Hunting Share Discussion Threads

[wooster4] 29/8/2006 10:53

bought some this morning for the interims being announced on Thursday. Looks like that hurricane will not affect Huntings operations - will be looking for a nice mark up.

[srsm] 26/8/2006 15:16

Regarding recent BP pipe problems. Hope the pipes aren't Hunting supplied. If not, then this might be a huge opportunity for Hunting.

[jakleeds] 02/8/2006 12:09

Looks ready for a strong breakout....

[old giggleswickian] 08/7/2006 09:35

From the mail:-
Shell's record of overruns worsened after one of its partners in a massive Canadian project said it could go 50% over budget. The company revealed that the £3.6bn expansion of the Athabasca oil sands venture in Alberta was being hit by significant upward pressure on capital costs. Tha Athabasca expansion, which could add 100,000 barrels to its current 150,000 capacity, is being hit by rising costs of labour, equipment and materials. Cost inflation is something the whole industry is facing-but what element is project complexity and under-extimates? Oil sands production is a costly business and requires a market price of at least $25 a barrel to be viable. The raw material is scooped up using huge diggers, then blasted with steam before being piped hundreds of miles for refining.

Ian.

[rogerbridge] 07/7/2006 23:21

Yes we are looking good. Still undervalued.

[huggybear1954] 04/7/2006 09:28

blessings, interesting article, thanks. Looks like we're getting a boost from the Petrofac trading statement yesterday.

[blessings] 03/7/2006 15:52

2 June 2006
There's gold in them there rigs

Big oil has a problem. While profits are gushing at a record pace, the oil majors are also feeling cost pressures on key inputs, such as drilling rigs. This is because they're all simultaneously vying for new equipment from a limited group of suppliers. That's bad news for them, but great for the oil services companies, which, collectively, have gained just over 20 per cent since the start of the year.

It's easy enough to view these service companies as identikit investments. Behind their outward similarities, though, there are big differences between their core businesses and the risks and rewards that go with them. There's a lot more to these firms than moves in the oil price alone can explain - see box, right. As a result, it's worth looking closely at what exactly the companies do and where their opportunities lie.

The current supply shortness isn't an unmitigated blessing for the oil services firms. Two of them, Petrofac and John Wood Group, offer full life-cycle solutions for building and operating oil and gas infrastructure - as such, they have significant exposure to engineering, procurement and construction (EPC) contracting. The procurement element is essential here. On many fixed-price contracts, companies quote a flat price upfront and then have to source the raw materials. If, say, steel prices soar in the interim, then they have a problem.

There are further significant differences between the two companies. Petrofac offers the purest exposure to the oil and gas investment environment, as a significant portion of John Wood's business involves supplying gas turbines for power generation. And while John Wood is involved in some upstream development, particularly in the deep-water Gulf of Mexico, Petrofac has upstream EPC penetration in more lucrative markets, such as the Middle East and the former Soviet Union.

Another attraction of Petrofac is its resources division. The company invests as an equity partner in upstream development, with a view to the development consortium then employing it as the contractor. Besides the synergies this offers, providing equity as a contractor helps to bridge the funding gap for smaller companies - and could make the difference between a project going ahead or not in the first place. While stimulating its own market, Petrofac is sensibly not taking any exploration risk, but buying into proven prospects.

With drilling rig day rates high on the list of oil company concerns, Abbot Group is similarly well-positioned as the only pure drilling play listed in the UK market. The company operates offshore platform drilling rigs for oil companies and also owns its own fleet of onshore drilling rigs, which have recently seen increased usage in the large Russian market. It was also an early mover into Libya, where it has tolerated relatively lower rates on drilling rigs in order to be first on the ground for the expected explosion of investment.

The drilling rate explosion cuts both ways, though. By encouraging oil companies to purchase more rigs themselves, their reliance on companies such as Abbot declines. But Abbot itself has just made a strategic acquisition worth £535m in the shape of Norwegian drilling company Songa. So some analysts say that paying a top-of-the-drilling-cycle price might prove short-sighted.

Expro is a service company focused solely on the development and operation of oil and gas wells, with divisions specialising both in onshore and offshore drilling programmes. It's the sector's biggest winner this year and now commands a rating of almost 30 times forecast earnings. Its supporters justify this by pointing out that it is a market-leader within a highly profitable area of the industry.

Hunting, by contrast, is the sector's bargain right now. Its cheapness possibly reflects its curious combination of a reasonably specialised well-casing manufacturing business and a midstream transport business. Hunting's unique selling point is that it has cornered the market in the pipelines, trucks and other infrastructure serving the Athabasca oil sands province in Canada.

Importantly, the prevailing high prices and increasing scarcity of conventional oil have made oil sands attractive and Shell is among the majors now spending significantly on commercialising the Canadian deposits. Hunting's trucking business, however, is extremely low-margin. Even so, this is a play for the future and, if the oil sands story takes off, so will investment in the region and associated demand.

What greases the services companies?

The key elements to understanding shares in the major oil firms are the oil price and how well those firms exploit their facilities. For oil services companies, though, it's not so obvious. You might think it a no-brainer that a high oil price leads the oil majors to invest heavily, thereby boosting the oil services firms. Over the past 10 years, however, movements in the oil services sub-sector have not been closely correlated with fluctuations in the oil price.

The collapse in the oil price in the late 1990s discouraged the oil majors - the services firms' main customers - as well as significant investment. Even when oil prices did begin to move decisively higher, the majors initially refused to believe it was more than a blip. Accordingly, they returned much of the bumper cash flows they generated during those years to shareholders via buy-backs and special dividends, rather than investing.

And there is strong disagreement now about where oil prices are heading. The oil majors' view is far less optimistic than that of the financial markets' view, which is embodied in the three-month futures curve. Nevertheless, it does seem that expectations of sustained higher oil prices are finally feeding into increases in the oil majors' spending plans.

These more generous investment plans reflect the difficulties that the industry's giants are currently having maintaining good reserve replacement ratios following the underinvestment of the 1990s. Shell, for example, will spend $19bn this year, up from $15bn in 2005.

The change in the majors' investment behaviour could be good news for the services firms. But what has moved their shares historically? When UK banks are holding more money to lend out, they tend to prosper. In fact, this has influenced them more than the oil price over the past decade.

[huggybear1954] 22/6/2006 12:54

Form todays Independent

Hunting shares trade at 15 times forecast earnings for 2006. Its rivals in the oil services sector, on average, trade at 23 times. This discount is unjustified. Buy, says the Independent.

[oscarino] 21/6/2006 15:26

motoring nicely today. best performer in my stable at the moment

[5eights] 21/6/2006 11:14

EPS '06 upgrades: T&G 21.4p (+6%), ABN 22.7p (+10%). 420p and 440p TP's respectively.

[5eights] 21/6/2006 08:47

Superb trading statement. Here come the broker upgrades...

[old giggleswickian] 02/6/2006 20:42

The latest consensus Broker forecast gives t/o down a little and profits up reasonably. I am told that the turmoil of the last few weeks had had a greater impact on the price of WG. than HTG so no need to panic it seems.

Type Report Date Turnover (m) Pre-tax Profit (m) EPS Adjusted Dividend
Final 31-Dec-06 £1,463.50 (-4%) £44.75 (+9%) 20.17p (-5%)

Ian.

[mach10] 22/5/2006 19:33

too right Willower but it is always hard to tell whether any bounce is a sucker's rally or not. I am surprised by the sustained drop but am taking a long- term view. I want to seek out quality stocks that provide divis coupled with growth in an orderly market. Hunting fits the bill. This is no bell which rings out the bottom. I really think it has fallen far enough and am willing to wait until it bounces no matter what the drop. In fact I have my eye on another stock which I hope to catch soon in Braemar Seascope and I will wait until the market settles a bit for that one. Another quality play imo!

[willower] 22/5/2006 10:39

There is no doubt that HTG seems a bargain at 3.20 but then it seemed a bargain at 3.75.The market pressure is still down and there are a load of very good companies with what seem to be bargain prices and yet they keep falling - I am going to continue to sit on the sidelines and resist temptation until the market has settled because overall market forces override almost all individual share considerations but dyor as usual.

[rogerbridge] 21/5/2006 20:30

Bought on Friday and hopefully tomorrow, if I can get my price. Stonkin good value and growth.

[gswredland] 20/5/2006 09:04

Any guesses as to the bottom..300?

[mach10] 19/5/2006 17:46

I dipped in twice today at 343 and 333. I really think this is the bottom. There seems to have been over 500k bought in the last hour alone- though they may have been disguised sales I suppose with those sneaky MM'S. However I am happy to be in! When the dust settles, Oil will be back in favour and Canada will be huge. There was a brief flurry after the analyst briefings and I held off fortunately. When sentiment returns these will fly!

[kneath] 19/5/2006 15:03

Stegrego & Willower: Thanks. I've only been trading for about 3 months and caught a bit of a cold in the last 8 days. Still positive, but next time I would do exactly as you have done. All part of the learning curve I guess, but my instincts tell me that I should be buying back in. I think i'll watch the Dow for the rest of the day, invert my parachute and jump in for the slow move up!

[willower] 19/5/2006 13:40

Kneath - I sold just after the results simply to bank some profits.The results were excellent and I had the intention of buying back in again at some point.The plunge in the share price is a surprise to me and has to be down to the present diabolical market conditions rather then anything that the company has done.It seems to me that HTG now represents a good buying opportunity but it needs the general market to settle first because you can't fight that downward pressure.My policy has been to sell most of my portfolio until trading conditions have settled but, sadly, you do have to dyor.

[stegrego] 19/5/2006 12:43

Has its own oil company and is oil services....
One Hurricane this year and the price will go ballistic again id of thought

Im thinking about jumping in again thats for sure...

[kneath] 19/5/2006 11:26

I'm down a bundle on this, what's the prognosis anyone? Jump or Jump in? (I know the bit about DYOR - i'm looking for support)

[grahamite2] 18/5/2006 07:56

A lot of stocks hammered yesterday are showing strongly blue pre open.

[mach10] 18/5/2006 07:54

and it will be hammertime today for sure! I think maybe down 15p! When the dust settles this will be one heck of a buying opportunity! I just hope the overall index is not heading towards 4500 in the next year!

[stegrego] 17/5/2006 23:51

Apparently did an analyst visit today and it went very well so i heard - altho the share still went down with everything else ;)

[millhaugh] 17/5/2006 13:36

Anyone out there with a view on this stock......looks like a good partner with Sondex as the oil companies push ahead