Hunting PLC H1 2018 Trading Update (8104S)

TIDMHTG

RNS Number : 8104S

Hunting PLC

28 June 2018

 
 For Immediate Release   28 June 2018 
 

Hunting PLC

("Hunting" or "the Company" or "the Group")

H1 2018 Trading Update

Hunting PLC (LSE:HTG), the international energy services group, today issues a pre-close trading update, ahead of its Half Year Results to be issued on Thursday 30 August 2018.

The Group's performance during the period has continued to reflect strong activity levels within US onshore completions, improving sentiment in the US offshore market and localised regional improvements in the Asia Pacific and Middle East markets. Activity levels in Europe and Canada remain challenging as lower drilling activity continues to impact these markets.

Based on these regional trends, Hunting Titan has delivered a performance ahead of management's expectations and the Group's US segment has returned to operating profitability, while Hunting's other segments have delivered an operating loss in the period.

Within Hunting Titan, the segment reports a strong increase in sales across all product lines, driven in part from higher completion activities and greater frac intensity. This increase is supported by the further commercialisation of Hunting Titan's proprietary perforating technologies including the H-1 System and EQUAfrac(TM) shaped charge, which offer greater reliability, reduced rig time and higher margins of safety. The Permian Basin remains the largest contributor to Titan's sales, however, other basins have also reported good increases in activity as the stable oil price environment supports new drilling activity in the onshore US market. The manufacture of perforating systems in the Group's facilities in Canada, Mexico and China has also increased in the period.

In the US, the Group's Premium Connections, Drilling Tools, Advanced Manufacturing and Speciality business units have reported improved sales compared to 2017, predominantly supported by US onshore drilling activity. Hunting Electronics has performed strongly during the period as clients increase investment in new capital equipment, in addition to the business supporting Hunting Titan in the manufacture of perforating switches. Of note has been the improved performance of the segment's Manufacturing and Accessories business which is nearing a breakeven position, as activity in the US offshore and international markets slowly improves. Hunting Subsea remains subdued, given the low investment levels particularly within the US offshore/deep water markets.

In Canada, while drilling activity levels remain low due to local oil pricing and distribution bottlenecks, the business has benefited from the increased production of perforating guns for Hunting Titan. In Europe, while drilling activity in the UK North Sea remains subdued, the business has retained a number of key supply contracts. Further, the Group's well intervention unit has returned to profit during Q2 2018, supported by the introduction of new technologies and products. Due to continuing losses within the Group's Kenya operation, management has decided to close its facility in Mombasa - the cost of closure is forecast to be absorbed within surplus provisions held over from the Cape Town facility closure announced in 2017.

In the Middle East, well intervention contracts in Northern Iraq have contributed to increased sales, while Hunting's joint venture in Saudi Arabia also reports a modest increase in order intake from key partners in the country.

Hunting's Asia Pacific business has reported increased orders for OCTG for the domestic market in China and has also increased production of perforating guns for Hunting Titan. Activity in Singapore and Indonesia remains quiet as international operators limit new drilling activity.

The Group's balance sheet remains strong with a net cash balance in excess of $30m expected at 30 June 2018 - this includes $8m of proceeds from the sale of the Group's Cape Town facility in May. Working capital has absorbed cash during the period, as expected, given the increased activity levels, and inventory is expected to be approximately $325m at 30 June 2018 compared to $286m at 31 December 2017. Capital investment has remained modest with approximately $11m incurred up to the end of June 2018.

Given current market conditions, and the outlook for the remainder of the year, management continue to take a cautious view on the rate of recovery in the wider market in H2 2018, but currently remain comfortable with the market consensus for the 2018 full year outturn.

For further information please contact:

 
 Hunting PLC                         Tel: [phone] 
  Jim Johnson, Chief Executive 
  Peter Rose, Finance Director 
  Tarryn Riley, Investor Relations 
 Buchanan                            Tel: [phone] 
  Ben Romney 
  Chris Judd 
 

Notes to Editors:

About Hunting PLC

Hunting PLC is an international energy services provider to the world's leading upstream oil and gas companies. Established in 1874, it is a premium listed public company traded on the London Stock Exchange. The Company maintains a corporate office in Houston and is headquartered in London. As well as the United Kingdom, the Company has operations in Canada, China, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates and the United States of America.

The Group reports in US dollars across seven segments: Hunting Titan, US, Canada, Europe, Asia Pacific, Middle East/Africa/Other and Exploration and Production.

Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.

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June 28, 2018 02:00 ET (06:00 GMT)