Rystad Energy believes that the merger of Wood Group and Amec Foster Wheeler (AMECFW) will create a market leader within the engineering and MMO-market, which will rank as one of the top 15 oilfield service companies in the world.
Audun Martinsen, Vice President of Oilfield Service Research, said: “The engineering and MMO markets have been very fragmented for a long time, so a market consolidation was not surprising […] Wood Group have previously been active with mergers and acquisitions by acquiring Mustang and Alliance Engineering, Baker Energy and PSN, so it was expected that they would not squander this unique opportunity during a downturn in the market.
“When Amec and Foster Wheeler merged November 2014, Wood Group saw them as a clear competitor to their upstream business. However, the timing of this acquisition was better positioned than when AMECFW merged at the brink of the downturn.”
Rystad Energy projects that market growth for this new entity will further contract in 2017 before recovery next year.
Martinsen added: “The market outlook will still be challenging for Wood Group and AMECFW, but they should be able to leverage on their size going forward through realised synergies and dominating some markets. Now, it is only time before we expect their competitors to consolidate.”