Oil equipment maker Weir Group Plc reported a 47% fall in first-quarter oil and gas orders on April 28 and estimated some 70% of North America's fracking fleet is currently idle as low crude prices slow investment in the sector.
The Scottish company, which specializes in pumps and valves used in drilling rigs, said a 20% reduction in U.S. land rig count in the past two months had lowered demand for its products.
"The U.S. rig count decline over the course of first quarter was over and beyond everyone's expectations," CEO Keith Cochrane told analysts.
His comments echoed ones from U.S. oilfield services firm Baker Hughes Inc. (NYSE: BHI) on April 27 about a slowdown in U.S. drilling activity that hit its first-quarter revenue.
Cochrane said, however, that cost savings had bolstered first-quarter profits, without giving financial details.
"As a result, we expect first half profits to be slightly ahead of market expectations," Cochrane said.
Shares in Weir were up 5% at 8:56 GMT (3:56 CT).
The fall in drilling activity and recent uptick in oil prices will encourage customers to place new orders, Cochrane added.
"If they want to keep producing they need to start spending money again," he said.
Jon Stanton, Weir's CFO, said this meant the company expected its oil and gas division to return to profit in the second half of the year from a "moderately loss-making" position currently.
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