15th Sep 2015 09:17
LONDON (Alliance News) - Oil and gas services company Enteq Upstream PLC Tuesday said revenue remains "unpredictable" but expects its earnings for the first half of 2015 to be in line with expectations.
The company, which supplies drilling products and engineering services to the energy industry, said its results since the start of 2015 reflect the current downturn in the North American oil drilling market, its primary geographical target.
Along with other companies operating in the up-stream drilling sector, Enteq is being hurt by the overhang of equipment capacity in the North American market.
Enteq noted West Texas Intermediate oil prices, the US benchmark, have continued to fall in recent months to USD45.6 per barrel from USD47.7 per barrel at the end of March and USD91.2 per barrel at the end of September 2014. On Tuesday morning, WTI was trading at USD44.4 per barrel.
The fall in oil prices has caused operators and explorers to cut back on investment and defer operations. The rig count in North America has fallen to only 850 rigs as of Tuesday, compared to 1,048 rigs at the end of March and 1,931 rigs since the end of September 2014.
"In North America, the group's year-to-date revenue performance related to drilling activity reflects the rig count reduction," said the company.
To try to combat falling levels of activity in the region, Enteq has looked for new customer opportunities. In North America, it has sourced new customers for rental equipment and it has made one-off sales outside of the region.
Enteq said it also has identified new development opportunities in Russia, the Middle East and the Far East.
"Overall the market and, therefore, revenue remains unpredictable, but the company has taken significant cost-cutting measures in order to protect underlying Ebitda, which the board expects to be in line with its expectations for the six months ending September 30, 2015," it said.
As of Monday, Enteq reported a cash balance of USD14.4 million, up from USD14.1 million at the end of March and from USD13.8 million at the end of December.
Enteq plans to release its results for the first half of the 2016 financial year on November 13.
The stock was up 4.2% at 12.50 pence Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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