WOOD Group chief executive Robin Watson has reiterated his faith in the potential benefits of the £2.2billion acquisition of Amec Foster Wheeler as the oil services giant completed the deal.
Aberdeen-based Wood cleared the final hurdle in the way of the takeover yesterday after Amec Foster Wheeler sold the bulk of its North Sea oil services business to Australia’s WorleyParsons for around £228 million.
The transaction gives WorleyParsons a big presence in the UK North Sea. It signals confidence in the long term prospects for a market which has come under significant pressure amid the crude price plunge.
Amec Foster Wheeler had to sell the business to ease regulators’ concerns about the impact of it being takeover by Wood Group on competition in the North Sea.
Mr Watson noted spending on new North Sea projects has fallen sharply amid the crude price plunge that started in 2014. Wood did not see any sign that activity levels could increase to fill the gap left by the completion of work on big projects that were started when conditions were brighter.
"The North Sea challenge remains the activity levels in such a mature basin," said Mr Watson.
Wood expects to remain active in the North Sea for years.But the takeover of London-based Amec Foster Wheeler will help reduce the firm’s reliance on the area by taking it into markets such as environmental engineering and extending its geographic reach.
Mr Watson said: “I’m really excited about where this takes us”.
The enlarged group will have 55,000 employees, including 14,500 in the UK, and be run from Aberdeen.
Wood has said it expects to shed around 1,200 posts from the enlarged group, without saying where cuts will be made.
The recommended all share offer for Amec Foster Wheeler was announced in March.
The North Sea business WorleyParsons is buying has around 3,000 employees.
Amec Foster Wheeler said the unit generated revenues of £323 million and trading profit of £34m in the first half, with a significant contribution coming from major projects which are expected to complete in the near term.
Shares in Wood Group closed down 7.5p at 722.5p.
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 here