The revival in the North American shale oil industry has delivered a timely boost to Weir Group.
The Glasgow-based engineer and oil services specialist published an upbeat trading statement yesterday that forecast better-than-expected profits in its oil and gas division.
The recovery in American shale production was reflected last week in figures from Baker Hughes, the industry consultancy, which showed that there were 952 active rigs in the United States, an increase of more than 500 from last year.
Weir said that the growing US rig count and a reduction in capacity were key factors driving its performance. It also said that the growth in the pricing of Weir’s parts, which include pumps and valves, was “modest” but that its operating margins had been in the low double digits for the first half of this year. If the American market held up for the remainder of the year, then margins would improve further.
Before the latest update, analysts had been predicting that Weir could generate as much as £650 million of revenues and operating profit of about £66 million over the full year.
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Weir said that group profits would be weighted towards the second half of the year. It said that the upturn in oil and gas would be partially offset by £13 million of one-off charges relating to the delivery of legacy contracts at its Gabbioneta business, part of its flow control division, in Italy.
Shares in the FTSE 250 company rose by almost 10 per cent in early trading before settling back to close at £19.78, up 154p, or 8.4 per cent.