Wood Group today said it would increase its dividend for the year by a “double digit percentage”.
The service firm confirmed the boost in its pre-close trading statement. Wood Group, who reported a thin North Sea workbook, said it saw indications of “modest recovery” in selected markets.
“Oil and gas markets remain challenging in 2016. Lower oil prices have endured and activity has fallen across the sector. In response, we have significantly reduced our cost base, worked alongside customers to improve efficiency and refined our operating structure to enhance customer delivery,” the update read.
“We anticipate full year 2016 financial performance in line with current market expectations. Our balance sheet remains strong and our intention remains to increase the dividend for 2016 by a double digit percentage.
“Looking ahead, the market continues to present significant challenges and although these are likely to persist during 2017, in selected markets we do see indications of modest recovery. We are confident that our focus on delivering value through our asset life cycle and specialist technical solutions, together with our customer relationships, global footprint and strong financial footing position us well.”
Wood Group’s operations and maintenance activities faced a “tough market in the North Sea”. Work for the year was down on 2015’s levels.
“In the UK North Sea, we have seen a significant fall in brownfield modifications and upgrade activity under existing contracts,” it read.
Its subsea arm experienced a similar slowdown, according the update.
“We have seen significantly reduced Subsea services activity. We are working on a number of early stage, tie back and verification scopes, but there are minimal large projects coming to market,” it read.
“Relationships with our customers remain positive, evidenced by a number of master service agreements including Statoil, Apache, BP and Chevron. Within our technology offering, we saw growth in our smart asset integrity services.”
The oil firm managed to off-set the drop by work in the Western Hemisphere.
“Operations and Maintenance activity is up on 2015 due to the impact of Infinity and Kelchner acquired in 2015 more than offsetting lower underlying activity. Our US onshore shale business has been significantly impacted but remains the largest contributor to this service line in the West,” the statement said.
The statement added: “We anticipate full year 2016 financial performance in line with current market expectations. Our balance sheet remains strong and our intention remains to increase the dividend for 2016 by a double digit percentage. Full year results will be announced on 21 February 2017.”
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