H1 2021 Trading Update

RNS Number : 3770D

Hunting PLC

29 June 2021

 

For Immediate Release

29 June 2021

Hunting PLC

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

H1 2021 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 26 August 2021.

Jim Johnson, Chief Executive of Hunting, commented:

"With the oil price firmly above $70 per barrel, along with the production discipline seen within the OPEC group and the improving global economic outlook, management expect a gradual improvement in hydrocarbon demand in the short to medium term. In the period, the Group has moved from a negative EBITDA result in Q1 2021 to a positive EBITDA result in Q2 2021, driven by an improving market in the US onshore. While there has been an increasing onshore rig count across North America, operators continue to demonstrate strong capital discipline which has led to drilling expenditures remaining subdued throughout H1 2021. Given the stronger oil price environment, we believe that as client cash flows improve capital expenditures will also increase, leading to robust demand for the Group's products and services supported by a significantly improved outlook for the industry for 2022 and beyond.

"Pricing within the oilfield services sector was deflationary in H1 2021 across all product lines, as too many goods and services pursued an industry hampered by persistently low rig counts. However, at current oil prices management anticipate an improvement in margins and pricing, supported by increased input prices, improving demand and a tighter labour market, especially in North America.

"Within Hunting Titan and the Group's US onshore-focused business units the trading environment has strengthened through the second quarter, with revenue increasing as the onshore rig count improved. Hunting's EMEA and Asia Pacific operating segments continue to experience challenging trading conditions given the ongoing impact of COVID-19, with OPEC production constraints also continuing to depress drilling activity across the Middle East, further exacerbating the recovery within these segments.

"In February 2021 the Group provided financing to Well Data Labs (WDL), which has enabled the Group to start a number of product development programmes that aligns WDL's software platform with Hunting Titan's technology and product offering. This investment opens up new technology opportunities that are increasingly being demanded across the energy industry.

"Cost cutting measures continue to be implemented to align with the short to medium term trading environment for each business unit. At the end of June 2021, the headcount was c.1,900 reflecting new hires within Hunting Titan as production increased, being offset by reductions within the Group's North America and Asia Pacific segments.

"Overall, Hunting Titan and the Group's onshore businesses have traded ahead of expectations in the period, however, this has been more than offset by a lower performance from Hunting's offshore and international businesses. We expect to see an improvement in trading in H2 2021, but we now anticipate that the Group's projected 2021 EBITDA result will be below previous expectations, but ahead of the 2020 full year result of $26.1m, with this EBITDA shortfall moving into 2022."

Trading Statement

Group EBITDA in H1 2021 is likely to report a modest loss given the market conditions noted above and the additional production disruption in Texas in February 2021 due to the severe weather which occurred. The majority of this trading result was generated in quarter one, followed by a small positive result being recorded in Q2 2021 as trading conditions within the US onshore improved.

Hunting retains a strong balance sheet with net assets of c.$950m and total cash and bank in excess of c.$100m.

Inventory levels have also continued to reduce since the start of the year, with the balance at the end of May 2021 being $269.7m compared to $288.4m as at 31 December 2020.

Within Hunting Titan, the segment has recorded sequential monthly increases in revenue, leading to an operating profit being recorded in May and June 2021. The segment has seen strong interest in its preloaded perforating gun offering in the reporting period that addresses customer demand and the wider evolution of the US onshore market. The segment has also launched the H-3 Perforating System to clients, complementing its other integrated perforating system products. The H-3 Perforating System takes many of the reliability and safety features of Hunting's H-1 Perforating System and incorporates the industry's first wireless safe detonator and the latest switch technology, the ControlFire V3.

In January 2021, the US and Canada operating segments were merged, following the restructuring completed in Canada in H2 2020. During H1 2021, the enlarged segment has seen positive trading within its Premium Connections, Trenchless and Subsea businesses, offset by the segment's Accessories Manufacturing business due to lower US offshore and international drilling activity. The Subsea Spring business, formerly RTI Energy Systems, has also won a number of significant orders in the period, totalling c.$11m, for offshore projects in the Gulf of Mexico. In Canada, the new licensing business model in-country, whereby local partners manufacture Hunting's premium and semi-premium connections, is seeing good customer acceptance and positive trading results. Within the Advanced Manufacturing group, while the business has seen reduced levels of oil and gas sales in H1 2021, increased medical, aviation and space orders have supported the businesses in the period. In support of the improving outlook, Hunting Dearborn reports a strong order book for completion later in 2021 and into 2022.

The EMEA operating segment has reported a subdued trading environment throughout H1 2021, as activity remains slow in the North Sea. However, the segment has received its first, sizeable, order for the Organic Oil Recovery technology from a client in the Middle East, which will include a 30 well treatment programme.

The Asia Pacific operating segment has seen challenging trading conditions in the period, as the ongoing impact of COVID-19 has slowed the pace of anticipated recovery across the region. However, in the period the segment has received its first order for its micro hydro generators, underpinning the segment's efforts to diversify its revenue streams. During H1 2021, the Group has also incorporated an entity in India to build its presence in the OCTG supply chain, along with its strategic partner Jindal SAW.

Formation of Ethics and Sustainability Committee

The Board has reviewed its governance framework and today announces the formation of an Ethics and Sustainability Committee, which will comprise Hunting's independent non-executive Directors and will be chaired by Jay Glick.

The new Committee will have oversight of Hunting's ethics, environmental, social and governance reporting matters and will monitor the Group's evolving carbon and climate strategies, its stakeholder initiatives, including its employee, customer and supplier engagement programmes, and also assume oversight of the Group's anti-bribery and corruption, modern slavery, sanctions and related procedures.

Hunting Executive Committee

In addition to the Ethics and Sustainability Committee, the membership of the Hunting Executive Committee ("ExCo") has been reviewed and the Board is pleased to announce new appointments to the ExCo to better reflect the Group's senior leadership team:

Liese Borden, Chief Human Resources Officer

Ryan Elliott, Chief Information Officer

Greg Farmer, Director of Health, Safety and Environment and Quality Assurance

Ben Willey, Company Secretary

All the new members of the ExCo are PDMRs of the Company.

For further information, please contact:

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

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 China, Indonesia, Mexico, Netherlands, Norway, Saudi Arabia, Singapore, United Arab Emirates and the United States of America.

The Group reports in US dollars across four operating segments: Hunting Titan; North America; Europe, Middle East and Africa ("EMEA") and Asia Pacific.

Hunting PLC's Legal Entity Identifier is 2138008S5FL78ITZRN66.

 

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