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Wood Group well support unit up for sale - sources
February 2, 2011 / 11:53 PM / 7 years ago

Wood Group well support unit up for sale - sources

NEW YORK (Reuters) - Energy services company John Wood Group (WG.L) has put its well support division on the block and has hired Credit Suisse CSGN.VX to advise on the sale, several sources familiar with the matter said on Wednesday.

First-round bids are due on Wednesday for the unit, three of the sources said. The sources gave a wide range of valuations for the unit, from as low as $1 billion (617 million pounds) to above $2 billion.

Wood Group’s market capitalisation as of Wednesday was about $4.9 billion. The company has not yet released full year results, but the division accounted for more than a third of the company’s earnings before interest, tax and amortisation expenses in the first half of 2010.

The universe of possible bidders could include General Electric Co (GE.N), Halliburton Co (HAL.N), Weatherford International (WFT.N), Cameron International CAM.N, and FMC Technologies (FTI.N), sources said.

Wood’s well support business helps energy companies improve production rates and recovery from oil and gas wells.

The sale would be of particular interest to other oilfield services companies because of its position in electric submersible pumps, which provide “artificial lift” to help produce more oil or gas.

Leading oilfield services companies have been snapping up specialists in order to round out their product suites, since many state-run oil companies in particular increasingly demand one-stop shopping when drilling.

In the past year, sector leader Schlumberger Ltd (SLB.N) bought Smith for its drillbits, Halliburton bought well intervention expert Boots & Coots, and Baker Hughes Inc BHI.N took over BJ Services to add capability in the fast-growing U.S. market for pressure pumping.

Moreover, oilfield services has been among the hottest sectors of late. Since late August, the Philadelphia Stock Exchange oil service index, which tracks the sector, has risen nearly 60 percent.

Wood agreed to buy international energy services company PSN for $955 million in December.

GE has made a string of acquisitions that have boosted the largest U.S. conglomerate’s presence in the global energy industry over the past several months.

GE bought Dresser Inc, a maker of engines used in oil and gas production, for $3 billion in October and also acquired British oil pipe maker Wellstream Holdings WSML.L for $1.3 billion two months later.

Shares of Wood group closed at 567.5 pence on the London Stock Exchange on Wednesday.

Credit Suisse declined to comment, and Wood Group could not immediately be reached for comment.

Reporting by Michael Erman and Soyoung Kim, editing by Matthew Lewis

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