Engineering company Weir Group Plc on July 30 reported a 22% fall in like-for-like profit in the first half of the year, while forecasting full-year oil and gas profit at the lower end of its target range as orders in North America slowed.
Shares of the FTSE 250 company fell 3.2% as of 3:00 a.m. CT after the company also reported a 7% drop in like-for-like orders.
Weir, which makes equipment used in mining as well as in energy industries, said the drop in oil and gas orders was due to excess capacity in the North American pressure pumping market.
Operating profit for the first half of 2019 was 172 million pounds (US$209.41 million) and total orders were 1.42 billion pounds (US$1.72 billion), with oil and gas orders down 27%.
The company had previously forecast oil and gas operating profit in the range of 55 million pounds (US$66 million) to 95 million pounds (US$115 million) for the year.
“Bottom line is that we view the guidance message as in line with expectations given increasingly cautious news flow from the U.S. shale sector already being factored into expectations,” Credit Suisse analysts wrote in a note.
($1 = 0.8214 pounds)
Schlumberger, Halliburton and Baker Hughes reportedly kicked off the new year by putting units up for sale, as the three largest names in oilfield services adjust to falling demand.
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U.S. oil output growth is expected to slow over the next five years, likely prompting oil majors to "gobble up" smaller shale oil producers, Mark Papa told Reuters.