Plexus suspends trade with Russian partner Gusar

Oil and gas engineering service provider Plexus updated the market on the effects of Russia’s invasion of Ukraine on Monday, confirming the suspension of its licence agreement with Gusar.

The AIM-traded firm said under the deal, Gusar is able to supply Russian and Commonwealth of Independent States (CIS) markets with Plexus' ‘POS-GRIP’ rental exploration wellhead equipment.

As a result of the ongoing situation in Ukraine, Plexus said it had decided to suspend activities with Gusar until further notice.

“The suspension of these activities is not expected to have a material impact on Plexus' financial trading performance in the year ending 30 June 2022, which the board anticipates will remain in line with market expectations,” the company said in its statement.

Plexus did warn, however, that it was likely to incur a Gusar-related negative cash flow impact of about £0.65m in the 2022 financial year, relating to a combination of pending royalties, and planned advanced-stage payments for wellhead equipment, which as a result of the invasion, were now currently uncertain.

As the company had recently been performing well, the directors said they currently expected that despite the situation, Plexus’ year-end cash position would be “broadly in line” with expectations.

“On a more positive note, apart from the positive progress with Cameron in relation to the surface production wellhead licence, Plexus is actively pursuing opportunities in its main target markets outside of Russia, in particular the UK and European continental shelves.

“These include production wellhead sales, a number of Plexus product developments utilising proprietary POS-GRIP technology, and importantly our newly re-entered exploration rental wellhead market activities following the recent signing of a collaboration agreement with Cameron International Corporation - a Schlumberger company.

“These ongoing initiatives are expected to gain momentum in the next financial year.”

Plexus said it would continue to monitor the situation in Ukraine and the impact on Russian commercial activities, and would provide further updates as required.

At 1437 GMT, shares in Plexus Holdings were down 8.84% at 5.01p.