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Weir steps up US shale gas business with $675m deal

  • @BawdenTom

Weir Group, the FTSE 100 pumping and drilling equipment maker, is expanding its presence in the booming market for North American shale gas, after agreeing to buy Seaboard Holdings, the Texas wellhead maker, for $675m (£431m).

Weir, whose shale gas "fracking" equipment is in such high demand it has raised its full-year profits forecast, said the deal would broaden the range of kit it makes to extract unconventional gas and oil reserves.

The group's heavy-duty pumps are used to force sand, chemicals and water into the shale rocks to release the gas, in a process known as hydraulic fracturing, or fracking. Meanwhile Seaboard's equipment is used to control the pressure in the wells.

Keith Cochrane, the chief executive of Glasgow-based Weir, acknowledged there was a supply bottleneck in the shale gas industry, which is growing so fast that customers must wait several months for the delivery of fracking kit.

"One of the key challenges is providing the pumps and related flow control for fracking. This acquisition doesn't relieve the bottleneck, but it does give us a broader exposure, with us providing the pumps and Seaboard controlling the wellhead," Mr Cochrane said.

The shale gas industry has taken off in the US in the past few years as the refinement of existing techniques has made it economically viable for producers to extract fossil fuels.

The process is highly controversial, having been linked to earthquakes in areas such as Blackpool as well as water pollution elsewhere.