16th Feb 2015 08:33
LONDON (Alliance News) - Hunting PLC Monday said it does not expect to feel the full impact of lower oil prices until the second quarter of 2015, but said it is possible that some businesses will report growth in the year ahead, while others will be affected by the wider sector downturn.
"While Hunting anticipates a good performance in the early months of the year, most of our businesses expect the full impact of the lower oil price environment to be felt from the second quarter of 2015," it said in a statement.
The FTSE 250-listed energy services group said the early part of 2015 has seen the global energy industry reset its expenditure and profitability expectations in light of the anticipation of sustained lower prices for oil and gas. Expenditure estimates for the company's customers for the current year continue to evolve rapidly in light of changing oil prices, it said.
Hunting said its well completion and well construction businesses will be hit the most by reduced activity resulting from the low oil price, whilst its well intervention business will be impacted "to a lesser extent," it said.
"Corrective cost-actions in response to market conditions across all of Hunting's operations are underway, including the reduction of operating shifts and hiring freezes, while those businesses which are most impacted by the lower levels of activity anticipated have begun programmes of headcount reductions as and where necessary," said Hunting.
The company is also curtailing any non-essential costs across its global supply chain and said its balance sheet "remains solid" with "modest" levels of net debt.
"While the short term outlook for the industry remains unclear and challenged, we are also mindful of the longer term strategic growth opportunities for Hunting," said the company.
In addition, Hunting said equity market analysts have "not kept pace" with the "rapidly changing industry dynamics," and said analyst estimates should not be relied upon as an accurate forecast for 2015.
Hunting also said it does not feel it is appropriate to provide any form of financial guidance for 2015 at present, and said it was "common with a number of companies within the oil field services sector" to hold back on providing guidance given the changes happening in the market, said the company.
"We expect lower levels of industry activity as global rig counts decline and commodity prices remain subdued which will feed through to the group's profitability for the year ahead," it said.
Hunting shares were down 4.1% to 472.90 pence per share on Monday morning, the worst performer in the FTSE 250.
By Joshua Warner; [email protected]; @JoshAlliance
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