Wellstream Holdings PLC
Wellstream Holdings PLC ("Wellstream" or the "Company"), a leading designer and manufacturer of flexible risers and flowlines for the oil and gas industry, issues the following pre-close trading update for the year ended 31 December 2009. The preliminary announcement of the full year
results will be made on 16 March 2010.
The Board of Directors is pleased to report that against difficult trading conditions, the Company has maintained its good performance, delivering revenues ahead of last year and earnings broadly
in line with expectations. The long term fundamentals of the sector remain positive and the actions the Company has taken in 2009 have positioned it well to capitalise on the significant growth opportunities these provide.
In response to short term market weakness caused by project delays, we have initiated a cost reduction program. This will place Wellstream in the best possible position to take advantage of the expected upturn in the sector. Consistent with previous indications, year end order backlog was in excess of £160 million.
In October 2009, the Company was pleased to sign a lease on the land adjacent to the Niterói facility. This will provide the opportunity to generate operational efficiencies and offer key customers logistics support. Additionally, it secures space for future expansion of production capacity to serve the buoyant Brazilian market and accommodate expansion of activity in the wider South Atlantic Basin.
In June 2009, the Company embarked on a comprehensive 18 month qualification program covering metals, polymers and full scale product testing, targeted specifically at technologies suited to development of the pre-salt discoveries in Brazil. Petrobras has subsequently awarded Wellstream a contract to support this development program.
In addition, awards under the four year Framework Agreement with Petrobras now total some £200 million out of an anticipated overall value that exceeds £600 million.
2009 has seen the achievement of a number of significant milestones for the Company including;
successful delivery of the Tupi Extended Well Test (EWT) project for Petrobras;
manufacture of the first high pressure, (15,000psi) risers for Anadarko Petroleum's Caesar Tonga project in the Gulf of Mexico;
substantial completion of the Company's first major offshore installation project by its Seastream joint venture; and
successful divestment of its onshore FlexsteelTM business to Prime Natural Resources Inc., effective 1 October 2009, for a total cash consideration of approximately USD $30 million.
These events represent a step change for the Company in terms of capability and position Wellstream well for the future.
The long term fundamentals of the sector remain positive despite short term uncertainty outside of
Brazil. Anecdotal evidence of an improvement in market activity supports some optimism, although
the Board's outlook remains unchanged.
For further information, contact:
Wellstream Holdings PLC +44 (0) 191 295 9000
Alasdair MacDonald, Acting Chief Executive
Chris Gill, Finance Director
Jason Nunn, Investor Relations
Tulchan Communications +44 (0) 20 7353 4200
Notes to Editors:
A normalised kilometre (nkm) is an internal measure used to standardise different pipe diameters for comparison purposes to a standard 8 inch pipe.
Wellstream refers to Wellstream Holdings PLC (FTSE:WSM) and its subsidiary Wellstream International Ltd. The company is a leading independent designer and manufacturer of high quality bespoke flexible pipeline products, systems and solutions for fluid transportation. Its pipeline portfolio includes established product lines such as dynamic flexible risers and static flowlines, for deep and ultra-deepwater environments, and high temperature/high pressure products for drilling and
service applications. With over 1000 employees, Wellstream has offices/ facilities in the UK, Brazil,
USA and Australia. Further information regarding Wellstream and its products and services can be accessed at www.wellstream.com