Hunting anticipates moving back into monthly profit later in 2017

Despite new optimism in the oil and gas industry, energy services group Hunting said it was still focusing on cost control for itself and its customers, after sales nearly halved and it swung to an underlying loss in 2016.

While operating losses have continued during the opening months of 2017, management expect to move back to monthly profitability later in the year if the broader energy market continues to recover.

The company is developing and rolling out new product lines to lower customers' operational costs and increase project efficiencies.

Since the start of 2016, the FTSE 250 group has axed 24% of its headcount to 2,107 and decommissioned three manufacturing facilities and 10 distribution centres.

Meanwhile revenue tumbled 44% to $455.8m, with Hunting sliding to an underlying losses from operations of $92.2m from the $16.4m profit made in 2015.

At the statutory level, losses from operations improved, however, to $140.7m from the preceding $282.2m loss, with the reported diluted loss per share more than halved to 76.8 cents.

Net debt has been slashed to $1.9m from £110.5m, while chief executive Dennis Proctor has arranged for profit-based covenants for Hunting's committed bank facilities to be suspended up to and including 30 June 2018 bank covenant test date.

There will be no dividend payments until the end of the suspension period.

"Towards the end of 2016 optimism was seen across the energy market, following the announcements by OPEC to reduce oil production and improving onshore activity levels in the US, particularly in West Texas," said Proctor.

"While this is positive news for the industry, Hunting is still focused on cost controls and aligning its operations with the short-term outlook. US onshore activity levels are increasing, providing better trading for businesses such as Hunting Perforating Systems, while the international picture remains subdued."

Looking forward, while operating losses have been incurred during the opening months of 2017, he said "management anticipate moving back to monthly profitability later in the year, subject to a continuing recovery across the whole market".