Boom in shale output means lower gas prices and less demand for fracking equipment, engineering group announces
The Glasgow-based engineering group Weir has admitted its profits are likely to be affected by the fall in US gas prices. The FTSE 100 business admitted that full-year profits could come in at the low end of expectations due to a fall in orders for pumps used in fracking – the process by which gas is released from shale rock. A boom in shale output has led to a fall in gas prices and, as a knock-on effect, a cutback in shale gas production by some businesses. Shell and BP have also been affected. Weir said it expected pre-tax profits of £440m to £460m this year, with the low end of the range reflecting “no improvement” in its oil and gas business. The announcement came as Weir reported a 27% surge in first-half pre-tax profits, to £226m, as revenues grew by 29% to £1.3m.As well as making fracking equipment, Weir makes devices for the mining and power generation industries. The latter two divisions showed “strong trading” in the 26 weeks to the end of June, Weir said. Shares dipped 2.9% to 1655p.