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LONDON (Reuters) – Oil equipment maker Weir Group (WEIR.L) reported a 47 percent fall in first-quarter oil and gas orders on Thursday and estimated some 70 percent of North America’s fracking fleet is currently idle as low crude prices slow investment in the sector.
The Scottish company, which specialises in pumps and valves used in drilling rigs, said a 20 percent reduction in U.S. land rig count in the past two months had lowered demand for its products.
“The U.S. rig count decline over the course of Q1 was over and beyond everyone’s expectations,” Chief Executive Keith Cochrane told analysts.
His comments echoed ones from U.S. oilfield services firm Baker Hughes on Wednesday about a slowdown in U.S. drilling activity that hit its first-quarter revenue.
Cochraine said, however, that cost savings had bolstered first-quarter profits, without giving financial details.
“As a result, we expect first half profits to be slightly ahead of market expectations,” Cochrane said.
Shares in Weir were up 5.0 percent at 0856 GMT.
The fall in drilling activity and recent uptick in oil prices will encourage customers to place new orders, Cochrane added.
“If they want to keep producing they need to start spending money again,” he said.
Jon Stanton, Weir’s chief financial officer, said this meant the company expected its oil and gas division to return to profit in the second half of the year from a “moderately loss-making” position currently.
(Reporting by Karolin Schaps; editing by Jason Neely)
