Daily Telegraph (UK): Oil profits return to investors: “The Scottish oil services company said companies like BP and Shell were using the high oil price to return billions to shareholders in dividends and share buybacks, rather than increasing spending on exploration and production.” (ShellNews.net) 9 March 05

By Christopher Hope (Filed: 09/03/2005)

John Wood Group yesterday said big oil and gas companies were handing the profits from the high oil price back to shareholders rather than investing the proceeds in looking for more reserves. 

The Scottish oil services company said companies like BP and Shell were using the high oil price to return billions to shareholders in dividends and share buybacks, rather than increasing spending on exploration and production.

Sir Ian Wood, chairman and chief executive, said: "The majors are not spending at what you would expect at $50 oil." Asked why, he replied: "That is their strategy." Despite that, the market was "very busy" and likely to grow by 5pc to 10pc this year.

John Wood's full-year profits fell 35pc from $83m (£43.4m) to $53.7m pre-tax. This was due to $26.2m of exceptional costs linked to problems at the company's troubled gas turbines business, and ongoing delays in the awarding of deep water drilling licences.

Turnover improved 13pc to $2.25 billion for the year to December 31. Sir Ian stuck to his forecast that John Wood will "return to acceptable growth" – defined as growth in underlying profits of at least 10pc – this year.

Wood's shares rose 8 to 158.75p on the better-than-expected results.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/03/09/cnjwg09.xml