Oil services heavyweight Wood has won a contract boost in the Middle East as it faces a £1.6 billion takeover bid by investors based in the region.

The Aberdeen-based company said it has been appointed to provide engineering services on a flagship gas development in Iraq for TotalEnergies of France.

The award may underline the appeal of Wood to potential buyers as it reflects the breadth of expertise offered by the company.

The win comes amid uncertainty about how long Wood will remain an independent firm with headquarters in Scotland.

Last week Wood said it had decided to engage with the Dubai-based Sidara engineering group about a 230p per share offer for the firm after consulting shareholders.

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Wood spurned three previous approaches made by Sidara, which directors said undervalued the business.

Sidara has until 5pm on July 3 to announce whether it intends to make a firm offer for Wood.

The group, which works for firms operating in sectors such as energy and aviation, was granted access to due diligence materials by Wood on June 5.

Wood has worked hard to become a broad-based energy services business in recent years amid the global drive to reduce carbon emissions after achieving renown as a North Sea-focused oil services business.

Wood will provide design, procurement and construction services on the Gas Growth Integrated Project (GGIP) in Southern Iraq for TotalEnergies under a three-year contract worth $46 million.

It noted this will involve the recovery of gas currently flared in the Basrah region to supply power generation plants, along with the construction of a seawater treatment unit and a solar power plant.

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Shaun Dewar, Senior Vice President of Operations, Middle East and Africa at Wood said the project will support emissions reduction efforts while contributing to the development of Iraq.

“As part of this agreement, Wood will also continue to invest in local employment and skills development in the Basrah region,” noted Mr Dewar.

Wood expects to create 100 jobs to service the contract. It currently employs over 1,300 people in Iraq and the United Arab Emirates.

The Middle East has long been an important market for Wood, which used expertise developed in the North Sea to win oil services work around the world.

Wood generated revenues of $235m and $245m in Iraq and Saudi Arabia respectively in 2023, out of a group total of $5.9bn.  Total revenues increased by around 10% annually, from $5.45bn.

Wood made $35m operating profit in 2023. It lost $565m in the preceding year after $542m write offs, largely in respect of the built environment business the group sold that year.

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The group has been trying to reduce its debts. It last paid a dividend in 2019 before the pandemic.

Led by chief executive Ken Gilmartin, directors of Wood have insisted they remain confident in the group's strategic direction and its fundamental prospects.

In a trading update issued in May, Mr Gilmartin said Wood was making good progress in the second year of the growth strategy he launched after succeeding Robin Watson. He noted that Wood was achieving growth in earnings and profit margins and the group’s order book was 9% higher than a year ago.

However, the preceding month an investor in Wood said a sale of the business might be the only way to get a valuation it regarded as acceptable.

Sparta Capital said then that the gap between the intrinsic worth of Wood and the valuation implied by its share price had never been wider.

Wood faced a £1.7 billion takeover bid from Apollo but the US investment giant walked away in April last year after difficult exchanges with Wood’s management.

Sidara made an initial 205p per share approach early in May.

Shares in Wood closed down 1.6p at 199p yesterday.

Following the fourth approach at 230p per share, described as final, Wood said: “Having now weighed all relevant factors including, in particular, feedback received from Wood shareholders, the Board has decided to engage with Sidara to determine if a firm offer can be made.” It said there could be no certainty that such an offer would be made.