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Wood Group cuts 170 Houston jobs

Engineering giant reduces US headcount in response to reduced activity levels in Western Hemisphere

Engineering and services giant Wood Group has cut 170 jobs from its offices in Houston as it tries to get its headcount in line with lagging offshore activity levels.

Spokeswoman Bobbie Ireland confirmed the cuts have been ongoing since 1 April and have affected people "mostly in overhead functions".

The headcount reduction includes "voluntary leavers" who will not be replaced, as well as "additional reductions", she said.

"Activity levels determine the size and scale of our business. Although work levels in offshore greenfield project engineering and commissioning have improved in the (Western Hemisphere), work volumes in other areas are down," she explained.

"In line with this, since April 1, we have reduced Houston-based employees by approximately 170 people."

She added: "These difficult but necessary measures are recognised as helping to create a sustainable business by ensuring our headcount and cost base are aligned with the activity levels we are currently experiencing."

Anadarko shelves Shenandoah development plans

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Wood Group has been one of the more successful contractors in bidding for recent development projects in the Western Hemisphere. The company was selected to carry out various topsides engineering services for a number of high-profile projects, including BP's Mad Dog 2 and Chevron's proposed Anchor and Tigris floater developments in the US Gulf of Mexico.

Wood Group is also involved in the Statoil-operated Peregrino 2 project off Brazil and Husky Energy's West White Rose development in Eastern Canada.

The company had also been doing front-end engineering and design work on another high-profile US Gulf development, Anadarko Petroleum's Shenandoah project. However, this month, the operator told all Shenandoah contractors to stop work after determining the project would not be viable in the current commodity price environment.

The shelving of Shenandoah is not thought to have had a direct impact on Wood Group's staff reductions, though it is indicative of the challenging environment in which offshore contractors are finding themselves, despite optimism of a rebound in activity in the coming years.

Ireland also stressed that the layoffs "have nothing to do with" Wood Group's $2.7 billion acquisition of Amec Foster Wheeler, which was announced in March. That deal is expected to give Wood Group more access to onshore markets, particularly in the US, where oil development activity is picking up pace.

Wood Group employed about 10,900 people in the Western Hemisphere at the end of 2016, with about 29,000 employees worldwide. The company reduced its global staff by about 20%, representing some 8000 lost positions, between the end of 2014 and early 2016.

Ireland noted that Wood Group has hired 1800 people across the global business so far in 2017.