17th Dec 2019 08:54
(Alliance News) - Oilfield services firm Hunting PLC said on Tuesday it expects profits to remain in the range of current market expectations, dependent on results for this December.
Hunting said, as anticipated, activity levels within the North American oil and gas industry continues to slow, with the pace of decline increasing in the US onshore market.
Further, the oil and gas contractor said "exhaustion" within its client base together with seasonal declines are hurting its fourth quarter results and "certain clients have closed facilities serving the US onshore sector due to the slowing market".
The FTSE 250-listed company said revenue and operating profit in October and November were below the average run rate for the third quarter of the financial year due to the "slowing and highly competitive" US onshore market.
Hunting said it continues to trade profitably and remains cash generative. It expects to have around USD110 million of cash at the end of the year, with USD45 million of lease liabilities - resulting in a USD65 million net cash position.
The company said that offshore and international oil market demand was slowly returning to growth with the Hunting Electronics business reporting good results including a higher contribution of sales from non-oil and gas markets.
While activity in Canada is lower, the performance of the business is said to be benefiting from the lower cost base.
Trading in EMEA and Asia Pacific regions are ahead of management expectations due to the improving international drilling market. However, the company noted some signs of market softening as a result of international trade tensions.
Looking to 2020, the company said: "At this time early announcements from Hunting's publicly quoted clients indicate that capital spend in the year ahead will be lower than 2019, as the oil and gas industry endeavours to improve returns and increase cash generation for investors."
Shares in Hunting were trading 3.7% lower at 394.20 pence per share on Tuesday morning in London.
By Ife Taiwo; [email protected]
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