Enteq Technologies Share Discussion Threads

[1gw] 04/8/2022 14:52

I guess companies like the Saudi strategic partner, which may have better existing relationships with local service companies and/or end-customers than has Enteq. This from the 2021 results:

"The latest update from Enteq's strategic partner in the Kingdom of Saudi Arabia, Sawafi Aljazeera Oilfield Products and Services Co. Ltd ("Sawafi") is that their client, Saudi Aramco, have informed them that due to low drilling activity there is currently no foreseeable need for the equipment that was placed in Saudi Arabia on stand-by. The equipment will be redeployed to other opportunities. Sawafi wish to continue with the partnership arrangement with particular emphasis on the new technologies that Enteq is developing, chiefly SABER."

As Enteq is hoping for rapid take-up across the world then it may wish to set up a number of key regional partners (rather than itself recruit an adequately-sized global salesforce) who can then manage the roll-out in their region.

[p1nkfish] 04/8/2022 14:24

"to facilitate the roll-out" could mean sales channel partners, local service partners too.

[mr doughnut1] 04/8/2022 14:08

Afternoon Bruges, commercial partners, as I understand it, refer to existing customers who use Enteq’s MWD equipment.

[brugen] 04/8/2022 10:56

rivaldo,
Do you have any thoughts on what "commercial partners" means in the last sentence? Is this to help with maunfacturing, sales or distribution? I don't remember reference to commercial partners other than Shell before.

[rivaldo] 04/8/2022 10:24

NTQ have issued an expanded version of the above report, with this nice concluding sentences:



"Enteq Technologies (Enteq), the energy services technology and equipment supplier, announces a 45% increase in revenue in 2022 with new entry into new regions and energy transition sectors. Building on this, the SABER Tool (Steer-At-Bit Enteq Rotary Tool), Enteq’s game-changing alternative to traditional rotary steerable system (RSS) for directional drilling, has successfully achieved its testing milestones to date."

"We have a steady and loyal customer base through our MWD and LWD offering who are incredibly interested in SABER and we’ve put a lot of work into understanding what the market wants – gaining significant interest globally. We’re currently in the position of identifying commercial partners across several regions to facilitate the roll-out of SABER as the industry go to in RSS technology.”

[rivaldo] 02/8/2022 07:19

Nice coverage of SABER yesterday:



Extract:

"Robust alternative to traditional rotary steerable system
Created: Monday, 01 August 2022"

"The global drilling market is currently estimated to be worth at least US$11bn. Enteq’s chief executive officer, Andrew Law, said, “We know that the drilling market, and in particular the RSS market, is strong. We’re confident this is set to continue into the future, and we’re excited by the potential to use our technology to support energy transition applications. When we set out to commercialise SABER, we wanted to ensure that we were creating an RSS that would improve the efficiency of operations now and well into the future. With SABER, we’re confident that we’re able to do that and we’re looking forward to providing a solution that customers can feel confident in investing in.

“When you look at the oil and gas industry, for example, there are only a handful of businesses supplying the global market in this sector and we know that there is demand there for alternative, innovative technologies.”

[p1nkfish] 01/8/2022 22:19

Customers in fine fettle.

[rivaldo] 01/8/2022 08:44

Another good week for the rig count, rising another 9 to 767:



Extracts:

"U.S. energy firms this week added oil and natural gas rigs for a record 24 months in a row as oil majors post blowout earnings on surging crude and gas prices.

The oil and gas rig count, an early indicator of future output, rose nine to 767 in the week to July 29, its highest since March 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Baker Hughes said that puts the total rig count up 279, or 57%, over this time last year."

"Demand for hydraulic fracturing equipment is quickly outpacing supply, executives said"

[rivaldo] 25/7/2022 11:38

The weekly rig count continues to rise and was up another 2 last week to 758. It was at just 491 a year ago:

[rivaldo] 20/7/2022 10:56

The US rig count continues to climb and is now at 756, up 4 on the week:



I've been on hols, but made some notes on the investor presentation before I left which might be of interest:

- SABER is a sticky rental model with ongoing revenues from maintenance, spares and support, and is already in use by prospective customers, with two levels of patent protection from Shell's own design and NTQ's addition and inventions
- the 5 acre Houston site is in the books at $2.5m. So very useful asset backing on top of the $4.8m cash and the $3.5m debtors
- year end debtors are high sue to accelerating Q4 sales and are fully recoverable
- testing has led to "derisking" of SABER and "a better tool" following design refinements. The engineering team are very happy with the finished product, and NTQ are confident of SABER revenues this financial year
- all NTQ's American customers are keen to test SABER. Field testing agreements are already in place, and helpfully NTQ's selected partners have good control over their operatins without having to contact their end customer
- next SABER news flow will be a downhole field trial this year
- NTQ have plenty of cash for SABER and everything else, especially given the £1m O/D facility which will be available immediately on the first SABER sale, so there will be no need to raise money
- SABER are addressing a $2 billion and growing market dominated by two companies, so there's plenty of pent-up demand, particularly from domestic and national energy operators

[masurenguy] 16/7/2022 10:27

Enteq Technologies present SABER technology and commercialisation plans for this year

Andrew Law talks to Katie Pilbeam about ENTEQ's plan to commercialise its SABER system, a guiding and drill-positioning technology. Law says good progress is being made while commercialisation is on track and expected this year. The firm recently reported an increase in full-year underlying earnings (EBITDA) as revenues rose and costs were cut.

[novision] 12/7/2022 14:47

My takeaway from Q&A was that they're probably going to be okay. (Was worried they'd run out of cash at one point.) They are a couple of accountants, so you wouldn't really expect them to be gung-ho with forecasts. They have continued to buy shares, so I think that augurs well long term. Not expecting share price fireworks any time soon though.

[p1nkfish] 12/7/2022 12:43

A reluctance to go all in on a positive outlook. Only mentioning low % capture of the market without explicitly giving a target $ number and leaving the viewer/listener to do it.

I can understand that but it's a bit at 90 degrees to the published results potential growth rates. Why not just regurgitate those numbers verbally?

[1gw] 12/7/2022 11:01

I was personally disappointed with the Q&A, which felt to me like they were dancing round the issue of a delay in moving into live directional drilling tests. i.e. they didn't acknowledge that there had been a delay but as a result seemed to be struggling to answer a number of the Qs convincingly.

Having said that, the basic message that now they expect to move into live directional drilling tests and commercial contracts by the end of the year was encouraging. I look forward to an RNS saying that a live directional drilling test has been successfully completed, and hope that that will have a more positive impact on the shareprice than the results did.

[novision] 11/7/2022 13:30

Useful update from the directors. (Q&A most useful, I guess)

[p1nkfish] 06/7/2022 19:53

At what point in time is a hockey-stick price response likely?

The growth rate potential, even if cut in half, tells us this can multiple before 2025.

[mr doughnut1] 06/7/2022 18:45

https://www.proactiveinvestors.co.uk/companies/news/986719/enteq-technologies-lifts-full-year-earnings-and-prepares-saber-for-launch-986719.html

[1gw] 06/7/2022 10:59

I'm not sure the finnCap forecast makes a lot of sense and I wonder if a last-minute decision was taken to pull FY24 & FY25 forecasts and revert to a more-or-less unchanged FY23 forecast, despite the growth in 2H in (non-SABER) revenue.

The $10m revenue in the finnCap forecast implies very little SABER contribution since, as rivaldo observes, 2HFY22 revenue was $5m so it doesn't even allow for continued growth in the non-SABER business (beyond 2H run-rate).

On the other hand a 55% gross margin implies a relatively material SABER contribution since 2HFY22 GM was only 35%.

[rivaldo] 06/7/2022 10:15

I suspect Finncap's forecasts of $10m revenue and 1.7c EPS - i.e 1.42p EPS - are simply rather conservative, especially given the $5m of revenues in the last H2.

Which is a good thing imo. Not only is there therefore a good chance of beating forecasts, but the market doesn't get overexcited and I can continue topping up in the meantime :o))

FYI here's extracts from today's Finncap's note:

"FY22 results show a strong recovery and growth in revenue, assisted by North American market recovery and additional revenue from recent third-party component distribution agreements. The change in sales mix had some effect on gross margin, while incremental overhead cost reductions helped reduce pre-tax loss to $0.5m. SABER development is progressing well, with key tests surpassed, and remains on track for commercialisation in 2022. No change to forecasts, with market recovery supporting the near-term prospect and initial SABER revenues expected to commence in FY23. We maintain our 40p price target based on the exciting and substantial market opportunity offered by the introduction of SABER, its unique rotary steerable system."

"- Forecasts. No change to adj PBT forecast of £1.2m, with a lower GP margin of 55% offset by lower overhead costs. Our forecast year-end cash remains £3.0m.

- Valuation. We maintain our existing 40p price target. The company is progressively de-risking and expanding operating parameters for SABER and is on track for commercialisation before the end of 2022. SABER is a unique and disruptive product with a huge market opportunity. Early indications are of strong interest from potential customers. As SABER starts to demonstrate its market potential, we see significant scope for the shares to revalue."

[p1nkfish] 06/7/2022 09:08

Some decent questions for the IMC call.

[somerset lad] 06/7/2022 08:58

The finnCap note forecasts FY23 revenues of $10.0m, but note 6 to the prelims states "The impairment test assumes annual growth rates of 123% in the year to March 2023" which implies revenue in FY23 of $16.3m. Why is there such a wide divergence? I would expect the impairment test to be undertaken using fairly conservative (i.e. lower growth) assumptions, so why then is finnCap number so very much lower when we are already part of the way through the period?

[somerset lad] 06/7/2022 08:21

Note 6 (impairment testing) flagged by 1gw in post 1589.

The growth rate assumptions imply revenues of $61.1m in FY25.

There won’t be much by way of SABER revenues in FY23 given the targeted launch of calendar 22, so the 123% growth must mainly be from the existing business.

The growth rate assumptions are significantly larger than the equivalent FY21 statement: “Currently the SABER project is in the development phase and has not generated any revenue. On the assumption that the SABER project is launched successfully, the longer-term forecast assumes annual growth rates between 5% and 3%. The remaining assets impairment test within the separate CGU assumes annual growth rates of 69% in the year to March 2023, 58% in the year to March 2024, 25% in the year to March 2025, 20% in the year to March 2026, followed by 3% thereafter.”

[rivaldo] 06/7/2022 07:34

Good results for the year to 31st March.

H2 revenues were $5m, up from $2.3m in H1 - leading to a $0.9m EBITDA in H2 alone and an H2 $0.4m PAT.

That's an annualised $1.8m EBITDA with no improvement at all this year.

NTQ still has a £4m cash pile against the £10m m/cap.

SABER development is going smoothly, and its prospects are potentially gamechanging in not only oil, but also geothermal and methane capture.

There are new customers internationally and in the USA.

With the rig count climbing almost every week - and very nicely since the year end - I would expect those H2 figures to continue to improve.

[masurenguy] 06/7/2022 07:33

Some progress but still jam tomorrow especially where SABER is concerned !

Final results for the year ended 31 March 2022

Key features

-- Total revenue up from $5.1m to $7.3m due to strengthening North American market, offsetting reduced activity in China:
o North America revenue up from $1.9m to $6.2m
o International revenue down from $3.2m to $1.1m

-- Adjusted EBITDA up from $0.1m to $0.3m

-- Gross profit margin down from 53% to 36% due to change in product mix from new strategic distribution partnerships

-- Administrative expenses before amortisation reduced from $3.9m to $3.2m:
o Underlying overheads reduced from $2.6m to $2.3m
o Depreciation on rental fleet down from $0.9m to $0.5m
o Depreciation on other fixed assets steady at $0.2m

-- Loss attributable to shareholders reduced from $1.1m to $0.8m

-- The SABER project has progressed well:
o Key test objectives achieved
o Extensive industry and customer engagement has demonstrated market potential

Outlook

-- Continued US rig count growth gives optimism regarding US market

-- Focus on international opportunities as markets recover

-- Ongoing investment in the development and deployment of new market-led technologies

-- Emphasis on maintaining a strong balance sheet

Andrew Law, CEO of Enteq Technologies plc, commented:"Enteq has continued investment in the SABER RSS project development, resulting in an enhanced, simplified design with a wider range of operation and a low cost to operate. Sustained testing has confirmed the system has performed to the design criteria and met all requirements to date, thereby further reducing technical risk. Extensive industry engagement with existing and new customers both internationally and across North America, has confirmed that SABER is on-track to meeting the market requirements. Enteq's core MWD business has benefitted from the continued growth in the US market, new customers in the US, new customers internationally and from access to selected technology distribution agreements. Additionally, the core existing customer base will be the initial target market for SABER. As with the core MWD technology, SABER has applications in geothermal and methane capture operations as well as conventional oil and gas, giving the Board grounds for optimism for the short, medium and long term outlook."