With West Texas Intermediate (WTI) trading at $43 (£32.6) a barrel, anecdotal evidence suggests that drillers have stepped-up activity in the US Permian Basin of late. That will be cold comfort for shareholders in Hunting (HTG) after the oil services and equipment group posted a 43 per cent fall in adjusted gross profit to $82.6m at the half-year mark.
With the exception of Subsea, revenues for all of the business segments fell, with sales for Perforating Systems halving to $97.2m. The group swung to a net loss of $207.9m, largely attributable to an inventory write-down of $33.3m, together with goodwill impairments amounting to $131m.
Revenues and cash profits had been broadly in line with management expectations in the first quarter, but you get some idea of how rapidly trading conditions deteriorated when you look at the US onshore rig count, which fell from 782 to 254 over the period.
A net operating cash outflow of $9.5m came about through a $49.3m decrease in trade payables, while another $32.8m was given over to the February acquisition of Enpro Subsea Ltd. Excluding lease liabilities, the group ended the period with net cash of $44.9m, while the $160m revolving credit facility remained undrawn at the period-end.
FactSet consensus estimates are for adjusted EPS of 0.28 cents, rising to 4.67 cents in 2021.
| HUNTING (HTG) | ||||
| ORD PRICE: | 188.7p | MARKET VALUE: | £ 311m | |
| TOUCH: | 188.7-189p | 12-MONTH HIGH: | 524¢ | LOW: 149¢ |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | NA | |
| NET ASSET VALUE: | 596¢* | NET CASH: | $5.5m | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 509 | 40.1 | 18.0 | 5.0 |
| 2020 | 378 | -185 | -126 | 5.0 |
| % change | -14 | - | - | - |
| Ex-div: | 01 Oct | |||
| Payment: | 23 Oct | |||
| £1=$1.32. *Includes intangible assets of $207m or 126¢ a share. NB: A second interim div of 2.0¢ is being paid in addition to a div of 3.0¢ paid on 15 May 2020 in lieu of the 2019 final. | ||||
