INVESTORS have added around £200 million to the stock market value of Weir Group after the Glasgow-based engineering giant reported strong growth in orders although it is facing challenges in the key US oil and gas market.

Read more: Weir shares plunge on gloomy oil and gas market update

Weir grew orders from continuing operations by 16 per cent year on year in the third quarter with chief executive Jon Stanton highlighting the company’s success in mining, which is its largest market.

The company has benefited from efforts by metal miners to make the most of their existing assets, amid increases in commodity prices.

The indications are that Weir may be set to benefit from increased spending on new facilities as companies prepare to capitalise on expected strong global demand for metals. They cut investment from 2012 following price falls.

In Weir’s third quarter interim management statement, Mr Stanton said: “Quotation activity for expansion projects also remained strong, reinforcing our view that we are in the early stages of a multi-year capex growth cycle.”

The company increased its exposure to the mining sector through the $1.3bn acquisition of American tools business ESCO Corporation, which closed in July.

Read more: Weir cheers investors with major US deal

Mr Stanton said ESCO had a good quarter, delivering market share gains on large mining machine ground engaging tools.

“Its integration is progressing very smoothly and is on track to deliver anticipated cost synergy targets,” he added.

Weir increased third quarter orders by 40% year on year including the business won by ESCO.

The company has benefited from increased spending by oil and gas firms in response to the rise in the crude price since late 2016 after being hit by cuts in investment amid the preceding oil price slump.

However, after noting in September that the key US oil and gas market had softened in the previous month, Weir indicated yesterday that conditions had got harder in recent weeks.

Weir developed a strong presence in the US shale market through acquisitions during the period of $100 per barrel plus prices that came to an end in summer 2014 as growth in supplies ran ahead of demand.

Read more: Weir Group boss warns on fracking

“There was a sequential decline in North America across both original equipment and aftermarket orders which accelerated late in the quarter,” said the company yesterday.

Directors appear confident the slowdown in US activity will prove to be short-lived as pipeline capacity constraints which are affecting producers in the Permian shale area are addressed.

The company noted industry expectations that the number of North American wells that are brought into production will start increasing again in the first half of 2019.

It cited factors such as the replenishment of exploration and production budget and, the availability of a record number of drilled but uncompleted wells.

However, the update will do little to boost hopes that conditions in the North Sea oil and gas chain are set to improve quickly as the industry emerges from the long downturn that followed the crude price plunge.

Weir noted: “International markets remained challenging during the quarter although they did continue to show some early signs of recovery with project quotation activity increasing.”

Weir expects the oil and gas arm to achieve operating profit of £90m - £100m, against £92m in 2017.

In April it said: “Assuming market conditions remain supportive at or around current levels, we continue to expect a strong increase in constant currency divisional revenues and profits.”

Weir said yesterday it had formally initiated the planned sale of its flow control division, which is progressing as expected.

Weir shares closed up 5%, 76.5p at 1588.5p, leaving the firm with a market capitalisation of around £4.1bn. The shares fetched 1786p before the update in September.

Alexander Virgo at Bank of America Merrill Lynch said that given the concerns around the outlook in US shale as a result of Weir’s statement in September and the broader third quarter earnings season in US oilfield services the interim management statement was solid.