WOOD chief executive Robin Watson has hailed the benefits of the £250m sale of its nuclear engineering business as the group capitalises on modest growth in North Sea oil and gas market activity.

The Aberdeen firm has agreed to sell its nuclear division to American rival Jacobs two years after expanding in the market through the £2.2 billion acquisition of Amec Foster Wheeler.

Read more: Wood to lead on flagship nuclear project

Mr Watson noted the sale allowed the firm to achieve its debt reduction targets in one go.

Jacobs highlighted the profitability of the business it is acquiring, which won a bumper contract covering work on the Sellafield complex in Cumbria in May.

However, Mr Watson said the nuclear business had no material footprint outwith the UK.

“We have seen the greenfield prospects that were there two or three years ago have really been kicked into the long grass … so the growth potential that we saw was fundamentally low,” he said.

Read more: £1.6bn windfarm boost for North Sea

Asked if the sale indicated that that the AFW acquisition was not delivering as much as expected Mr Watson said the strategic rationale for the deal remained as compelling as ever.

The acquisition gave Wood exposure to markets in which it sees better growth prospects than in the nuclear industry. These include the chemicals production support industry in the US and infrastructure engineering in North America.

It has also helped Wood win more business in the key oil and gas market in areas such as the Middle East.

“Our sales pipeline to my mind is an excellent blend of Wood Group and Amec Foster Wheeler,” said Mr Watson.

The acquisition was a key move in Mr Watson’s plan to reduce Wood’s reliance on the North Sea oil services market.

The company made its name helping oil and gas firms develop and operate North Sea facilities.

It was hit hard by the slump in North Sea activity triggered by the sharp fall in the crude price since 2014.

However, Mr Watson said: “I’m a big believer in being positive about the North Sea. It still sustains 350,000 jobs in the UK, it’s a big part of the primary energy mix, it’s a key industry as far as we are concerned and we’re very glad to be one of the largest employers in it.”

Mr Watson noted conditions had improved in the area in recent months. The partial recovery in the crude price since late 2016 has encouraged firms to invest in the kind of upgrade work that got shelved during the downturn.

Read more: Israeli firm hails 'exciting growth opportunities' in North Sea after $2bn deal

“We certainly have seen an uptick in modifications work and we’re a bit busier this summer than we were last summer across the North Sea,” said Mr Watson. “We’ve seen an increase in head count.”

Mr Watson said new entrants that have bought North Sea assets in recent months are helping to stoke activity.

However, activity is increasing faster in other oil and gas markets. The company has seen a “real uplift” in activity in the Middle East, Australia and Asia Pacific.

“Our US shale business goes from strength to strength,” Mr Watson observed.

The sale of Wood’s nuclear business is expected to complete by the end of the first quarter of 2020 subject to regulatory clearance.

The sale price represents a multiple of 12 times the £20.2m underlying earnings achieved by the division in 2018.

Mr Watson said the group did not expect to make any further material acquisitions before the second half of 2020 but could move faster if the right opportunity came up.

Read more: North Sea upheaval set to continue as oil giant mulls sale of bumper portfolio

Wood increased first half operating profit before exceptionals by 28 per cent, to $160m from $125m last time.

It proposed an interim dividend of 11.4 cents per share, up from 11.3c last time.

Noting that Wood does not trade goods or services between the UK and European Union states, Mr Watson said: “From a business perspective we don’t anticipate a hard or a soft Brexit having any material impact on the business.”

He noted: “With 87% of 2019 revenues delivered or secured we remain confident in our full year outlook and guidance is unchanged.”

However, Wood shares closed down 4.5%, 20.4p at 430.4p.

The Brent crude price has fallen from $75 per barrel in April to around $60/bbl amid strong US production and concerns about the outlook for the global economy.

It peaked at $115/bbl in June 2014.