2nd Jul 2015 06:49
LONDON (Alliance News) - Energy services company Hunting PLC on Thursday said its operating profit has plunged lower in the first half amid a declining rig count in the face of a falling oil price, though it said it is seeing tentative signs of a recovery, even as its full-year results look set also to show a huge drop in profit.
The FTSE 250 company said the second quarter, as anticipated, saw continued declines in the oil and gas market, with an additional 34% decline in wells completed in the US, and 33% worldwide, compared to the first quarter. This "severe" decline has meant operating profit for the company in the first five months is down by 76% year-on-year.
Hunting said that, with the exception of its Subsea division and its US Connections facility in Louisiana, which are fully-booked, all other facilities are trading at or slightly above one shift. The group has seen trading losses in its Canadian, Drilling Tools and Trenchless businesses in the first half and said headcount in these businesses have been cut by 50%.
Headcount reductions across the company represent around 25% of Hunting's workforce since the start of the year, it said, generating annual savings of around USD41 million.
Hunting said the 56% decline in North American rig counts since the start of 2015, plus a 12% fall in international rig counts, has impacted its historical purchase volumes, caused by customer destocking, with only modest replacement volumes as existing equipment continues to be cannibalised.
Hunting said its outlook remains unclear, though the weekly rig count declines have slowed, and it has seen some signs of an improvement in its order book and customer sentiment.
Based on the current trading environment and its results in the year to date, Hunting expects a year-on-year fall in operating profit of between 50% and 75%, though this would remain dependent on activity levels improving.
By Sam Unsted; [email protected]; @SamUAtAlliance
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