Weir warns of ‘softening’ in US oil and gas

Shares in Weir Group fell yesterday after the company said it had seen “considerable softening of demand” in the US oil and gas market in recent weeks.

In an update, which came just over a month after the Glasgow-based group reported strong increases in firsthalf sales and profit, Weir said although market conditions had been in line with management expectations until mid-august, there had been a change since then.

“There was a considerable softening in demand for original equipment and some order book delivery deferrals,” the company said in a stock market update ahead of a series of pre-planned investor roadshows in London.

Weir said it was issuing the update in light of reports from competitors in recent days around issues in the North American oil and gas market.

Earlier this week the chief executive of rival Schlumberger warned that bottlenecks in the largest US shale basin would hold back oil production growth and investments in the region. A surge in oil and gas production in the Permian basin of West Texas and New Mexico has outstripped transport capacity, pushing the local price of oil to its lowest for four years and threatening to slow drilling activity.

Shares in Us-based Halliburton have also been hit in recent days after it flagged a slowdown in activity in the region.

In July Weir’s chief executive Jon Stanton said he was seeing “very strong growth in oil and gas” and highlighted record North American oil production levels. 0 ‘Order deferrals’ – Weir chief executive Jon Stanton