Wood Shares Plunge After Writeoffs Prompt Independent Review
Wood's share price plunged ~40% on the day, after the oilfield services company announced a writedown of more than half a billion pounds ($670 million) and launched an independent review of its accounting practices.
The writedown relates to Wood's acquisitions of Amec Foster Wheeler in 2017 and John Wood Group in 2021, which the company said had resulted in "material overstatements" of its profits.
The independent review will be led by auditors PwC and is expected to take several months to complete. Wood said it had appointed PwC "to provide an independent assessment of the carrying value of certain of its assets and the robustness of its financial reporting processes."
The company's shares fell as much as 46% in early trading, wiping out more than £1 billion ($1.3 billion) from its market value. Wood's share price has now fallen by more than two-thirds since the start of the year.
The writedown and independent review are the latest in a series of setbacks for Wood, which has been hit by the downturn in the oil and gas industry.
In May, the company announced plans to cut 4,000 jobs and in July it issued a profit warning, saying that its profits for the first half of the year would be "significantly below" expectations.
The company's problems have also been compounded by the COVID-19 pandemic, which has led to a sharp decline in demand for oil and gas.
Wood is not the only oilfield services company to have been hit by the downturn in the industry. In recent months, several other companies have announced job cuts and profit warnings.
The industry is facing a number of challenges, including the transition to renewable energy, the rise of shale oil and gas, and the impact of the COVID-19 pandemic.
It is unclear how long the downturn in the oil and gas industry will last, but it is clear that Wood and other oilfield services companies are facing a tough time.
