Wood Group Looks to Grow Profits on Energy, Chem Projects

Researched by Industrial Info Resources (Sugar Land, Texas)--Energy services provider Wood Group plc (Aberdeen, Scotland) offered a reassuring outlook to its stakeholders this week, pointing to a narrower net loss and a stronger project backlog for 2021, when compared with 2020. Wood Group is optimistic it will emerge from the red in 2022, with a slate that includes energy and chemical projects along the U.S. Gulf of Mexico. Industrial Info is tracking more than $4.2 billion worth of active projects across the U.S. and Canada involving Wood Group.

Click on the image at right for a graph detailing Wood Group's U.S. and Canadian projects, by industry sector.

Wood Group's net loss of $135.5 million last year was an improvement from 2020's net loss of $228.1 million. The company's order book, which it defines as "revenue supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements," was up 19% from 2020 at $7.75 billion.

"2021 was a challenging year for the Group, with the ongoing pressures of the pandemic, mixed market conditions across our businesses and continued challenges in projects impacting our performance," said Robin Watson, the departing chief executive officer of Wood Group, in a quarterly earnings-related press release. "Despite this, we ended the year with positive momentum and a growing order book (up 19% on last year) which gives us confidence that activity levels will be higher in 2022."

One of the largest proposed projects in the U.S. to feature Wood Group's services is the Bluewater Texas Terminal in Gregory, Texas, east of Corpus Christi, which is a joint venture between Phillips 66 (NYSE:PSX) (Houston, Texas) and Trafigura Group (Singapore). The proposed facility, now mired in the federal permitting process, is designed to load very large crude carriers (VLCC) at a rate of 1.56 million barrels per day (BBL/d), and would be supported by a pair of single-point mooring buoy systems and a 27-mile crude oil pipeline. Wood Group would provide engineering, procurement and construction (EPC) services for the terminal and the pipeline.

The Port of Corpus Christi backed the project shortly after the joint venture was formed in 2019. Bluewater would give the port the ability to load VLCCs, which can carry up to 2 million barrels of crude oil, directly at the dock. Under its existing setup, the Port of Corpus Christi can only partly load VLCCs at dock, then have the rest ferried out to them in the Gulf of Mexico in a process known as lightering, according to the Caller Times. Subscribers can learn more from Industrial Info's project reports on the proposed terminal and pipeline.

Also in Texas, Wood Group is performing a series of upgrades and replacements to control systems at organic chemical and chlor-alkali plants in Freeport, Texas, both of which are part of a complex owned by Olin Corporation (NYSE:OLN) (Clayton, Missouri). A total of 20 units need to be updated at the Freeport complex. Subscribers can learn more from Industrial Info's reports on the organic chemical and chlor-alkali projects.

Wood Group expects to reduce its net debt through the proposed sale of its Built Environment business, which the company expects to have a "significant impact" on its reported results. The segment provides consulting and engineering solutions that address environmental risks, increase climate resilience, and help to build more sustainable infrastructure, according to Wood Group's website.

"The sale process of our Built Environment business is progressing well, and we continue to expect to announce a sale agreement in the second quarter of this year," Watson said in the press release.

The Built Environment business is providing consulting services for Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) on several ash pond closures at Duke's coal-fired power plants, which it plans to close in the coming years. These include the 2,574-MW Roxboro Power Station in Semora, North Carolina, which began site preparation for its ash pond closure last year, and the 735-MW Mayo Electric Generating Plant in Roxboro, North Carolina, which expects to begin the process next year. Subscribers can learn more from Industrial Info's reports on the projects at the Roxboro Power Station and Mayo Plant.

Duke announced earlier this year it plans to close its 11 existing coal-fired generators by 2035, including six in the Carolinas, as it moves toward cleaner energy sources. For more information on the recent wave of announced coal-fired plant closures, see April 19, 2022, article - Coal-Fired Power Plant Closure Announcements Surge.

Watson cautioned Wood Group's revenues in the coming year could be negated by "ongoing, exceptional cash drags," such as restructuring costs, contract outflows and payments to the U.K.'s Serious Fraud Office. The latter is a result of "bribery and corruption investigations into the past use of third parties in the legacy Amec Foster Wheeler business," according to an earlier announcement from Wood Group. The company expects to pay fines and penalties totaling $177 million, staggered out through 2024.

Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.