Anticipated falls in capital spending by mining and oil and gas companies have yet to dent order books substantially, three of Britain’s leading suppliers to the sectors told investors on Wednesday.
Although some projects were being delayed, John Wood Group, the oil and gas services company, said larger customers “are generally continuing to make [important] project decisions based on oil and gas prices increasing in the medium term”.
However, the Aberdeen-based company said that it expected a 10-15 per cent contraction this year in exploration and production spending.
Spending in the North American gas market and on Canadian oil sands projects would be particularly affected, its annual meeting was told.
Oil prices, which slumped from a high of $147 (£97) last July to a four-year low of $32.70 in January, have recovered to trade at more than $60 this week, helping to ease fears of a collapse in demand for oil services companies.
Wood Group shares fell 13p to 249½p as the company said that its trading performance this year had been in line with expectations.
Its shares fell from 494½p in June to a low of 157¾p in early December on the back of the oil price collapse. They have since recovered about 65 per cent in a rally shared by many of the company’s peers.
Amec, the oil and engineering services group, told its annual meeting that “despite the limited impact of project deferrals and cancellations, our order book continues to [increase]”.
Shares in Amec fell 13p to 625p, well up from their low point of 377½p in October, as the company maintained its guidance of pre-exceptional profits in the range of £211m to £266m for the year.
Deferrals and cancellations of contracts in the first four months of the year were “not material”, Amec said.
It acknowledged the risk of customers cutting their spending later in the year. In spite of weakness in some natural resources markets, such as Canadian oil sands, orders in its other big divisions remained strong.
Weir Group, the Glasgow-based engineering group that supplies pumps and valves to the mining, oil and power sectors, maintained full-year profits guidance of £140m to £169m.
A 19 per cent decline in orders at Weir‘s minerals division, prompted by cutbacks and postponing of projects by many mining companies, was offset by increased orders in its oil and gas, power and industrial divisions.
It did not expect to achieve “the exceptional levels of order-input experienced in the first half of 2008” from its power and industrial clients.
Weir’s shares dropped 19¼p to 464¾p, up from a low of 271½p last November.
via FT.com / Companies / UK companies – Orders to energy and mining suppliers hold up.
