WOOD Group has highlighted challenging conditions in the North Sea but signalled confidence in the longer term prospects for work in the area.
The Aberdeen-based oil services giant provided further evidence that moves by oil and gas firms to cut spending in response to the crude price slump are hitting the North Sea supply chain in an update on trading.
"We are seeing the impact of reduced project work and in certain cases non-essential maintenance work," said Wood Group, which is braced for a sharp fall in profits this year.
Last month the company said up to 80 onshore jobs could go in the UK under a review of operations intended to cuts costs and increase efficiency.
Noting that Wood Group is seeing a 10 per cent to 15 per cent fall in earnings this year, a spokeswoman said yesterday: "It's important to understand that these are challenging market conditions."
The spokeswoman added: " As a service company we flex our project workforce as project work increases and decreases and as a result we have lost a large number of contractors this year, plus a relatively small number of permanent staff."
On Tuesday Subsea 7, an oil services firm with a big presence in Aberdeen, announced plans to shed up to 410 UK jobs in response to the downturn.
Wood Group cut the rates paid to contractors by 20 per cent last year.
The company said yesterday it remains focused on reducing selling, general and administration costs, which it expects to cut by over $30 million (£19m) this year.
The company noted that firms are continuing to defer spending on new projects around the world and activity remains subdued.
The group's US onshore business has been hit by moves by producers in shale areas to limit production in response to the crude price fall.
However, the company said it sees longer term opportunities for its maintenance business in the North Sea in helping firms to increase the efficiency of existing assets and to manage ageing production infrastructure.
It remains confident that conditions in oil and gas markets will improve eventually.
Sector watchers have predicted strong demand for oil and gas in areas like Asia will fuel an increase in activity once current high levels of global inventories are reduced.
Wood Group said: " We now have improved visibility on customers' spending plans for the year, although market conditions remain challenging."
The company said it expects that full year earnings before interest tax and amortisation will be broadly in line with analyst consensus of $473m. Earnings on that measure were 14 per cent higher, at $550m, in 2014.
Some eight per cent of votes cast opposed the company's directors' remuneration report at yesterday's general meeting.
Wood Group employs around 12,000 people working in and offshore the UK.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article