Wood Group’s chief financial officer said the company expects changes to shift patterns in the North Sea to remain when the industry returns to an up-cycle period.
David Kemp spoke to investors following the announcement of the company’s pre-trade closing update ahead of its full year results next year.
He said the move to an equal time rota of three weeks on, three weeks off, had impacted on staffing reductions by around 20%.
Wood Group said it now estimates job losses of around 8,000 people by the year end following the continued decline in oil price.
The company said around 2,000 of those positions had come from its business operations in Europe.
Kemp said the shift pattern changes most likely represented a continued “structural change”.
He said the change in rota pattern was a “significant impact on the industry” which as a consequence had “significant reductions in headcount”.
The company said it expected 2016 would see further reductions to spending by operators.
Kemp said there continued to be a “lack of visibility” when it came to upstream and subsea engineering awards in the year ahead.
He said the UK had “clearly gone through a big change” in 2015 which was continuing into 2016.
The company has won a number of new contracts in the past year including a second FEED contract from Woodside in Australia.
The financial boss said Wood Group continued to be focused on international work and opportunities in Australia, Africa and “particularly Iraq.”
In its results earlier today, WGPSN said despite a strong performance in the US onshore marker last year, there had been “significant pressure” on both volumes and pricing in 2015.
Wood Group, which has made a number of acquisitions this year, has also said it remains focused on the M&A market.
It comes after acquisitions of Infinity, which is expected to close by the end of December 2015, and the completion of the acquisitions of Automated Technology Group in September and Beta Machinery Analysis in June.
In a statement the company said: “Our balance sheet and cashflow generation remain strong, supporting the delivery of strategic acquisitions and our previously stated intention to increase the dividend by a double digit percentage in 2015.
“Our strong balance sheet allows us to reinvest productively in the business, supporting our continued investment in acquisitions and organic growth. Cash flow generation remains strong, and we expect that net debt at the year end will be around 0.5 times EBITDA.
“Ongoing dividends, organic investment and M&A remain our preferred uses of cash. The recently announced acquisition of Infinity, which is expected to close by the end of December 2015, and the completion of the acquisitions of Automated Technology Group in September and Beta Machinery Analysis in June demonstrate the benefits of our strong focus on M&A.”
WGPSN said internationally it remains focused on its Shell Gabon contract as well as a maintenance contract for Statoil in Brazil.
Wood Group Engineering is continuing with work in its upstream portfolio on Det Norske’s Ivar Aasen and Hess Stampede.
The company said it expects to face an “exceptional” non cash impairment on its Ethos Energy business.
Wood Group said performance in its turbine activities was reflected by the “continued maintenance deferrals with oil and gas customers” as well as a “very disappointing” performance in the second half of the year from Ethos Energy.
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