INTERVIEW: Aveva: Gulf Spill Safety Concerns To Boost Demand

7th Jul 2010 10:05

By Tommy Stubbington Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Engineering software company Aveva Group PLC (AVV.LN) said Wednesday that safety concerns following the Gulf of Mexico oil spill will likely increase demand for its products in the oil and gas sector, particularly its Aveva Net data viewing system which it expects will be a key driver of growth. Companies will increasingly look to Aveva Net to manage information in complex drilling operations once uncertainty surrounding deepwater oil exploration passes, Chief Executive Richard Longdon told Dow Jones Newswires. "I think there will be a slight hiatus [in demand] till BP PLC (BP) gets off the front page," Longdon said. But the market will quickly recover, he added, saying "there will be a demand for more detail behind engineering projects. The one thing you need quickly if something goes wrong is information." Aveva Net collates data from documents, drawings, maintenance plans and computer-aided design models and allows engineers to view it through an interface Langdon likens to using the Internet. The product contributes 8% of group revenue, but Aveva hopes to grow this share to 50% within five years, Longdon said. Aveva said earlier Wednesday that it is trading in line with company expectations in the first quarter of fiscal 2010. Panmure Gordon analyst George O'Connor maintained his "buy" recommendation with a target price of 1270 pence following the announcement, but said the share price should respond positively to further details about Aveva Net. "In our view, this is a pivotal year for Aveva Net; we expect sales to increase from GBP9.6 million to GBP19.8 million from fiscal 2010 to fiscal 2011," he added. Longdon said there is a precedent for oil industry disasters driving demand for software. "We saw exactly the same thing happen after Texas City [oil refinery fire in 2005]," he said. "This was a problem no one really worried about a few years ago. Now we've had one company telling us that their engineers spend 40% of their time looking for information." Shares at 0845 GMT down 11 pence, or 0.9%, at 1174 pence, outperforming a lower FTSE 250 Index--down 1.2%. -By Tommy Stubbington, Dow Jones Newswires; 44-20-7842-9268; [email protected] (END) Dow Jones Newswires July 07, 2010 05:05 ET (09:05 GMT)