ET report on Reliance’s stake buy lifts Wood Group shares

NEW YORK: Shares of John Wood Group, a UK-oil-field services provider, made their largest gain in five months on Wednesday, after a report in The Economic Times said Reliance Industries may buy a stake in the company.

Reliance, owner of the world’s third-largest refinery, is talks with Wood Group on the purchase of an unspecified stake, as reported by ET. Wood press officials Carolyn Smith and Bobbie Ireland did not return calls. A Reliance spokesman, who did not want to be identified by name, declined to comment.

The report comes as shares of oil-field service companies outperform the stocks of energy producers, after oil prices surged. Analysts, including Peter Hitchens of Teather & Greenwood, doubted the report, saying it would be too expensive for the Indian buyer. Hiring the company for individual projects would be cheaper, Hitchens said.

The purchase is “unlikely,” said Hitchens in a phone interview from London. “Oil and gas companies do not buy oil-service companies.” Buying Wood would lose some other customers of Reliance and “would be a really bad news” for the shareholders of the company, he said.

Wood Group shares rose as much as 7.9% on Wednesday, to 259 pence, their highest since May 12. They traded up 2.5% at 246.75 pence in London. Reliance shares dropped 0.7% to Rs 1,208. Indian companies are increasingly interested in investing in the UK. Tata Steel, India’s second-biggest steelmaker, offered £4.05bn for CorusGroup, the largest UK steelmaker.