Hunting still waiting for recovery boost

Onshore US oil and gas activity recovered significantly this year, but not quickly enough to be reflected in services and technology company Hunting’s (HTG) first-half numbers.

Onshore producers such as Diversified Energy (DEC) are a few months ahead of Hunting – Diversified saw its sales climb 75 per cent in the first half, thanks to the run-up in gas prices, while the US onshore rig count climbed 80 per cent between June 2020 and June 2021. Hunting’s sales were a third below the first half of last year, at $244m (£178m). 

The company has forecast a better second half. “The market recovery in the US, while slower than anticipated, shows clear signs of growth,” Hunting chief executive Jim Johnson said. “Management is further encouraged by the outlook for 2022, which is supported by a strengthening order book.” 

The Hunting Titan division, which sells perforating guns for wells, has most recently been a drag for the company in terms of growth. It saw an uptick in sales of 50 per cent between the second half of 2020 and the first half of this year, although year on year it was down. The North America division, the company’s largest, fell compared with both halves of 2020. 

The company said it had gone looking for new revenue streams this year, including a $5m investment in a 3D printing outfit and a convertible loan to an oil and gas-focused well data firm. 

Hunting forecasts full-year cash profits around $16m, down from $26m last year. 

When the oil recovery came on, we looked at Hunting as a safer play on the improved prices than producers. This proved overly optimistic but we’ll keep our buy recommendation based on the potential for Hunting to be late to the party, rather than missing it completely. Speculative buy. 

Last IC View: Buy, 279p, 18 Mar 2021