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Trading statements

Hunting buoyed by rise in US onshore drilling

04 July 2017 07:20

International energy services group Hunting's performance in the first half has benefited from the increase in onshore drilling in the US, particularly in the shale oil regions such as the Permian Basin in West Texas.

Chief executive Dennis Proctor said: "This growth in activity since the end of 2016 has meant Hunting's Perforating Systems business has reported results ahead of management's expectations.

"Of note has been the wider adoption of the H-1 Perforating System, which has established a strong market position given its performance, reliability and safety.

"To meet this demand, the Perforating Systems business has increased the number of shifts, recommissioned a previously mothballed facility and added personnel.

"Elsewhere, the US offshore and international drilling markets remain weak due to the low oil price. Drilling budgets continue to be reduced by global operators, which adversely impacts Hunting's businesses focused on these markets.

"While Hunting's Well Construction segment has experienced difficult trading conditions in the period, sales into the onshore US drilling market, which include the segment's Premium Connections and Specialty Supply businesses, have improved during H1 2017.

"The Well Completion segment, which incorporates Hunting's Perforating Systems business, has reported a profit, driven by the activity noted above, but being offset by the weaker US offshore and international markets.

"As previously noted, Hunting's European OCTG operations have reported good activity levels since the start of the year, with sales primarily driven by orders for the US shale and Middle East markets.

"Hunting's Well Intervention segment also saw difficult market conditions as deepwater drilling activity remained subdued due to the lower investment levels seen particularly in the deepwater Gulf of Mexico.

"As a consequence of this activity, the Group expects to report a positive EBITDA in the period, but remain loss making at the profit before tax level.

"Cash generation continues to be closely monitored, with working capital controls still in place across the Group's businesses.

"Net debt at 30 June 2017 has increased to approximately $8.0 million since the year end, principally as a result of order book increases and the associated inventory purchases required.

"Capital investment continues to be tightly controlled with spend in the period being approximately $5.0 million.

"The outlook for the remainder of year is predicated on sustained US onshore drilling activity driving the Group's performance, accompanied by cautious optimism for stable offshore and international markets during H2 2017."

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Related Company: HTG

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