Wood Group (john) Share Discussion Threads

[volsung] 20/4/2010 13:18

This is nice

[volsung] 14/4/2010 16:34

Wednesday, April 14, 2010

All is well for long term earnings at John Wood group
by Fat Prophets

With the average price of oil during 2009 60% lower than it was in 2008, it was no great shock that capital expenditure across the oil and gas industry during the year fell by 15%. The situation now is somewhat different. The price of oil has strengthened and confidence is returning to the industry. Good news then for energy focussed support services group John Wood Group (LSE, WG).

Looking at Wood's share price performance so far this year it is clear that investors are tuning in to the companies ability to add new contracts and renew existing arrangements. 5 weeks ago the company released full year results which provided plenty of cause for optimism. The group's year on year fall in revenue was just 6% with revenue coming in at US$4.9 billion. Underlying earnings fell by 19% aided by a fall in the EBITA margin from 8.4% in 2008 to 7.3% in 2009. Nevertheless, given the economic backdrop these results were relatively resilient.

So what will 2010 look like for John Wood Group?

A lot of course depends on oil. In 2010 alone oil demand is set to make up the falls it has experienced in both 2009 and 2008. The International Energy Agency (IEA) has also recently been increasing predictions for demand on the back of emerging market growth showing that the oil price has solid underpinnings.

The oil price recently surged past US$87 per barrel– putting the price of the commodity at an 18 month high – and a return to triple digits is gathering momentum. Doubters may say that there is spare capacity at the present time however if the market believes this will rapidly disappear in the future, oil prices may nevertheless still rise.

The most pivotal business division for Wood is its Engineering and Production Facilities (E&PF) which provided around two thirds of revenue and underlying earnings last year. Whilst the division's revenue remained stable, earnings fell because of a contraction in margins. This is because the high margin development related activities were cut back by clients as they were less confident pursuing new oil projects would be worthwhile. However, with a buoyant oil price development spending look set to recover helping to boost profits for Wood Group.

The other two divisions are Well Support and Gas Turbine Services. Well Support focuses on oil and gas reservoirs in order to enhance production rates and economic recovery - clearly a critical service for clients, the unit had the highest EBITA margin of all the divisions. Gas Turbine Services meanwhile is also poised for long term growth with gas the greenest of the fossil fuels for power generation.

Overall, looking at the long term earnings picture for John Wood group, all is well. The group's focus on expanding the group's international reach and broadening the range of services provided will in our view underpin robust share price performance. Whilst management will ramp up the company's positions in the Middle East, Africa and Asia Pacific, the group is developing capabilities in renewables and CO2 handling as well as further technologies for offshore and US shale.

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[volsung] 02/4/2010 11:30

We must be stockbrothers redips :)

[redips2] 01/4/2010 19:50

'Volie' again!! i recon you are following me! just been on lam to reply :)

[volsung] 01/4/2010 13:40

Verry nice. Ilike this

[volsung] 01/4/2010 11:03

Bought a few. Due a wee rise

[greenroom78] 18/3/2010 21:04

I saw a buy tip at 303p and almost bought in. I opted for something else at the time but definately an opportunity missed on my part.

[jack parlabane] 18/3/2010 20:54

I'm in debt to the "Sunday Herald" tip to buy at £2.80 in June last year.

Bought a few then and have been adding monthly since.

[philo124] 18/3/2010 20:39

It's going to 450p, in due course, at least you're in before the price gets away from you.

[greenroom78] 18/3/2010 17:52

I bought in today, nearer the top unfortunately. Should've waited till towards the close. Was gearing up for a buy when the BP RNS was released and ended up paying about an extra 6-7p per share.

[slim9] 18/3/2010 17:41

I'm still here.................

[philo124] 04/3/2010 18:00

450p target Merrills; 505p Goldman

[wendsworth] 03/3/2010 13:14

What a quiet BB! Cannot believe there hasn't been any comments ref Finals this week.

Have sold WG and AMEC(results this Friday) holdings recently. Waiting and watching for an opportunity to buy back in.

Difficult to assess. AMEC has cash 'war-chest' but can't see it moving on WG at current level.

[jdb2005] 16/2/2010 09:08

LONDON (Dow Jones)--John Wood Group (WG.LN) said Tuesday that its subsidiary, Wood Group GTS, has been awarded a long-term service agreement by PERU LNG worth $150 million over an 18--year term.
MAIN FACTS:
-Wood Group GTS will provide a service and maintenance program to maximize machine availability of the gas turbines, compressors and generators for PERU LNG at their Pampa Melchorita site south of Lima.
-The agreement covers two General Electric Frame 7 (7EA DLN--1) gas turbine-driven compressor trains for the LNG process and three GE LM2500 + DLE aero derivative gas turbine power generator sets.
-Wood Group GTS will implement remote monitoring and diagnostics, supply of spare parts, component repair, inventory management, field service and maintenance management to maximize machine availability over the 18--year term.
-Wood Group GTS worked with the PERU LNG team to develop a flexible and risk sharing contract.
-Compania Operadora de LNG del Peru, or COLP, the operating company of PERU LNG, since 2007, has been responsible for constructing the LNG plant and gas supply pipeline and will be responsible for the plant and pipeline operation and support services.

-By London Bureau, Dow Jones Newswires; Contact Iain Packham; [phone]; [e-mail]

[philo124] 09/2/2010 18:54

Well, why the "sharp" rise from the 28th to the 3rd?

[squash90] 22/1/2010 13:23

why are we getting draged in to this mess????

[chillwill] 11/1/2010 11:37

Hmm, gone well into overbought territory now, thinking a pull back and coming off overbought levels before making a new 52yr high would be good and leave some room for a run up to around 400p (that 410p seems realistic for the next peak).

[losses] 11/1/2010 08:39

Barclays have increased fair price target to 410 with a BUY recommendation.

[slim9] 10/1/2010 15:07

Any one post the broker upgrade........

[whizzy1] 08/1/2010 16:01

I put it down to massive gas usage which will only benefit WG contracts
either way nice rise.
great looking chart btw