Tyneside oil and gas pipeline expert’s shares sink

Jul 2 2010 by Iain Laing, The Journal

TYNESIDE oil and gas pipeline expert Wellstream saw its share price sink by more than 12% yesterday after revealing that its recovery would be slower than expected.

The company said the market would continue to be uncertain because of the fall-out from the BP crisis.

But the Walker-based company said it was trading in line with expectations and had landed another contract in the fast-growing Brazilian market, adding to £100m-plus of new work already secured this year.

The firm, which employs more than 850 people in the UK, Brazil, US and Australia, did not reveal how much the contract with OGX Petroleo e Gas (OGX) was worth. The pipeline equipment and services for the offshore deal will be supplied from its Brazilian offices.

The contract comes on top of new work that Wellstream has won this year in the Brazilian and North Sea oilfields, which has boosted its order backlog to £250m.

The Brazilian market is responsible for the majority of this year’s new orders. In addition to the OGX contract, Wellstream is already working with Petrobras in Brazil.

But the group warned that the oil leak off the Gulf of Mexico has introduced “some uncertainty” to its markets elsewhere, which were already growing more slowly with smaller contract awards.

That means the recovery for the second half the year is likely to be slower than expected.

However, the group said trading was in line with its expectations. It will publish its half-year results in August.