John Wood hit by E&P spending decline

26th Aug 2009 07:40

Oil services group John Wood saw profits slide in the half-year as the tough market conditions hit exploration and production (E&P) spending worldwide.The group said the recent higher oil prices are likely to have little impact on E&P spending in the second half. Global E&P spend is expected to reduce by around 15% during 2009, with lower volumes and price deflation leading to lower service company revenue.But John Wood said it continues to benefit from robust performance in its production support related businesses and believes results for the year will be in line with expectations.Profit before tax fell to $160.8m from $181.3m previously on revenue that slipped 5% to $2,411.4m but increased 7% in constant currency terms. The movement in constant currency revenue is driven by a strong increase in Production Facilities activity, partly offset by a reduction in Well Support's US gas market related revenue and lower fast track power package revenue in Gas Turbine Services."We believe the longer term fundamentals for our business remain strong, and our market leading services and products, wide international spread and high quality customer base will enable us to resume good growth as energy markets recover," said the group.Interim dividend has been increased 11% to 3.1 cents per share.