Hunting to purchase $8m of shares in first buyback

Hunting launched its first share buyback as the energy services group reported a decline in annual profit caused by a slowdown in the US shale gas industry.

The FTSE 250 company said it would purchase 2m of its own shares at a cost of about $8m (£6.2m) because its share price was too low. The buyback is the first in the company's history.

Hunting shares rose 5.6% to 308.80p at 11:17 GMT, bucking a wider sell-off prompted by fears about the impact of the coronavirus. The company's shares have more than halved since April 2019 as US fracking activity has slowed.

Operating profit for the year to the end of December fell to $46.8m from $75.4m from a year earlier as revenue rose to $960m from $911.4m. Cash generation was strong with free cash flow of $149.4m leaving Hunting with net cash of $123.1m compared with $61.3m at the end of 2018.

US fracking has entered a sharp slowdown as companies tighten spending under pressure from investors. Hunting is shifting its business to focus more on offshore production by buying makers of stress joints and subsea production technology for offshore rigs.

Chief Executive Jim Johnson said: "Our results announced today reflect the group's commitment to capital discipline, retaining a strong balance sheet while delivering a solid performance in difficult market conditions. For the first time in the history of the company we are initiating a share buyback programme, as the board considers the current share price highly undervalues the group."

Johnson said the company's cash generation meant it could make further acquisitions and increase distributions to shareholders. Hunting increased its final dividend to 6 cents a share from 5 cents in 2018.