International Oil and Gas Tech Ltd Interim Management Statement (1440H)

TIDMOGT

RNS Number : 1440H

International Oil and Gas Tech Ltd

15 May 2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

International Oil and Gas Technology Limited

("the Company")

Interim Management Statement

15 May 2014

Introduction

International Oil and Gas Technology Limited (LSE: OGT) today provides its Interim Management Statement for the period since 31 December 2013 in accordance with Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.

PORTFOLIO UPDATE

Strata Energy Services Inc. ("Strata")

Strata provides specialised underbalanced and managed-pressure drilling ("UBD" and "MPD") services. The company has its headquarters in Alberta, Canada. It operates proprietary drilling equipment that is considered among the best in the industry and Strata has an excellent reputation for customer service.

Strata has maintained high levels of utilisation of its equipment and services in all three operating regions. Revenues for the four months to 31 March 2014 were approximately C$11.3 million, compared to a budget of C$10.6 million. EBITDA for the same period was C$2.4 million compared to a budget of C$2.2 million.

Strata has continued to build its US business, which now accounts for approximately 30% of the company's revenues. Although the Canadian business still produces the majority of its revenues, the effect of the annual spring thaw on revenues thus far has been less than in previous years, partly because much of Strata's current activity in Canada is on multi-well-pad drilling sites, which are less affected by the spring break-up. MPD services have continued to gain market acceptance and now account for approximately 80 per cent of Strata's sales.

Strata is working closely with its primary lender to resolve the covenant issues that arose as a result of its trailing twelve-month performance in 2013.

The Company owns 43 per cent of the fully diluted share capital of Strata. There has been no change in the Company's valuation of its interests in Strata during the quarter.

Crest Energy Services Limited ("Crest")

Crest provides in-situ nitrogen generation services to various segments of the oil, gas and energy industries in Saudi Arabia. The market for nitrogen services in Saudi Arabia is large, encompassing various activities from pipeline purging to well intervention. Crest is currently engaged in providing services to two segments of this market: gas-pipeline purging and power station infrastructure purging. Crest has thus far been unable to address excess demand within Saudi Arabia and the large Middle East market outside of Saudi Arabia due to a lack of capital investment to increase its equipment base.

Crest achieved sales of US$0.37 million for the three months to 31 March 2014, which is slightly down on 2013 due to contract timing. However, Crest has a full order book for its currently available equipment and expects to exceed the FY/13 revenue level of US$2.0 million.

The Company owns 75 per cent of the shares of Crest, with the balance held by management. The valuation of Crest remains at US$2 million.

SR2020 Inc. ("SR2020")

SR2020 provides technically advanced and proprietary borehole-seismic services, including 3D-vertical seismic surveys, to a large number of operators in the US oil and gas industry.

SR2020 has experienced a downturn in revenue caused by the necessary restructuring that took place in 2013. Although trading in the first quarter was disappointing, the outlook should improve as the company's newly launched micro-seismic monitoring product gains acceptance. SR2020's new and proprietary micro-seismic imaging product continues to create market interest.

The Company owns 70 per cent of the share capital of SR2020. An employee share-option scheme, once fully vested, will own the balance of 30 per cent. The valuation of the Company's investment in SR2020 remains at US$1 million.

Litigation

As previously reported, the litigation against the Company has now been heard in the Commercial Division of the High Court in London and we await the judgment.

Net Asset Value

At 31 March 2014, the Company estimates that the unaudited Net Asset Value per participating redeemable preference share was US$3.81 (31 December 2013: US$4.10), including cash of US$1.3 million (US$0.16 per share). The decline in NAV per share during the quarter has been exacerbated by the need to provide for the costs of defending against the litigation; the trial finished on 9 April.

The valuations of the Company's holdings in its portfolio companies as at 31 March 2014 and 31 December 2013 are set out in the table below:

 
                                 31 March 2014           31 December 2013 
--------------------------  -----------------------  ----------------------- 
 Company                     Valuation         % of   Valuation         % of 
                                (US$m)    portfolio      (US$m)    portfolio 
--------------------------  ----------  -----------  ----------  ----------- 
 Strata Energy Services 
  Inc                             28.1         90.4        28.1         90.4 
 Crest Energy Services 
  Ltd                              2.0          6.4         2.0          6.4 
 SR2020 Inc (+)                    1.0          3.2         1.0          3.2 
--------------------------  ----------  -----------  ----------  ----------- 
 Investment portfolio 
  total                           31.1         100%        31.1         100% 
--------------------------  ----------  -----------  ----------  ----------- 
 (+) Valuation takes account of full potential 
  dilution. 
 

For further information:

 
Investment Manager 
Linton Capital LLP 
David Sefton 
[e-mail]  Tel: [phone] 
 
 
Corporate broker 
Numis Securities 
Nathan Brown 
[e-mail]  Tel: [phone] 
 

Notes to editors:

International Oil and Gas Technology Limited

International Oil and Gas Technology Limited is an authorised closed-ended investment company incorporated in Guernsey. The Company was admitted to the Official List of the UK Listing Authority and to trading on the London Stock Exchange on 7 January 2008. Its stock market EPIC is OGT.L.

Further information can be found at www.international-ogt.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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