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Oil price, Hunting, Tower, Remus. And finally…

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WTI $61.28 +$1.53, Brent $64.07 +$1.37, Diff -$2.79 -16c, NG $2.82 -2c, UKNG 39.0p -1.05p

Oil price

I’ve written the blog and sat on the Hunting call but Opec+ is only just underway. My hunch is that they are going to be risk averse and not flood from April 1st, a gradual filling in is probably a good bet. The Technical Committee reported back that the recent rise is as much down to financial markets as it is fundamentals in the oil market, thus making the 2nd half even better.

Hunting

That 2020 was a challenging year is no surprise given the oil and gas markets volatility not helped by the Corona virus. However this is a market Hunting thrives on and using its strong finances, market penetration and ability to gain market share has delivered future growth. In addition this ‘stickability’ led to corporate activity across the board.

Results were in line with expectations with revenue of $626m ($960m), EBITDA of $26.1m ($139.7m) giving an underlying loss from operations of $16.4m (profit $94.3m). Confidence in the market along with the M&A and reconstruction moves during the year has led to ab4c final dividend to be declared.

Commenting on the results Jim Johnson, Chief Executive, said:

 “The early weeks of 2021 have seen a steady increase in a number of key market indicators, including a rising WTI oil price and improving rig count. This positive sentiment, if sustained, bodes well for the global energy industry for the coming months as operators seek stability across the sector to enable them to confirm new drilling programmes and capital investment. Supporting this sentiment is the availability of COVID-19 vaccines and the rollout of immunisation programmes across the World.

 “Within the US market, our Hunting Titan segment has seen a steadily improving revenue profile in recent months as onshore activity levels have increased. The business has reopened a distribution centre to meet this demand and has made selective additions to headcount. Hunting Titan’s technology offering continues to be industry-leading, which will support new sales opportunities both in the US and internationally as onshore drilling programmes recommence.

 “The Group’s US operating segment, which provides equipment to both onshore and offshore projects, anticipates accelerating activity in H2 2021, following the slowing of offshore projects in the second half of 2020.

 “In Canada, our new business model is seeing good customer acceptance as we work with our new licence partners. Hunting’s European operations report optimism for the year ahead as deferred drilling programmes recommence. In the UK, a number of clients have already indicated that drilling will take place in 2021, while in the Netherlands international orders received since the start of the year will ensure our OCTG facility will remain busy for the short-term.

 “In the Middle East and Asia Pacific, new opportunities are emerging following the increase in the oil price and the beginning of vaccination programmes, with growth now projected from the middle of the year.

 “The Group has made strong inroads into new sectors in the year. Our presence in the medical devices, aviation and space sectors has increased and our various operating segments have all progressed initiatives that utilise our core competencies, as well as diversify our revenue streams.

 “The Board of Hunting believes that the Group has been decisive in its actions during 2020 to manage the market downturn. The Group enters 2021 a leaner organisation, with its global capabilities intact and poised to capitalise on any new opportunities presented.”

This confident stance makes me confident that in a market where Hunting have a significant advantage and helped by its financial strength will be a major player as we go into a much more positive 2021. On the Con call Johnson appeared full of confidence ‘increasingly bullish’ were his words and he agrees with me that lack of investment in the industry will ‘come home to roost’.

Deals such as the exit from US drilling tools which consumed cash and needed industry consolidation is very wise as are the other corporate deals I have mentioned. Hunting is exceptionally well placed to be amongst the best of the oilfield service companies and any company that does better than it this year will have punched some lights out, its time to buy the picks and shovels.

Tower Resources

Tower Resources has announced a further extension of its Loan Facility of $750,000. The Facility is provided by the Company’s shareholder Pegasus Petroleum Limited whose ultimate beneficial owner is the Company’s Chairman and CEO, Jeremy Asher, and was originally provided to the Company as a bridging loan announced on 16 April 2019. The Facility has now been extended to the end of November 2021, though the Company hopes to repay the Facility by 15 July 2021, in which case the cost of the extension will reflect the earlier repayment.

Jeremy Asher, Chairman and CEO, commented:

“The independent directors and I are all committed to getting the NJOM-3 well in Cameroon drilled as soon as circumstances permit. The possible easing of pandemic restrictions globally both provides a more favourable market environment, and also means that it is now important we complete current financing discussions for the well. We are therefore optimistic that we can get this financing in place by the summer, which would reduce the time required for the extension of the facility, and this is why the independent directors have adopted this extension structure. If the NJOM-3 well succeeds as we hope, then we believe that the royalty share agreed provides an appropriate reward to both shareholders and Pegasus. We also hope that shareholders will see clearly, in the terms of this extension, the confidence that I have in our ability to deliver the NJOM-3 well and production from Thali in due course.”

Remus Corporation/Horizons/Petroleum

Remus in its various incarnations has been very active in the last few months but tangible results are yet to appear. Buying the initial Gran Tierra stake in PetroTal was aborted and the bid for Far has been trumped and the expected counter bid is yet to materialise and Lukoil has since joined the party. A reappearance for the remaining PetroTal stake was imminent, but no sign…

Part of the drive behind the Remus has been the hiring of a bunch of senior, experienced people to fill executive positions in the company. So I was quite surprised to hear on the gripe vine recently that a big group of these senior executives have resigned from the company, where that leaves the acquisition policy I’m not sure but Having expected imminent action I may be disappointed.

And finally…

In last nights Prem Burnley held the Foxes 1-1 and the Blades beat Villa 1-0, the Eagles held the Red Devils to a 0-0 draw no good the reds.

Tonight its a London derby as Spurs travel to Craven Cottage, the Baggies host the Toffees and Chelski visit Liverpool.

And another poor start for England as they were scuttled out for 205 in the Modi Stadium and at the close India were 24-1.

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