WOOD chief executive Robin Watson has welcomed signs of increased activity in the North Sea oil and gas market as he insisted the £2.2 billion acquisition the group completed to reduce its reliance on the area made sense.

Mr Watson said the increased focus on energy security seen in many countries following Russia’s assault on Ukraine appears to have fuelled a recovery in investment in oil and gas assets in areas such as the North Sea.

Noting that Aberdeen-based Wood has won around $500 million (£375m) North Sea contracts in recent months, Mr Watson underlined the scale of the change that appears to be underway in the area following years of retrenchment.

“As energy security is becoming more prominent we’re seeing more opportunities coming in the pipeline. We’re about 10 per cent up in people in the North Sea and that’s the first time in a while I’ve been able to say that,” Mr Watson told The Herald.

Wood employs more than 4,000 people in operations covering the UK and Norwegian sectors of the North Sea. Workforce numbers fell amid the downturn triggered by the pandemic.

Mr Watson was speaking after Wood posted a $136m (£106m) loss for 2021 after incurring a near $100m charge in respect of a contract to provide construction services for the US army on a missile base in Poland. It has faced big challenges on the contract.

Publication of the 2021 results was delayed from March while accountancy firm KPMG completed a review into the contract. It covers work on buildings to house the Aegis Ashore anti-missile defence facility for the US Army Corps of Engineers.

READ MORE: Shares in Wood plunge as it faces big loss on Polish contract 

Wood said Mr Watson has informed the company’s board that he intends to stand down after seven years in charge. It has launched a search for a replacement.

Wood inherited the Polish contract following the £2.2bn acquisition of Amec Foster Wheeler in 2017. This was a landmark move in a drive launched by Mr Watson to reduce Wood’s reliance on the oil services business in which it made its name.

Wood has faced other challenges in connection with the AFW acquisition. In June the company said it had agreed to pay $177m following investigations into legacy AFW companies by authorities in the UK, the US and Brazil.

Mr Watson insisted the acquisition had left Wood in a much stronger position to prosper amid the transition to a lower carbon energy system.

“We’ve now got breadth and strength of capability across a wide range of industries, market sectors, geographies,” said Mr Watson. He added: “If I look at our solar, our wind, our minerals processing businesses; if I look at our hydrogen, carbon capture, bio-refining business ... they’ve all come with Amec Foster Wheeler.”

HeraldScotland: Wood recently won a contract to help design a hydrogen production plant in Chile Picture: WoodWood recently won a contract to help design a hydrogen production plant in Chile Picture: Wood

Mr Watson said he felt the time was right to stand down because the group was set to offload it’s built environment business. The sale process has generated strong interest. The sale will represent a “pivotal” development in the effort to rationalise the enlarged portfolio Wood was left with following the AFW deal. “The next cycle will last over several years,” said Mr Watson, adding: “It’s appropriate that the company has a chief executive who can commit to see it through, a bit like I have in terms of my repositioning strategy.”

Wood’s chairman Roy Franklin said Mr Watson had built a strong leadership team around him and a portfolio that provides the group with great growth opportunities.

He described the group’s 2021 results as mixed. The group grew revenues from consulting services and work on existing operations. It suffered a significant decline in its projects business, which helps clients develop new assets. Clients have been delaying investment decisions in some markets following the uncertainty caused by the pandemic. Mr Franklin said as the level of debt at the end of the year was too high the board had decided not to declare dividends for 2021.

READ MORE: North Sea firms unveil plans to make huge payouts to investors after surge in oil and gas prices

Wood lost $136m from continuing operations after exceptionals in 2021 against $228m last time. Earnings before interest, tax, depreciation and amortisation fell to $554m from $630m.

Revenues fell to $6.4 billion from $7.5bn.

However, the value of Wood's order book increased by around 20% year-on-year to $7.7bn.

Wood said it had decided in March to exit Russia. It has begun the process of withdrawing from operations in the country. These accounted for around 1% of group revenue in 2021.

Wood shares closed down 1.7p at 190.75p.