Shares in Wellstream Hldgs Plc (LON:WSM) fell by 11.5% to 444.7p this morning on news that a predicted recovery in its markets in the second half of the year was taking longer to materialise and that some profits would be delayed into 2011. The oil and gas services group said that while it was continuing to see improvements in the important Brazilian market, elsewhere there had been only modest growth, which has been compounded by uncertainty triggered by the oil spill in the Gulf of Mexico
In an update ahead of its interim results fro the period to June 30, the company said it had continued to deliver good operational performance with first half trading in line with its expectations. A string of notable contract awards has pushed its order backlog to £250m, helped in part by an announcement today that it had won a contract from OGX Petroleo e Gas to supply flexible risers and flowlines mid-water arches, umbilicals and other associated equipment and services, offshore Brazil. Wellstream said the contract complemented its strong pre-salt position with Petrobras in Brazil and positioned it well to build a long term relationship with OGX, which is rapidly emerging as a significant offshore operator in the region. Looking forward, the company said the potential for significant growth in Brazil was clear and the fundamentals underpinning growth elsewhere across its markets remained unchanged.
Commenting on the OGX contract award, Alasdair MacDonald, Wellstream’s acting CEO, said: “We look forward to working closely with OGX on this exciting new development. Wellstream has a history of working closely with its key customers. Indeed, this award is a clear example of the success of the group’s strategy to offer the industry full SURF capability through collaborative and innovative working relationships. We look forward to working with OGX as the project moves into the manufacturing, development and offshore phases.”
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