Wood Group wins five-year EPC contract with Brunei Shell Petroleum amid investor scrutiny

John Wood Group PLC (LSE: WG) has announced a major five-year contract win through its joint venture with Tendrill International Sdn. Bhd., securing a brownfield engineering, procurement, and construction (EPC) mandate from Brunei Shell Petroleum Sdn Bhd. The deal will see the TendrillWood JV deliver end-to-end EPC services across both offshore and onshore assets operated by Brunei’s largest oil and gas producer, with an option to extend for two additional years.

This award comes at a critical juncture for the Aberdeen-based energy engineering firm, whose shares have been suspended on the London Stock Exchange since May 2025 due to missed audited results and internal financial control issues. The Brunei EPC contract now serves as both a commercial milestone and a litmus test of Wood Group’s ability to maintain client trust despite governance setbacks.

What is the scope of the Wood–Tendrill EPC contract with Brunei Shell Petroleum and why is it significant in 2025?

The EPC contract secured by the TendrillWood joint venture covers full-cycle brownfield services, including conceptual engineering, procurement, construction, commissioning, and start-up across mature hydrocarbon infrastructure in Brunei. Brunei Shell Petroleum Sdn Bhd—jointly owned by Shell plc and the Government of Brunei—is the country’s primary hydrocarbon producer, contributing the bulk of national oil and gas output.

While exact financial terms were not disclosed, industry estimates suggest the contract could generate between USD 80 million and USD 150 million annually, based on comparable mid-size brownfield contracts. These figures, if accurate, would contribute materially to Wood Group’s regional revenue pool and aid in shoring up liquidity as the company seeks to restore investor confidence.

The joint venture, established in 2023, employs approximately 1,000 personnel—70% of whom are Bruneian nationals. This localization strategy aligns with Brunei’s national policy to enhance domestic participation in energy projects. It also underscores Wood Group’s ESG narrative around upskilling and investing in local supply chains, particularly important as competition intensifies for low-risk EPC assignments in Asia.

How does this deal compare to historical EPC contract performance and regional energy trends?

Wood Group’s latest win follows other key contracts in 2025, including a USD 120 million brownfield extension from Shell UK and a separate USD 2.8 billion contract from Adnoc Gas for the Habshan Carbon Capture and Storage expansion. In comparison, the Brunei EPC contract is mid-tier in size but strategically vital, given its long-term nature and regional supply chain commitments.

According to past financial disclosures, Wood Group reported revenues of USD 5.9 billion in FY2023 and operating income of USD 114 million, though net losses reached USD 105 million due to impairments and restructuring costs. Brownfield EPC work, while not as headline-grabbing as greenfield megaprojects, remains a key earnings stabilizer in the company’s diversified portfolio. Analysts believe projects like the BSP deal could support operating margins in the 5–7% range if executed within schedule and budget.

Institutional investors also point out that brownfield work typically carries lower upfront capital risk than greenfield developments, a factor that plays in Wood’s favor amid ongoing cash flow challenges.

What is the investor sentiment around Wood Group following its financial reporting issues?

Investor sentiment toward John Wood Group PLC remains fragile. In May 2025, shares were suspended after the company failed to publish audited results for 2024, with its auditor identifying “material weaknesses” in financial reporting. The stock had already fallen by more than 90% over the previous 12 months, from a high of 213 pence to lows under 17 pence.

Institutional investors have signaled that while the company’s technical and engineering delivery remains largely intact, the core concern now centers on transparency, audit remediation, and the ability to refinance debt due in 2026. Analysts noted that the Brunei contract win is a positive operational signal, but not sufficient in itself to change the company’s credit or equity profile without progress on restating financials and executing on asset divestments.

Still, the new EPC win offers evidence that Wood Group continues to maintain long-term trust with supermajors like Shell, even as financial restructuring continues in the background.

What financial impact could this contract have on Wood Group’s recovery and cash flow profile?

Assuming stable execution and minimal change orders, the five-year Brunei EPC contract has the potential to generate total revenues in the USD 400–750 million range. This would provide consistent income across the 2026–2030 period, which is critical as Wood Group attempts to navigate its cash shortfall, reduce debt, and meet free cash flow targets.

The firm is currently pursuing asset sales worth up to USD 200 million, and executives have committed to returning to positive free cash flow by FY2026. If margins hold and payment cycles remain timely under the BSP contract, the project could contribute to those internal recovery targets while supporting headroom for refinancing discussions.

However, EPC projects of this nature are not without risk. Wood Group has previously encountered margin erosion on legacy contracts due to cost inflation and execution delays. With Brunei’s brownfield infrastructure being mature and operationally sensitive, maintaining project discipline will be essential. The JV must also avoid cost overruns or scope drift—especially given the heightened scrutiny from investors and regulators.

What do institutional investors and analysts expect from Wood Group moving forward?

Institutional sentiment reflects a wait-and-watch posture. Analysts suggest the following milestones are key to any re-rating of Wood Group shares:

First, publication of restated audited financials for FY2022–FY2024 is critical to restoring London Stock Exchange compliance and transparency with lenders. Second, Wood must successfully deliver milestones under the Brunei contract without cost blowouts, signaling operational resilience. Third, execution of the planned asset divestment program and clear communication on debt reduction will be necessary to build momentum for refinancing efforts due in late 2026.

From a reputational standpoint, the Brunei contract provides a platform to showcase Wood’s capabilities in high-integrity markets. It also demonstrates the company’s continued relevance in Asia-Pacific, where competition from regional EPC firms has intensified. The focus on Bruneian workforce development may also serve as a model for future bids in other localization-focused jurisdictions such as Malaysia, Indonesia, and Qatar.

What strategic moves can be expected from Wood Group in the Asia-Pacific region after this contract?

With the Brunei award in place, Wood Group is likely to pursue additional brownfield and O&M contracts in Asia-Pacific, especially those with integrated local content mandates. Tactically, the company may use the TendrillWood joint venture as a vehicle to bid for Shell’s or other majors’ ongoing offshore maintenance packages, especially in Southeast Asia.

There is also the possibility of deepening partnerships in Brunei by expanding the scope into decarbonization-related projects, including flare reduction, electrification of upstream assets, and CCS readiness—all areas BSP is actively exploring. If successful, Wood could also compete for related FEED (Front-End Engineering Design) and early-stage advisory work across Shell-linked upstream hubs.

Institutionally, much of the near-term focus will remain internal—on regaining control over audit processes, liquidity improvement, and communication with regulators. Still, project wins like this may help rebuild confidence incrementally as the company transitions from crisis to stabilization mode.