Hunting PLC (LSE:HTG), the international energy services group, today issues a Q3 2018 trading update.
Revenues during the third quarter have remained steady in North America as activity within the onshore shale basins continued, with sustained demand for the Group's perforating products and accessories. While the US onshore market environment remains relatively firm, the US offshore and international markets remain slow as geopolitical tensions and the lack of confidence in commodity prices due to the recent downturn continue to weigh on sentiment and capital investment planning.
Within Hunting Titan, revenues and operating profits have continued at similar levels to the previous quarter, with demand for perforating guns, energetics and instrumentation resulting in a steady performance. A seasonal slowdown in North American drilling during November and December remains predicted due to public holidays, along with the potential exhaustion of our clients' drilling and completion budgets. The segment has continued with its manufacturing capacity expansion programmes during the period, with project completion remaining on track for Q1/Q2 2019 at both the Milford and Pampa facilities.
In the US segment, revenues and operating profits continue to reflect modest improvement, with most businesses reporting operating profits during the quarter. Demand for the Group's TEC-LOCK™ semi-premium connection continues to gain market acceptance for application within the US onshore basins. Demand within the Advanced Manufacturing Group has also increased during the quarter as new orders for drilling and completions-related capital equipment, as well as non-oil and gas products, have been received.
Within the Canada segment, general market improvement and the continuing production of perforating guns for Hunting Titan has allowed losses to narrow. In Europe, low activity levels in the North Sea continue to lead to operating losses. In Asia Pacific, the segment's operating losses continue to reduce, despite a more volatile market environment and within the Middle East, initiatives to contain costs have helped reduce losses.
During Q3 2018 as anticipated, working capital has continued to absorb cash in line with activity levels – inventory has increased to approximately $346m (30 June 2018 - $322m). Capital investment mainly reflects the manufacturing expansion programmes underway within Hunting Titan with cumulative spend in the nine months to 30 September 2018 being $20.4m. The Group's balance sheet remains strong and as at 19 October 2018, the Group's net cash positon was approximately $34.9m – this before payment of the $6.6m interim dividend on 24 October 2018.
Overall, trading for the full year remains in line with expectations, with Management remaining comfortable with current market consensus.