Trading Update

RNS Number : 7687V

Plexus Holdings Plc

01 February 2017

 

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

This announcement contains inside information

1 February 2017

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

Trading Update

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, provides the following update on trading.

With continued difficult trading conditions in the oil & gas industry as indicated in our recent AGM trading update, the Company notes that its revenue for the current financial year, ending 30 June 2017, is currently running materially behind expectations.  The Company is in negotiations for the conclusion of several new contracts which if they fall within this financial year will go some way to recovering this shortfall for the year, or will help to underpin visibility for the next financial year.  Furthermore, due to cost cutting measures which have already been implemented, and further actions by management, the impact on LBT is expected to be proportionally less significant.   In addition, the Company has successfully implemented the cash conservation measures announced previously and as a result the cash position of the Company, which remains debt free, is expected to be closer to expectations.

The Directors believe that Plexus' POS-GRIP technology enables the Company to deliver best in class solutions to the industry and, notwithstanding these ongoing difficult trading conditions, activity in oil & gas industry has shown signs of improving and levels of customer interest in Plexus' technology have increased in recent months. The directors see the second half of the current financial year falling in line with the bottom of the exploration drilling down cycle, especially in the North Sea, and this view is supported by the fact that the Company has more visibility at this time this year than at the same time last year.  With the oil price stabilising at levels which are profitable for many exploration & production companies as a result of the recent OPEC production reduction strategy, the Directors are confident of improving results for Plexus during the next 2017/18 financial year.

Plexus' CEO Ben Van Bilderbeek said, 

"As we have indicated previously, while the downturn has undoubtedly significantly impacted on our progress and financial performance, we are confident that once sentiment within the sector begins to recover and operators renew their appetite for exploration, Plexus will in turn regain the momentum that existed before the downturn set in. Consensus is building that such a turnaround is underway, and it was only a few weeks ago that Mr Khalid-al-Falih the Saudi energy minister stated that the (down) cycle is now switching to the opposite extreme, and warned that the world needs $1 trillion of fresh investment in oil projects each year just to keep up with growing demand.

Whilst the sector as a whole continues to experience challenging trading conditions, it is our view that the bottom of the cycle has now been reached and Plexus will be well placed to capitalise on a more positive and robust trading environment. Alongside the views of major producing countries like Saudi, I was also encouraged to see that the Saudi warning was echoed by Fatih Birol, head of the International Energy Agency who fears a looming oil shortage after a collapse in spending on exploration and development, and was quoted as saying that "Alarm bells will be ringing if there is no major new investment this year".

The new business opportunities that Plexus is seeing at present are increasing, with pricing levels in line with our expectations.  The continued underinvestment in the sector will, we believe, result in an increased level of activity from operators in the second half of 2017 onwards, which Plexus is undoubtedly well placed to capitalise on."

**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]
Nick Tulloch	Cenkos Securities 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:

Plexus Holdings PLC

Plexus Holdings PLC is an AIM traded oil and gas engineering and services business, which supplies wellhead and mudline suspension equipment together with associated equipment and services for exploration and production applications.  Based in Aberdeen, with a presence in London, Cairo, Kuala Lumpur, Singapore and Texas, it has developed and patented a friction-grip method of engineering for oil and gas field wellheads and connectors, POS-GRIP®, which involves deforming one tubular member against another to effect gripping and sealing.

To date, POS-GRIP wellhead systems have been used in over 400 oil and gas wells by numerous international companies.  In particular, the technology has advantages in High Pressure/High Temperature (HPHT) and Extreme HPHT (X-HPHT) oil and gas environments, for which there is growing global demand and where Plexus is being increasingly recognised as the supplier of choice.  Plexus has recently successfully completed the supply of an X-HPHT exploration wellhead to Total for the Solaris well which is believed to be the deepest and highest pressure well ever drilled in the North Sea.

Plexus is also extending its technology into an increasing number of other applications:

·     In September 2015 it launched a prototype of the 'Python™ Subsea Wellhead' developed as part of a Joint Industry Project in collaboration with BG, Royal Dutch Shell, Wintershall, Maersk, TOTAL, Tullow Oil, ENI, LR Senergy, Transocean and Oil States Industries Inc. 

·     It recently also completed a JIP in conjunction with Maersk to develop a downhole HPHT Tieback connector which for the first time allows the reconnection of production casing to HPHT exploration and production wells.

·     It developed and qualified a new product called POS-SET Connector™ which is designed to re-establish a connection onto rough conductor casing previously cut above the seabed to facilitate tieback or abandonment operations.

Having proven its POS-GRIP technology in the niche jack-up exploration market Plexus is now focused on extending its applications into the much larger multi-billion dollar land and platform production well market as well as actively pursuing a first time use of the new Python subsea wellhead into the important subsea sector. Such strategic initiatives will be pursued both organically and with trading partners and licencees.

 

END

 

 

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