Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering, is pleased to announce the sale of two POS-GRIP 18-3/4” rental wellhead sets and associated mudline equipment and tooling to LLC Gusar (OOO Gusar) Ltd ('Gusar'), the Company's partner and licensee in Russia, for circa £1.4m (‘the Sale'). The wellheads will serve as the basis for Gusar's POS-GRIP rental exploration wellhead inventory, and are planned to be used for gas exploration drilling within the Russian Federation under the exclusive licence agreement (‘the Licence Agreement') between Plexus and Gusar and CJSC Konar (ZAO Konar) (‘Konar'), two independent Russian oil and gas equipment manufacturers.
The Sale represents a major milestone towards delivering on one of Plexus' objectives to establish its best in class POS-GRIP equipment in Russia and the CIS, one of the top three hydrocarbon producers in the world with significant gas reserves.
In January 2016, the Company entered into the Licence Agreement, which conferred to Gusar and Konar the right to manufacture and rent Plexus' proprietary jack-up exploration wellhead and associated equipment within the Russian Federation and the other CIS states. Under the terms of the Licence Agreement, Plexus agreed to sell to Gusar up to three suitably configured POS-GRIP Wellhead Systems as the basis of its own rental wellhead inventory and to help facilitate Gusar's roll-out of rental POS-GRIP Wellhead Systems in the Russian and CIS markets. It is anticipated that the Sale will enable Gusar to secure its first rental order from a major local operator in the near future and may lead to the purchase of a third wellhead in due course.
As the anticipated pick-up in activity in Russia and elsewhere in the region gains traction, Gusar can as and when necessary add to this initial rental inventory by manufacturing POS-GRIP Wellhead Systems under licence. Under the terms of the Licence Agreement Plexus will receive royalties based on the invoice value of any Plexus products rented or sold by Gusar or Konar. The two wellhead sets of equipment sold to Gusar as part of the Sale are expected to be deployed on jack-up gas exploration wells, which is permissible under current EU trade sanctions.
The Sale follows an initial purchase order from Gusar for the Company's Tersus™- TRT Mudline Suspension System (‘MLS') equipment in April 2017. Gusar, assisted by Plexus, has been using the MLS to demonstrate to Russian operators the environmental benefits and operational advantages of Plexus' system, which is proven to deliver excellent reliability, superior well integrity, and significant time savings. In combination with POS-GRIP® Adjustable Wellhead Systems, which have been used on over 350 jack-up exploration wells worldwide by major operators including BP, Royal Dutch Shell, Statoil and Total, the Directors believe that Plexus' system is the best technical solution.
Following the recent completion of the disposal of its wellhead exploration equipment and services business for Jack-Up applications (the "Jack-up Business") to FMC Technologies Limited ("FMCT") for up to £42.5million (the "Disposal"), Plexus retained the right to pursue jack-up exploration related business in Russia and the CIS via the Licence Agreement. FMCT is a subsidiary of TechnipFMC (Paris:FTI)(NYSE:FTI), one of the leading oil and gas service and equipment companies.
Plexus' CEO Ben Van Bilderbeek said, “The sale of these two wellhead sets is a key step towards Gusar securing a landmark first rental order from a local Russian gas operator for our POS-GRIP wellhead equipment. Post the sale of our Jack-up Business to FMCT, alongside the development and roll-out of POS-GRIP enabled products in other areas of the energy industry such as subsea, production and renewables, Russia and the wider region is a central area of focus, not only because it is a top three global hydrocarbon producer, but also due to the importance of gas in its energy mix. As evidenced by its successful deployment on numerous wells in the North Sea, our technology and HG® metal sealing are ideally suited to the high pressures and temperatures – and hence environmental risks – associated with gas. As a result, Russia represents a major opportunity for the Company and I am very pleased to see our belief in this market coming to fruition.
Gusar's General Director, Alexander Beryozkin said, “We are delighted to kick-start the build-up of our POS-GRIP exploration rental fleet with the purchase of these initial two wellhead sets. This follows a period of active engagement with Russian operators, which has resulted in highly encouraging feedback. The proven safety and operational advantages of POS-GRIP technology, together with the pickup in activity across the sector and the ongoing import replacement programme where locally manufactured and safest drilling technology is sought, give us grounds for optimism that we will begin to make inroads in the important Russian gas drilling market.”