Hunting for a shale alternative

The more significant fall here was in the underlying operating margin, which fell from 26 per cent to 18 per cent as discounting was used to clear inventory in the first half of the year. Hunting’s overall operating margin fell one percentage point for the year, to 10 per cent, with the non-Titan divisions well under the 18 per cent rate – the highest of them was US offshore, on 7 per cent. 

Despite the weakness of its largest division, underlying cash profits were flat on 2018 and Hunting has increased the dividend and brought in its first buyback programme. Chief executive Jim Johnson said there was also cash to spend on more acquisitions.

This month, Hunting bought Enpro Subsea for $33m, its second offshore purchase in six months. Mr Johnson said producers would keep spending in the Gulf of Mexico despite the weak oil price. Even at $48 [per barrel] offshore is dominated by the supermajors that have to replace production,” he said. 

Consensus forecasts compiled by Bloomberg see cash profits falling 2 per cent to $135m in 2020, before recovering to over $151m in 2021.