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Hunting pulls guidance, warns on earnings

Oil price crash has thrown a wrecking ball into services company's 2020 plans
April 15, 2020

Oil and gas services company Hunting (HTG) has withdrawn guidance and seen its cash position fall by $100m (£80m) between the end of 2019 and 31 March.

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Hunting is reliant on the US onshore oil sector for earnings through its largest division Titan. Rig counts are down and many onshore companies are in distress after the oil price crashed last month. The company said it had felt this from the end of March in the Titan business, while its offshore and international divisions “are likely to see declines” by June. 

Hunting will cut spending to protect its balance sheet, but is still paying a 3¢ dividend next month. The company shifted the payment from a 6¢ final dividend. 

The fall in net cash came from a working capital outflow of $56m as the company settled bills, the $33n purchase of Enpro Subsea and $11m spent on share buybacks. The company has maintained a net cash position of $22.3m, although this ignores lease liabilities of $42m and is before the $5m dividend payout due in mid-May

The pain looks unlikely to be over quickly. The International Energy Agency (IEA) has forecast a demand drop of 23m barrels of oil per day (bopd) for the June quarter, which combined with a limit on oil storage will see prices stay low. The IEA said the production hit for onshore US shale between April and May would be 183,000bopd, cutting sales and service opportunities for Hunting.