Hunting cautious on 2019 as US market softens

Energy services group Hunting said results to the end of November had remained in line with expectations, but sounded a note of caution over its 2019 outlook with the possibility of deferred orders.

Hunting said “some market softness” had been observed within businesses focused on US onshore operations as public holidays and the exhaustion of clients' budgets marginally impacted daily sales run-rates.

There would be a “marginal” fall in fourth quarter in operating profits at its Titan US unit as a result, Hunting said.

“Given the current volatile market environment, management anticipate these market conditions will impact short term budgetary decision making by our customers with possible deferrals of work,” Hunting said.

“Management enter 2019 with a cautious outlook, but believe that Hunting is in a robust position to manage these challenging market conditions.”

Titan continued to deliver record results in 2018 due to US onshore completion activity, coupled with “increased market acceptance of its proprietary technologies, leading to a strong year-on-year increase in revenue and operating profit”, the company said in a trading update.

However, its said clients were indicating caution on committed spend for the early part of 2019 as the lower oil price and pipeline bottlenecks in the Permian basin indicate a short term slowing in completion activity.

“As reported by market commentators, the pipeline bottlenecks in the Permian are forecast to improve by mid-2019,” Hunting said.

The group's Canada, Europe, Middle East and Asia Pacific segments, reported a similar performance in the fourth quarter compared to the third, with cost containment initiatives continuing to narrow losses.

The group's net cash position at December 7, 2018 was $44.6m, which included a $10.6m cash refund from the company's UK pension surplus.

Hunting Titan continued to progress the production capacity expansion programmes at its Pampa and Milford facilities. Both projects remained on track for completion late in the first quarter of 2019.

Hunting anticipated that capital expenditure for the full year 2018 would be $30m.