Energy service business Wood Group said yesterday that the unit it created after buying PSN was performing below expectations after delays on two contracts.
The Aberdeen-based company said demand for Wood Group PSN’s (WGPSN) services in the North Sea remained strong, but added that it had encountered problems in other regions.
The work in question, which was won by the group before the PSN takeover, includes losses from delays to a £500million-plus contract the company landed a year ago in Oman.
Wood said it had taken on 1,500 people for the seven-year project for Petroleum Development Oman (PDO), but added that it needed to recruit more workers with different skills to match PDO’s requirements.
A spokesman for the company said revenue from the contract had been held back by the delays, but added that it should become profitable in 2013.
In Colombia, WGPSN is carrying out engineering, procurement and construction work on a downstream project, and the company said that, despite past success in the country, it was facing civil-engineering and supply-chain challenges on the latest deal with Ecopetrol.
Wood said it now expected a loss under the contract, which would be accounted for in this year’s results and would not affect performance in subsequent years.
In a pre-close trading update for the year to December 31, the group added that the delays had held WGPSN back in the second half of the year.
Wood Group said it expected to deliver good growth overall, however, thanks to positive conditions in the oil and gas markets and favourable commodity prices for its customers. The company added: “We are not witnessing any material change in customer behaviour as a consequence of volatility in financial markets, and we remain confident in the longer-term prospects for oil and gas and gas-fired power generation.”
The group said maintenance activities in its GTS (gas-turbine service) business were expected to deliver an improved performance in the second half of the year, despite relatively weak conditions in the power sector.
Wood added: “We anticipate good growth in all divisions in 2012 and remain confident in the longer-term fundamentals for oil and gas and gas-fired power generation and the prospects for the group’s market-leading services.”
