Daily Telegraph: Oil majors reining in exploration says Expro

By Christopher Hope, Business Correspondent (Filed: 03/06/2004)

Expro International, the oil services group, yesterday dived into the red and appeared to criticise big oil companies for using profits from high prices to give more cash to shareholders rather than investing in exploration. 

The comments come weeks after BP and Shell announced plans for more share buybacks to take advantage of the high value of crude oil, down $2.22 at $36.86 a barrel last night.

Expro posted a £4.5m pre-tax loss in the 12 months to the end of March, compared with a profit of £34.4m last time, on turnover down 7pc to £208.4m.

The company blamed £14m of the loss on lower than expected activity in the Gulf of Mexico. Expro had anticipated that 140 rigs would be used - in the event only 90 were needed.

A delay in licences for oil companies to drill in the deep water off Nigeria and Angola had also hit profits, it said.

Expro was not able to benefit from the high oil price because it was tied into long-term contracts that were unaffected by the short-term oil price.

Graeme Coutts, chief executive, and Chris Fay, chairman, complained in the results statement that big oil and gas companies were not using the windfall from the higher oil prices to look for more hydrocarbons.

They said: "Although global commodity prices have remained high, our major clients have in general preferred to distribute the benefit of higher cash flow to their shareholders rather than expand their exploration and production programmes."

Later Mr Coutts insisted that the comments were not meant to be critical. He said: "That is not criticism but a fact."

Mr Coutts took over as chief executive last October after the previous incumbent, John Dawson, retired. Expro also parted company with its finance director, Eric Woolley, around the same time.

Expro admitted that a review carried out shortly after found that "we were not aligned optimally to the needs of our clients and, furthermore, our approach in the market place was not sharp enough".

A restructuring has since taken place.

Expro's shares closed down 7.5 at 262.5p.

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