15th Jun 2016 07:53
LONDON (Alliance News) - Enteq Upstream PLC on Wednesday said Chairman Neil Warner will step down at its annual general meeting in September to cut costs and as a reflection of the company's reduced profile, as revenue fell 66% in its recently ended financial year.
Enteq, which provides drilling services to the oil and gas industry, posted revenue of USD6.3 million for the year ended March 31, compared with USD18.5 million the year earlier, due to a "the sustained lower oil price during 2015" hitting rig utilisation, particularly in the US.
Enteq cited data from drilling contractor Baker Hughes which showed the land-based rig count in North America dropped to 451 at the end of April from 1,031 the year earlier. The international count fell to 726 from 902, Enteq said.
"As revenue is derived from both rigs being added to customers' fleets and on-going replacement of items during rig operation, the dramatic reductions in active (revenue generating) rigs resulted in the 66% fall in revenue," Enteq said, noting that "there is considerable excess capacity of equipment available, un-utilised, in the market".
However, Enteq's pretax loss narrowed to USD4.7 million from USD47.2 million, after a USD39.5 million impairment incurred a year earlier did not repeat, and Enteq noted that it had also taken "very significant and early control of overheads".
During the year, overheads fell to USD4.7 million from USD6.8 million, and gross margin was 65%, up from 37% for the previous year. Enteq said this reflected "both a movement in product mix to the higher margin lines (electronic components and rental) and a reduction in the number of direct non-manufacturing labour posts (primarily supervisory and logistic positions)".
Employee numbers have dropped to 21 at the end of March from 56 the year earlier.
Enteq said it anticipates further market penetration in the Far East, Middle East, Africa and Russia over the coming year, and said it will continue to effect cost reductions.
As a further contribution to cost reductions, Chairman Warner said he will step down from his position at the annual general meeting on September 13 and will be replaced by Iain Paterson, who is currently a non-executive director at Enteq.
"Enteq has adapted to manage a rapidly declining market and has adjusted the cost base to preserve future cash balances and profitability. The business is secure and ready to respond to growth opportunities around the world and in North America when the market shows signs of recovery," said Chief Executive Martin Perry.
Shares in Enteq were up 5.3% at 13.95 pence on Wednesday.
By Hannah Boland; [email protected]; @Hannaheboland
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