UK contractor Wood slipped into the red last year as revenues sank, but there is optimism of a “swift acceleration” in contract awards as markets recover.

The coronavirus pandemic send oil prices tumbling in early 2020 leading to operators reining in spending, which impacted on contractors’ activity levels.

ENERGY EXPLORED: SUBSCRIBE TO ACCELERATE

Gain valuable insight into the global oil and gas industry's energy transition from ACCELERATE, the free weekly newsletter from Upstream and Recharge. Sign up here today.

London-listed Wood posted a net loss last year of $228 million, down from a profit in 2019 of $73 million.

Revenues for 2020 were $7.56 billion, down more than 23% from the $9.89 billion booked in the previous year.

Adjusted earnings before interest, tax, depreciation and amortisation was $630 million in 2020, down from $855 million in 2019, with the operating loss at $33 million as against an operating profit a year earlier of $303 million.

The orderbook as at the end of last year was $6.5 billion — down around 17% on 2019 — with 67% to be delivered this year, which Wood said is “typical at this point in the year”.

Wood said the order book “reflects expectations of strength in built environment, robustness in renewables and lower project awards in conventional energy and process & chemicals”.

The company also noted that there was an “improving momentum” in new awards in last year’s fourth quarter, with the December order book up 5% over November.

It added that the short-cycle order book combined with an opportunity pipeline at pre-Covid-19 levels supports an “expectation of swift acceleration in awards as markets recover”.

However, it also cautioned that it expects lower activity this year and a continued focus on improving margins.

“Our resilient financial performance in 2020 was underpinned by our strategic positioning across broad end markets and flexible business model,” said chief executive Robin Watson.

“We saw growth in renewables activity, strength in the built environment and relatively robust revenue in process & chemicals and we continued to win work, against the challenging backdrop of Covid-19 and oil price volatility.”

Wood revealed later on Tuesday that its subsidiary WGPSN (Holdings) reached a civil settlement with Scotland's Civil Recovery Unit in relation to the historical engagement of Unaoil by a legacy joint venture and potential unlawful conduct.

"The civil settlement relates to conduct in Kazakhstan in the period between 2008 and 2010," Wood said.

"A joint venture in the legacy PSN business, which was acquired by Wood in 2011, paid Unaoil a total of 1.358 billion Kazakhstan Tenge (then approximately US$8.74 million) in fees.

"Payments were on a commission basis and continued until 2015 although there is limited evidence of what services Unaoil provided for these fees.

"The settlement concludes the issue which started after Wood self-reported having conducted a thorough internal investigation, before cooperating fully with COPFS and the Civil Recovery Unit throughout their investigation.

"Under the terms of the settlement, Wood has agreed to pay a total of £6.46 million (around $9 million) to COPFS."