activity, which helped boost oil and gas orders.

Read more: This is why US shale oil has surged and is weighing on prices

However, growth in the oil arm is expected to be partially offset by £13m in one-off charges to operating profit.

The Scotland-based FTSE 250 firm's shares lifted 7.68 per cent to 1,964p in morning trading.

"The updated outlook for the group's full-year performance is now for strong constant currency revenue and profit growth," the company said.

Weir Group will publish its its interim results on 27 July 2017.

Read more: Weir acquires a leading Asian oilfield services firm for $114m