ENGINEERING giant Amec Foster Wheeler, which is being taken over by Wood Group, has suffered a sharp fall in profits at the North Sea services business it wants to sell amid tough conditions.
London-based Amec Foster Wheeler said the unit made £34 million trading profit in the six months to 30 June compared with £43m in the preceding year. It helps oil and gas firms develop and run North Sea facilities.
With revenues falling more than 50 per cent to £323m from £740m the figures highlight the scale of the challenges facing services firms in the North Sea.
Oil and gas firms have slashed investment in new facilities since the crude price plunge started in 2014 and cut discretionary spending on existing assets to the bone.
Amec Foster Wheeler said challenging conditions continue in oil and gas markets.
The update echoes the tone of those given by Wood Group in recent months. Wood has said it sees no signs of recovery in the North Sea.
The planned takeover of Amec Foster Wheeler forms part of its strategy to help reduce its reliance on the area, by growing in fields such as mining and environmental engineering.
The update may lead some to wonder about the prospect of Amec Foster Wheeler being able to sell the North Sea unit. It put the business up for sale to address regulators’ concerns about the impact of the takeover of the group by Wood on competition in the North Sea.
However, Amec Foster Wheeler said a competitive sale process for the North Sea business is well underway.
The short list of bidders is thought to include America’s KBR, Fluor and Jacobs and SNC Lavalin of Canada.
Chief executive Jon Lewis said: “I am confident Amec Foster Wheeler is now moving in the right direction, and I believe that our people and shareholders will have an exciting future as part of the Wood Group, once the deal closes in the fourth quarter.”
Amec Foster Wheeler non-executive director Roy Franklin will become deputy chairman of Wood Group following the deal.
It was announced yesterday the Scots North Sea veteran will become the next chairman of Premier Oil, one of the biggest players in the area.
On 1 September Mr Franklin will succeed Mike Welton, who is stepping down after eight years in post.
He will bring more than 40 years oil and gas industry experience to Premier, which has bucked the trend by investing heavily in two giant North Sea projects amid the downturn.
London-based Premier started production from the Solan field West of Shetland last year following delays. It expects to bring the Catcher field onstream east of Aberdeen this year.
After spending 18 years at BP, Mr Franklin made a big name for himself running Clyde Petroleum and then developing Paladin Resources out of Edinburgh-based minnow Pittencrieff Resources .
Paladin invested in mature North Sea assets that bigger fish had started to lose interest in. It was acquired by Canada’s Talisman for £1.2 billion in 2005.
Mr Franklin has held a range of non-executive positions since then. He is interim chairman of Statoil.
Mr Welton said he was an excellent choice to be chairman during the next phase of Premier’s development.
Dave Blackwood, a former head of BP’s North Sea business, and accountancy veteran Mike Wheeler became non-executive directors of Premier yesterday.
Amec Foster Wheeler made £77 million pre tax profit in the first half after losing £446m last time following hefty write offs.Revenues fell to £2.3bn from £2.8bn.
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