WEIR Group has said that the visibility of orders remains limited in the key North American market as its customers adjust spending intentions because of the oil price declines.
The information was revealed as senior officials from the Glasgow business made a presentation to analysts at Weir's oil and gas headquarters and pressure pumping facility in Forth Worth, Texas, in the United States.
Leading the delegation was Andrew Neilson, director of strategy and corporate affairs and Paul Coppinger, divisional managing director of Weir oil and gas.
Other key executives in the division such as David Paradis, Franck Deguere and John Mathena were also there.
The presentation looked at Weir's pressure pumping and pressure control activities in recent years and was designed to reassure the analysts that the engineering group will be able "to manage and react swiftly to the expected decline in activity levels in 2015."
Trading in the division through October and November was said to have been broadly in line with trends seen in the third quarter of the year.
However Weir admitted: "Forward visibility remains limited as customers in North America continue to evaluate their response to recent oil price declines."
Drilling and activity levels are said to have "remained robust" which has helped Weir's aftermarket business which specialises in the repair and servicing of equipment already in use.
But the oil price fluctuations are thought to have been a factor in original equipment orders dropping back to levels seen at the start of this year.
Weir said: "Oil price uncertainty contributed to November original equipment orders falling back."
In his part of the presentation Mr Neilson pointed out the long term growth potential of shale in North America and around the world.
He highlighted that aftermarket demand has grown steadily every year since 2009 with the greater intensity of operations placing additional demands on equipment.
The value of the market Weir serves was said to have grown from less than £3 billion in 2010 to in excess of £8bn by 2013.
Mr Neilson also gave an outline of a number of new products, including next generation fracturing pumps, which will be launched over the next three years.
Mr Coppinger said revenue from US shale oil is around 22 per cent of the group total.
He went on to say costs in the industry have fallen steadily in recent years and pointed out research from UBS suggesting 80 per cent of shale developments are economic even if oil prices were at $70 per barrel.
According to Mr Coppinger drilling rigs are now being used for more hours each year with the majority of sites running 24 hours a day, seven days a week.
Mr Degueure talked about how Weir plans to grow its pressure control market share particularly through growth into the Middle East and Australia.
It is currently the number four player in the $6.5bn North American market with the international market said to be worth an additional $3.4bn at the moment.
Mr Neilson concluded that the oil and gas division was well positioned for sustainable profitable growth.
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