Timing is everything in markets, whether foreseen or fortuitous. Last September, with West Texas crude changing hands for $47 (£34) a barrel and commentators predicting another round of pain and cutbacks for US onshore drillers, Jim Johnson was installed as chief executive of oilfield services group Hunting (HTG). Six months on, the oil price is 30 per cent higher, Hunting shares are up 58 per cent, and Mr Johnson can preside over his first set of full-year results while basking in the reflected glow of a resurgent industry.
As rigs have remobilised, the Hunting Titan perforating system division was able to beat 2014 levels of unit production, and strengthen sales of the H-1 gun. Yet investors need reassurance that the rally is sustainable this time. “We’ve had Shale 1.0, which was maximising the science,” Mr Johnson told us. “They are now figuring out how to do it at a continually lower price.”
So long as that remains the case, the company can paper over cracks elsewhere. At the group level, underlying operating margin turned positive, from a 20 per cent loss in 2016, but the closure of a Cape Town manufacturing facility, for a $10m charge, follows restructuring and other facility shutdowns in the Netherlands, UK, Singapore and the US.
On average, analysts expect adjusted pre-tax profit of $54.4m and EPS of 27.5¢ in 2018, up from $5.2m and 2.6¢ last year.
| HUNTING (HTG) | ||||
| ORD PRICE: | 687.5p | MARKET VALUE: | £1.13bn | |
| TOUCH: | 687.5-688p | 12-MONTH HIGH: | 687.5p | LOW: 377p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 665¢* | NET CASH: | $30m | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013 | 1.30 | 136 | 71.0 | 29.5 |
| 2014 | 1.39 | 109 | 45.9 | 31.0 |
| 2015 | 0.81 | -289 | -156 | 8.0 |
| 2016 | 0.46 | -144 | -76.8 | nil |
| 2017 | 0.72 | -28.2 | -16.4 | nil |
| % change | +59 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.37 *Includes intangible assets of $356m, or 217¢ a share | ||||
