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Denholm profits up, chairman sees positive outlook

J&J Denholm has reported an 8.1% jump in pre-tax profit to GBP22.1m ($37.01m) as its oilfield services arm returned a bumper operating profit.

A strong performance in the Middle East and improvements in the UK and Azerbaijan saw operating profits up 22% to GBP15.4m for the year, more than offsetting drops in its industrial services arm and a GBP0.1m fall in shipping profits to GB3.8m.

Speaking to Seatrade Global, John Denholm, chairman of the company, expanded on the prospects and outlook of the Oilfield Services sector.

"The oil industry is adapting to traumatic change in the price of oil, from $20 to $80 or $100 a barrel, and a huge step-change in the amount of investment has driven large developments in what was a marginal industry. Recently, the discovery of shale gas has turned the energy transportation market on its head, whether that shale revolution will happen in Europe remains to be seen, but the shale impact is already widespread.

"In our market, which is very much the oil fields, our outlook is positive for at least the next three to four years."

Addressing some longer-term concerns emerging within the offshore industry as oil majors cut back spending on projects, Denholm remained confident, "There are always worries about oil companies restricting their investments, but then they do tend to be hugely adventurous in exploration and conservative in production. We support both sides of that process and believe that there is little to worry about so long as a quality, good value service is put forward."

Denholm saw the developments of marginal fields in the North Sea as a continued source of opportunities, as well as fields coming online in the Caspian such as the delayed Kashagan field and, further in the future, the Pearl field.

"We are an Abu Dhabi based company, and in the Middle East we see stunning developments from Abu Dhabi National Oil Company (ADNOC) and its subsidiaries, including the replacement of six of its rigs with two man-made islands utilising directional drilling.

"Huge investment is also needed, again in the Middle East, to bring Iraq's production back online, and perhaps even in the future we'll see opportunities in Iran."

Commenting on the group's results, Michael Beveridge, chief executive of Denholm Oilfield Services, added: "An excellent performance in the Middle East fabrication business combined with improved performances in Azerbaijan and the UK and the gain realised on the disposal of 50% of our Caspian plant hire interests ensured that 2013 led to Oilfield Services' pre-tax result increasing by an impressive 36%. 2014 has started well and early indications are for another good year."

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