Summary of WILLBROS GROUP, INC.\NEW\

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (In thousands, except share and per share amounts or unless otherwise noted)

The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2009 and 2008, included in Item 1 of this Form 10-Q, and the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, including Critical Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2008.

OVERVIEW

Third Quarter of 2009 Summary

Our third quarter of 2009 revenue was $247,533 and net income was $1,683 or $0.04 per share from continuing operations. Revenue and net income for the same quarter in 2008 were $490,651 and $18,460, respectively. The 50 percent decline in year-over-year revenue is primarily related to the reduction of large diameter pipeline work and the absence of EPC work that made a positive contribution in the same period in 2008. The third quarter of 2009 earnings were lower than expected primarily because of $4,500 in additional costs on an EPC project that was shutdown by our customer for several months and restarted with different protocols for safety and project execution. The project's revised schedule and work scope have resulted in additional charges to the project. Change orders covering the costs of the delays and scope changes have been or will be submitted to our customer for settlement; however, we cannot estimate at this time the outcome of these negotiations. Also impacting the third quarter's earnings were $2,418 of "other charges" for employee severance and impairment of operating leases relating to the Company's ongoing efforts to align our cost structure with the current and anticipated business environments.

At the end of the third quarter, we were awarded the construction contract for two spreads of large diameter pipeline work on the Energy Transfer operated Fayetteville Express Project ("FEP"). Our FEP spreads are expected to commence field operations early in the second quarter of 2010. During the next two quarters, we expect to bid on over $1 billion of new pipeline construction work for execution in 2010 and 2011. Industry reports anticipate a return to higher levels of pipeline construction activity in the United States commencing in the second half of 2010 through 2012; this information, coupled with the FEP award and increased bid activity causes us to have a more optimistic view of the near-term opportunities for our upstream pipeline construction business. However, U.S. Construction revenue is expected to reflect low utilization of people and assets during the fourth quarter of 2009 and the first quarter of next year, primarily because anticipated work has been deferred into 2010. The near-term weakness in major pipeline construction is further exacerbated by an anticipated weak winter season in Canada for pipeline construction. We now expect that the combination of the diminished fourth quarter pipeline construction revenue, loss of anticipated work in certain other business units and continuing downward margin pressures across all business units will result in a further reduction of revenue and contract income as compared to the third quarter of 2009, resulting in a net loss expected for the fourth quarter.

We have responded to this year's challenging business environment by reassessing the cost structure of our business units and taking action to size the company for the market conditions that we anticipate, for current and future commitments, and for the strategic growth that we have planned going forward. At the end of 2008, we began aggressively reducing our G&A spending to maintain cost alignment with a decreasing revenue stream and simultaneously reducing our costs related to underutilized services, primarily engineering. During the third quarter, the cost reduction efforts expanded to address underutilized staff previously charged as part of contract costs, the appropriate level and type of executive compensation and recognition of underutilized or abandoned office and facility leases. Cost reduction initiatives related to underutilized operations staff have been tempered by the need to retain key resources to support a return to the elevated levels of business activity that are projected for 2010 and beyond, and to ensure that we are positioned to defend and pursue market share when conditions warrant it. Management views the negative near term impact, in the fourth quarter of 2009 and the first quarter of 2010, as necessary in order to capitalize on the anticipated improvement in business activity in 2010.

Since the fourth quarter of 2008, our cost savings initiatives have resulted in savings estimated at $56,100. The 2009 cost of these savings are expected to be $11,200, of which $1,700 was recorded in the fourth quarter of 2008, $8,200 through September 2009 and the remaining $1,300 is expected to be incurred in the fourth quarter of this year. The cost includes severance, accelerated stock vesting and lease abandonment charges. Much of the annual cost savings will not be immediately reflected in earnings results because in the short-term, these cost reductions will be offset by a continued downward pressure on margins caused by underutilized assets and people. The current business environment has mandated that we continue to aggressively reduce our cost structure in the short-term while also staying focused on our long-term vision for Willbros. We will reassess our cost structure throughout our business in conjunction with developing and executing our strategies and business plans for 2010, 2011 and beyond.

Our backlog as of September 30, 2009 was $501,358, an increase of $114,172 (29.5 percent) from the prior quarter. This is the first successive quarter backlog increase since the second quarter of 2008. As mentioned above, the FEP contract award drove the Upstream Oil & Gas increase of $74,683. Included in the Upstream Oil & Gas backlog increase is a 9 percent increase in our Oman backlog as well as new backlog associated with the Libya Great Manmade River Project, a combined successive quarter increase of $7,328. Downstream Oil & Gas backlog also experienced an increase of $39,489 or 26.1 percent. The Downstream Oil & Gas increase is primarily the result of $21,486 of additional backlog attributable to the acquisition of the engineering business of Wink Companies, LLC. ("Wink"); however, overall Downstream Oil & Gas backlog is trending up as a direct result of the increased proposal activity experienced in the current quarter and customers scheduling previously deferred turnaround work. Turnaround work scheduled for 2010 comprises 43.0 percent of the Downstream Oil & Gas backlog. Because our customers need to complete certain required maintenance work, our Downstream Oil & Gas businesses appear to be recovering earlier than the Upstream Oil & Gas businesses.

Looking forward, we are more optimistic of 2010 and beyond. We believe the first quarter of 2010 will be the starting point for improved levels of activity, particularly in turnaround work in our Downstream Oil & Gas segment. We believe our Upstream Oil & Gas business lags the oil field services cycle and the uptick in the drilling rig count driven by improving commodity prices, as well as increasing development of unconventional gas plays throughout North America is a positive sign for improvement in the upstream markets we serve. Internally, inquiry levels for manufacturing, engineering and field services have increased both in North America and internationally, although we have not yet seen a corresponding increase in the number of project awards. As mentioned previously, backlog has improved in both of our segments. Our cost reduction initiatives have contributed to conserving cash and maintaining financial flexibility. At September 30, we have $243,723 in cash, only a slight reduction from the June 30 balance of $245,392.

To accelerate our growth of business, we continue to identify and review potential acquisitions that would advance our strategy of diversifying our business model and drive more consistent long term results. The Wink acquisition, consummated in the third quarter, is the most recent example of the key role acquisitions may play in successfully executing our strategy. Our strong liquidity position supports our efforts to continue to acquire companies that are complementary to our strategy.

We are continuing to pursue international opportunities to expand our geographical presence. In addition to developing the North Africa and Middle East markets through our presence in Libya and our existing operations in Oman and our new Abu Dhabi engineering office, we have recently entered into a partnership agreement to actively pursue awards for several pipeline projects in Australia.

While the current market uncertainty impacts us unfavorably in the near-term, we remain committed to strategically building our company by growing our service offerings, expanding our geographical footprint, leveraging our current government opportunities, and maximizing our acquisition opportunities. We believe that our continued focus on growth, the best risk-adjusted returns and diversity, will result in a larger, more stable and profitable Willbros.

Our Vision

We continue to believe that long-term fundamentals support increasing demand for our services to the energy industry. This supports our vision for Willbros as a leading provider to the global infrastructure and government services markets of diversified professional construction and maintenance solutions addressing the entire asset lifecycle.

To accomplish this, we are actively working towards achieving the following objectives:

· Diversify our current end market and geographic exposure to better serve clients and mitigate market specific risk.

· Increase our professional services (project/program management, engineering, design, procurement, and logistics) capabilities to minimize cyclicality and risk associated with large capital projects in favor of higher return recurring service work.

· Establish Willbros as a service provider and employer of choice.

· Develop client partnerships by exceeding performance expectations and focusing team driven sales efforts on key clients.

· Establish and maintain industry best practices, particularly for safety and performance.

Our Values

We believe the values we adhere to as an organization shape the relationships and performance of our company. We are committed to strong leadership across the organization to achieve excellence and accountability in everything we do, based on our core values of:

· Safety - always perform safely for the protection of our people and our stakeholders.

· Honesty and Integrity - always do the right thing.

· Our People - respect and care for their well being and development; maintain an atmosphere of trust, empowerment and teamwork; ensure the best people are in the right position.

· Our Customers - understand their needs and develop responsive solutions; promote mutually beneficial relationships and deliver a good job on time.

· Superior Financial Performance - deliver earnings per share and cash flow and maintain a balance sheet which places us at the forefront of our peer group.

· Vision & Innovation - understand the drivers of our business environment, promote constant curiosity, imagination and creativity about our business and opportunities, seek continuous improvement.

· Effective Communications - present a clear, consistent and accurate message to our people, our customers and the public.

We believe adhering to and living these values will result in a high performance organization which can differentiate and compete effectively, providing incremental value to customers, employees and all our stakeholders.

Our Strategy

We work diligently to apply these values every day and use them to guide us in the execution of our strategy. We believe by allowing our values to drive the execution of our strategic goals we will increase stockholder value by leveraging the full resources and core competencies of an integrated Willbros business platform to drive consistent, sustainable value for our key customer, stockholder and employee constituencies. Key elements of our strategy are as follows:

Maintain Financial Flexibility

We anticipate that we will generate free positive cash flow for 2009 sufficient to meet our working capital needs and allow us to pursue our vision for diversification. We view financial strength and flexibility as a fundamental requirement to fulfilling our strategy.

At September 30, 2009, we had liquidity of $293,723 comprised of cash and cash equivalents of $243,723 and unutilized cash borrowing capacity of $50,000 under our revolving credit facility, with no short-term borrowings or commercial paper outstanding. This strong liquidity position is the result of our focus on the risk-adjusted return that was available in the North American market over the past two years and our focus on managing financial risk and cash flow. Our financial strategy going forward involves effectively deploying our liquidity to enhance our service capabilities and expand our geographic presence. We believe that companies with strong balance sheets and liquidity positions will have opportunities to acquire assets and companies in today's market.

Focus on Managing Risk

We have implemented a core set of business conduct, practices and policies which have fundamentally improved our risk profile. Examples of our risk management execution include diversifying our service offerings and end markets and focusing on contract execution risk. In today's economic environment, acknowledging the importance of risk management is paramount to success. It is emphasized throughout our organization and covers all aspects of a project from strategic planning and bidding to contract management and financial reporting.

Focus resources in markets with the highest risk-adjusted return. During the pause in North America pipeline construction activity, we are redeploying resources to seek international opportunities which can provide superior, more diversified risk-adjusted returns and believe our extensive international experience is a competitive advantage. We continue to pursue opportunities to expand our business in North America organically or through acquisitions to include more recurring service work, and to build alliances to minimize our reliance on large capital expenditure projects, such as large diameter cross-country pipeline construction. We opened an operations office in Libya and an engineering office in Abu Dhabi. We believe that markets in North Africa and the Middle East offer attractive opportunities for us in the future given mid- and long-term industry trends. The recent award to provide the project management services for the Libya Great Manmade River project and the U.S. Navy's selection of Willbros as a participating contractor in the Indefinite Delivery, Indefinite Quantity ("IDIQ") contract to upgrade their fuel systems worldwide represents the beginning of the expected new stream of international work. We are also pursuing new work in the expanding Asia-Pacific energy infrastructure where we have entered into an alliance with Nacap, a well-known international pipeline contractor with operations in Australia, to leverage our complementary capabilities and experience in pursuit of multiple large diameter pipeline EPC opportunities associated with the coal seam methane developments proposed there.

Manage the risks shifting from our customers because of the shift to fixed price contracts. While we will continue to pursue a balanced contract portfolio, current market dynamics indicate that opportunities for pipeline have contracted and entered a much more competitive period characterized by lower margins and more fixed price contracts. We believe our fixed price execution experience, our current efforts to realign our cost structure, especially in the procurement of materials and subcontractor services, our improved systems and our focus on risk management provide us a competitive advantage versus many of our competitors.

Leverage Industry Position and Reputation into a Broader Service Offering

We believe the global energy infrastructure market will continue to provide opportunities. Our established platform and track record position us to expand our expertise into a broader range of related service offerings. We intend to leverage our project management, engineering and construction skills to establish additional service offerings, such as downstream engineering, instrumentation and electrical services, turbo-machinery services, environmental services and pipeline system integrity services. We believe that over time, a more balanced mix of recurring services, such as program management and maintenance services and capital projects will enhance the earnings profile of our business.

During the third quarter of 2009, the Wink acquisition completed our Downstream integrated service offering, enabling us to provide full EPC execution services with our internal resources. To date we have identified over twelve EPC prospects, and we believe Wink positions us favorably for participation in high value, small capital projects for clients in the downstream markets. We believe small high return projects such as these will be the first to be awarded as the refining industry returns to more normal levels of activity. We anticipate this will have a meaningfully favorable impact on our Downstream Oil & Gas future revenue and earnings.

Leverage Core Service Expertise into Additional Full EPC Contracts

Our core expertise and service offerings allow us to provide our customers with a single source EPC solution which creates greater efficiencies to the benefit of both our customers and our company. Our goal is to be one of the preeminent global engineering and construction firms that can provide our customers EPC solutions related to all the services that we offer. In performing integrated EPC contracts, we establish ourselves as overall project manager from the earliest stages of project inception and are therefore better able to efficiently determine the design, permitting, procurement and construction sequence for a project in connection with making engineering decisions. Our customers benefit from a more seamless execution and one-stop accountability for cost containment; while for us, these contracts often yield higher profit margins on the engineering and construction components of the contract compared to stand-alone contracts for similar services. It is the combination of a good job on time and greater cost certainty that we can provide which differentiates our EPC offering to our customers. As previously noted, the Wink acquisition now completes our ability to provide Company-wide EPC service capabilities with internal resources.

Our Business

We are a provider of energy services to global end markets serving the oil and gas, refinery, petrochemical and power industries. Our services, which include engineering, procurement and construction individually or an EPC service offering, turnaround, maintenance and other specialty services, are critical to the ongoing expansion and operation of energy infrastructure. Within the global energy market, we specialize in designing, constructing, upgrading and repairing midstream infrastructure such as pipelines, compressor stations and related facilities for onshore and coastal locations as well as downstream facilities, such as refineries. We also provide specialty turnaround services, tank services, heater services, construction services and safety services and fabricate specialty items for hydrocarbon processing units. We provide, from time to time, asset development and participate in the ownership and operations as an extension of our portfolio of industry services. We place particular emphasis on achieving the best risk-adjusted returns. Depending upon market conditions, we may work in developing countries and we believe our experience gives us a competitive advantage in frontier areas where experience in dealing with project logistics is an important consideration for project award and execution. We also believe our engineering, planning and project management expertise, as it relates to optimizing the structure and execution of a project, provides us with competitive advantages in the markets we serve.

We are a top tier, global engineering and construction contractor to the energy market, having performed work in 60 countries. Our original business of international pipeline construction led to our worldwide reputation, and we have constructed over 200,000 kilometers of pipelines in our history. We complement our pipeline market expertise with our service offerings to the downstream hydrocarbon processing market providing integrated solutions for turnaround, maintenance and capital projects for the refining and petrochemical industries. We have performed these downstream services for 91 of 149 refineries in the United States and have experience in international markets. We offer our clients full asset lifecycle services and in some cases we provide the entire scope of services for a project, from front-end engineering and design to procurement, construction, commissioning and ongoing facility operations and maintenance. With over 100 years of experience in the global energy infrastructure market, our full asset lifecycle services are utilized by major pipeline transportation companies, exploration, production and refining companies and government entities worldwide.

Our Segments

In conjunction with the Wink acquisition, we redefined our business segments from Engineering, Upstream Oil & Gas and Downstream Oil & Gas to two segments by integrating the existing Engineering segment into the Upstream Oil & Gas segment and Wink's engineering services into the Downstream Oil & Gas segment. We believe the inclusion of engineering services within each segment will make our EPC offering even more effective by improving internal connectivity and providing dedicated, specialized engineering services to both the upstream and downstream markets.

Upstream Oil & Gas

We provide our full EPC services or individual engineering, procurement and construction expertise, including systems, personnel and equipment, to design, build or replace large-diameter cross-country pipelines; fabricate engineered structures, process modules and facilities; and build oil and gas production facilities, pump stations, flow stations, gas compressor stations, gas processing facilities, gathering lines and related facilities. We provide a broad array of engineering, project management, pipeline integrity and field services to increase our equipment and personnel utilization. We currently provide these services in the United States, Canada, and Oman, and, with our international experience, can enter (or re-enter) individual country markets when conditions there are attractive to us and present an acceptable risk-adjusted return.

Downstream Oil & Gas

We provide integrated, full-service specialty construction, turnaround, repair and maintenance services to the downstream energy infrastructure market, which consists primarily of refineries and petrochemical facilities. We are one of four major contractors in the United States that provides services for the overhaul of high-utilization fluid catalytic cracking units, the primary gasoline-producing unit in refineries. These catalytic cracking units, which operate continuously for long periods of time, are typically overhauled on a three to five-year cycle. We also provide similar turnaround services for other refinery process units, as well as specialty services. We design, manufacture and install process heaters for the refining industry. We also provide maintenance and construction services for the American Petroleum Institute (API 650) storage tank market. We provide these services primarily in the United States, but our experience includes international projects, and we are exploring opportunities to expand this offering to other locations with attractive risk-adjusted returns.

Additionally, the Downstream Oil & Gas segment provides government services, with current involvement in building and managing fueling depots. Also, based on our recent selection by the U.S. Navy to compete for future task orders under the Engineering Service Center's multiple-award IDIQ contract for assessments, inspections, repair, and construction services for fuel systems at U.S. Navy locations worldwide, we expect to be active in this area.

Significant Business Developments

October 2009

In Australia, we have formed a project-specific joint venture with Nacap, a well-known international pipeline contractor with operations in Australia, to leverage our complementary capabilities and experience in pursuit of multiple large diameter pipeline EPC opportunities associated with the large coal seam methane to LNG developments proposed there.

September 2009

We were awarded the construction contract for spreads three and four of the Fayetteville Express Pipeline. The approximately 185-mile natural gas pipeline will originate in Conway County, Arkansas, continue eastward through White County, Arkansas, and terminate at an interconnect with Trunkline Gas Company in Panola County, Mississippi. FEP will parallel existing utility corridors where possible to minimize impact to the environment, communities and landowners. FEP is a joint venture between Energy Transfer Partners, L.P. and Kinder Morgan Energy Partners, L.P. Our scope of work includes 120 miles of 42-inch pipeline, beginning near Bald Knob, Arkansas and ending at the Trunkline interconnection. The project is expected to begin construction in April 2010 and be completed in October 2010.

NiSource Gas Transmission & Storage ("NGT&S"), a unit of NiSource Inc., and Willbros have executed a long-term alliance agreement whereby we will be the provider of program development, project management, design, engineering, geographic information systems ("GIS"), integrity and maintenance services with respect to pipeline system projects for NGT&S. Under the alliance concept, a joint leadership team of NGT&S and Willbros members will identify, develop, define and evaluate concepts from a commercial perspective. We will provide services necessary to advance concepts to sufficient detail for construction and/or budget approval, and, upon approval, we will execute a work order for any combination of services in the execution of projects and programs on the NGT&S system.

Financial Summary

Results and Financial Position

For the three months ended September 30, 2009, we achieved net income from continuing operations of $1,683 or $0.04 per basic and diluted share on revenue of $247,533. This compares to net income from continuing operations of $18,460 or $0.48 per basic and $0.46 per diluted share on revenue of $490,651 for the three months ended September 30, 2008.

Revenue for the three months ended September 30, 2009 decreased $243,118 (49.6 percent) to $247,533 from $490,651 during the same period in 2008. The revenue decline is a result of decreased business activity due to delays and cancellations of anticipated projects for all business units; however, the largest declines were experienced in large diameter pipeline construction and EPC projects.

General and Administrative costs for the third quarter of 2009 decreased $10,648 (37.0 percent) to $18,490, which compares to $29,138 in the third quarter of 2008. This decrease is primarily related to current year reductions in incentive . . .