Hunting PLC (LSE:HTG), the international energy services group, will today be holding its Annual General Meeting commencing at 10.30a.m., and ahead of the meeting, issues a Q1 2018 trading update.
Revenues in the first three months of the year have been at a similar average monthly run rate to that reported in Q4 2017. The Group also continues to benefit from operational leverage as volumes increase against an already reduced cost base. Activity levels within the onshore North American completions market remain strong, leading to the Group reporting an underlying EBITDA in the period of approximately $32.7 million. International and US offshore markets continue to show signs of improvement, with new E & P projects being considered by global operators.
Hunting Titan has reported strong results in the quarter, as activity in the onshore North American shale basins continue to strengthen. Sales in the period were supported by growing demand across its perforating, energetics and instrumentation product lines.
In the US and Canada segments, revenues continue to stabilise and notably, there are now signs of improvement in offshore markets as operators consider activating projects.
Within Europe, activity in the North Sea remains generally subdued, however, contract wins have been secured in the year to date in the Netherlands and the UK, which will provide increased activity for these facilities into the second half of the year.
In Asia Pacific, activity levels within the region remain mixed, with positive results in China being offset by lower utilisation in Singapore and Indonesia.
In the Middle East and Africa, Group operations report improved activity levels in Saudi Arabia and the UAE. Following the decision to close down our operation in South Africa, sale of the Cape Town manufacturing facility is advancing with completion expected before mid year. A regional office is being maintained to support the Group's sub-Sahara Africa sales.
In the period, working capital outflows have increased, reflecting the strong demand seen in North America. Given the positive cash position of the Group at year-end and the improving cash generation from operations in the quarter, the Group maintained a net cash position at the quarter end of $3.6 million. Group capital expenditures continue to be tightly controlled with spend in the quarter being approximately $3.7 million – mostly relating to Hunting Titan capacity enhancement expenditure within its energetics and perforating divisions.
The Group has started the year well and given that the general market outlook remains steady in North America and Hunting's other regional operations are seeing improved market sentiment, management expectations for the full year have improved. Management therefore currently expect the full year result to be within the upper half of current market consensus.
As previously announced, John Nicholas will retire as a Director of the Company at the conclusion of the Annual General Meeting. In compliance with section 430(2B) of the Companies Act 2006, Mr Nicholas will shortly receive all relevant fees up to today's date in respect of his role, with no further payments due to him from his retirement date.
The Board would like to thank John for his service to the Company since 2009, in particular as Chairman of the Audit Committee. New non-executive Director appointments to the Board will be announced shortly.
The next scheduled trading update is 28 June 2018, ahead of the Company's interim results due for release on 30 August 2018.