International energy service giant Wood Group said yesterday it was mulling a sale of its well-support arm.
The Aberdeen firm gave no further details other than that current evaluation talks “may or not lead to a transaction”.
Oil and gas industry sources said the firm had hired Credit Suisse to advise on the potential sale.
The well-support division employs about 3,800 people worldwide, including 100 at Wood Group Pressure Control, at Peterhead.
US operations account for a large part of the workforce, with the rest spread between sites in Canada, Australia, Indonesia, Mexico, Saudi Arabia and Venezuela.
Speculators put the value of a potential deal for the division anywhere between £615million and more than £1.23billion.
Either end of that spectrum would more than cover Wood Group’s £606million acquisition of smaller rival and fellow Granite City company PSN late last year.
Interim figures from Wood Group last August showed well support netted earnings before interest, tax and amortisation (ebita) of £33.12million in the six months to June 30 on revenue of £278.4million. The performance accounted for about 35% and 19% of group ebita and revenue respectively.
In the previous full-year, well-support ebita totalled £46.46million on revenue of £503.54million.
The 2009 performance represented 21% and 17% of group ebita and revenue respectively.
Wood Group’s well-support arm offers services and products aimed at improving production rates and economic recovery from oil and gas reservoirs.
The division includes Wood Group ESP, Logging Services and Pressure Control.
According to some industry sources, first round bids for the well support arm are due on Wednesday.
It is thought a sale could be of particular interest to other oilfield service firms because of the division’s strong reputation for electric submersible pumps, which provide artificial lift in oil and gas production.
Sources believe potential bidders for the division could include General Electric, Halliburton, Weatherford International, Cameron International and FMC Technologies.
Leading energy service firms have been snapping up niche businesses lately to broaden the range of services they offer. There is an increasing trend among customers, particularly state-owned oil companies, for one-stop shopping when it comes to their service requirements.
In the past year, Schlumberger acquired Smith for its drill bits, Halliburton bought well-intervention expert Boots and Coots and Baker Hughes took over BJ Services to take advantage of the fast-growing American market for pressure pumping.
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