AGM Statement

RNS Number : 7145V

Plexus Holdings Plc

05 December 2019

 

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services

Plexus Holdings PLC ('Plexus' or 'the Company')

AGM Statement

Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering, known for its safety, time and cost saving capabilities, will hold its Annual General Meeting ('AGM') today.  At the AGM, Jeff Thrall, Chairman, will make the following statement:

"Annual Reports are forward as well as backward looking.  Our recently published 2019 report did not just summarise the financial results for the year ended 30 June 2019 but also our strategic vision to transform Plexus into an IP-led business based on POS-GRIP, our proprietary method of friction grip engineering that has raised the bar in terms of wellhead performance, reliability and safety. The Chairman's Statement detailed the 'reset and rebuild' strategy we are pursuing following the sale of our jack-up exploration wellhead rental business to leading oil and gas services company TechnipFMC in 2018. Meanwhile, the headline financials, notably a ten-fold increase in revenues generated from continuing operations to £3.6 million, showed the progress we are making in rebuilding our revenues, although as was noted the lead times associated with the sale of production wellheads, which we are now targeting as opposed to the rental of exploration wellheads, are much longer.  

"Over the years, the jack-up business we sold to TechnipFMC in 2018 accounted for the vast majority of our revenues and earnings, funded research and development for new applications for our POS-GRIP technology, employed over 150 staff at its peak and, enabled dividends to be regularly distributed to shareholders. Selling the rental business was therefore always going to require a reset and rebuild, not just of Plexus' financials, but also of the Company's strategy and structure. However, having proved our POS-GRIP technology around the world for a wide range of blue chip international oil companies in the niche jack-up drilling exploration market sector, we are now well positioned to address the far larger surface production and subsea markets where we are confident we can build over time a meaningful market position just as we did in the jack-up exploration sector. 

"One year on, an analysis of our £3.6 million sales revenue for the 12 months ended 30 June 2019 compared to £318k the previous year shows where we have come from, how far we have travelled and a glimpse of where we are going. Thanks to orders for a production wellhead (Spirit Energy - North Sea) and another for a POS-SET Connector (Oceaneering A/S) for abandonment operations, full year revenues were generated from a number of sources as opposed to being mainly dependent on the jack-up exploration business, as had been the case in previous years. It should not be forgotten however that we retained our jack-up exploration wellhead rights for Russia and the CIS through our licensee Gusar, and sold two POS-GRIP wellhead systems to Gusar for an initial exploration well contract with energy giant Gazprom. This is consistent with our goal to re-establish Plexus' credentials as a profitable and when appropriate dividend-paying, oil and gas engineering business. Our means of achieving this is to build a portfolio of revenues generated from a diverse range of products, territories and licensing agreements. Although much work remains to be done to regain and in due course surpass, previous revenue and profit levels, and we have reported that revenues for the current financial year to June 2020 are expected to be lower than last year, we strongly believe that we have a solid foundation upon which we can build a successful future: 

"Products - Plexus has a growing suite of proprietary products utilising our POS-GRIP technology, which includes certain patented features such as our superior "HG" metal-to-metal seals. In addition to our wellhead designs and POS-SET Connector, these products include the Python Subsea Wellhead and Tersus-PCT, an innovative HP/HT Tie-Back connector product, as well as new products such as our recent patent applied for Crown Plugs.  We believe that all our products offer a range of superior performance and operational cost benefits.

"For an example of just how ground-breaking our equipment is, I would advise you to refer to the announcement we released on 22 November 2019, detailing how our POS-GRIP "HG" Sealing system successfully completed, at the first attempt, an extreme temperature test verification programme from -75 to +400 °F in accordance with API 6A PR2F standards at 10,000 psi pressure. We believe this is another industry first, as the entire programme was performed within a single test as opposed to the standard practice of qualifying wellhead seals to extreme temperatures separately, which often requires multiple tests possibly using different test fixtures or sealing elements. Furthermore, our test was carried out with a sealing system previously used in a separate qualification test programme, further proving the reusability of the technology. The implications of this achievement are significant. Achieving the full range in a single test demonstrates superior integrity and importantly highlights POS-GRIP's capability in extreme Arctic conditions. Meanwhile by delivering a leak-proof solution, our one-design seal system can eliminate the need for remedial work and maintenance, thereby generating material cost savings. It is this combination of superior operational performance and significant cost savings which lies behind our belief that POS-GRIP's is a uniquely compelling solution for operators.

"Partners - Plexus has a growing list of partners at both the product and geographic levels.  In addition to our Russian partner Gusar, we have a Collaboration Agreement in place with TechnipFMC which establishes a framework for both parties to look to work together on the development of existing POS-GRIP IP for applications outside of jack-up exploration, as well as future new technologies. A third partner was added in June 2019 following the establishment of our majority owned Plexus Pressure Control Ltd ('PPC'). This company is a Joint Venture with UK-based BEL Valves Ltd, which enables us for the first time to offer operators a full-service package that includes valves and Xmas-trees, alongside our POS-GRIP wellheads, for large scale production projects. PPC helps to level the playing field for Plexus when tendering for surface production contracts, which are typically awarded to those suppliers who can offer operators package solutions. 

"End-users - Plexus can point to a who's who of blue-chip operators such as BP, Royal Dutch Shell, Statoil, Total, and ENI who have successfully deployed POS-GRIP equipment in the field, in many cases on multiple occasions. Importantly, the list of operators which have experienced the benefits of POS-GRIP for themselves continues to grow. In March 2019, we announced a breakthrough order secured by Gusar with global energy giant Gazprom to supply POS-GRIP rental wellhead gas exploration equipment during the first of a five-year gas exploration drilling programme.  We are hopeful that further orders from Gazprom, and from other operators in Russia and the CIS, will be secured through our licensing agreement with Gusar.

 "We continue to talk to other prospective partners about existing and potentially new applications for our POS-GRIP technology. Wherever metal-to-metal annulus sealing is required, POS-GRIP can deliver a true, leak-proof solution, and importantly one that can last for the 'Life of Field', thereby avoiding expensive remedial and maintenance costs which often result in significant production revenue losses for operators. As a result, multiple markets, both inside and outside the energy sector, can benefit from POS-GRIP technology-based equipment and solutions in the same way as jack-up exploration has for many years. At a time when there is increasing pressure on the oil & gas industry to eradicate harmful gas and methane emissions from operations through the use of advanced technologies across the supply chain from well site to consumer, we believe that a major opportunity has opened up for our leak proof technology, one we are focused on taking full advantage of for the benefit of our customers, our shareholders and the environment in which we operate. I look forward to announcing further news on our progress over the coming months."

**ENDS**

For further information please visit www.posgrip.com or contact:

Ben van Bilderbeek	Plexus Holdings PLC	Tel: [phone]
Graham Stevens	Plexus Holdings PLC	Tel: [phone]
Derrick Lee	Cenkos Securities PLC	Tel: [phone]
Frank Buhagiar	St Brides Partners Ltd	Tel: [phone]
Isabel de Salis	St Brides Partners Ltd	Tel: [phone]

NOTES:

AIM-traded oil and gas engineering services company Plexus (AIM: POS) is an IP-led company that has developed a range of products and applications based on its patent-protected POS-GRIP friction-grip technology.  Having proved the superior qualities of POS-GRIP within the jack-up wellhead exploration market through the sale of this business to FMC Technologies Limited, a subsidiary of TechnipFMC (Paris:FTI, NYSE:FTI) (jointly "TFMC"), in early 2018, the Company is now focused on establishing its technology and equipment in other markets including surface production wellheads, subsea and de-commissioning. 

Its suite of ongoing products and applications include: "HG" wellheads, which combine POS-GRIP technology with gas tight metal sealing; the Python® subsea wellhead (a new standard for subsea wellheads - developed in a Joint Industry Project supported by Royal Dutch Shell, BG (now owned by Shell), Wintershall, Total, Maersk (now owned by Total), Tullow Oil, eni, Senergy (now Lloyds register), and Oil States Industries Inc); the POS-SET™ connector for the growing de-commissioning and abandonment market; and Tersus-PCT, an innovative HP/HT tie back connector product.  Importantly, the Company also has a collaboration agreement with TFMC, which provides a platform to further develop and commercialise these and other applications based on its POS-GRIP technology.

 

END

 

 

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