Hunting trims first half losses as US shale boom giveth and taketh away

The boom in US shale giveth and the boom in US shale taketh away for Hunting, as the oil and gas services engineer benefited from increased confidence in onshore operators in tight oil but this then led to global oversupply concerns persisting to keep pressure on oil prices and therefore also on wider drilling activity.

The FTSE 250 company however reduced underlying losses by 82% to $9.1m in the first half of the year on revenues up 40% to $318.9m.

At the underlying level, earnings before interest, tax, depreciation and amortisation turned positive at $12.1m, from a $29.5m loss last time, while underlying losses per share were more than halved to 15.6 cents.

At the reported level, a $23.7m loss from operations was an improvement on the $77.0m loss reported a year ago.

Chief executive Dennis Proctor was pleased to report a positive EBITDA, which he said indicated profitability within certain businesses, before he retires on 1 September, with chief operating officer Jim Johnson taking the reins.

The Perforating Systems was one of the profitable businesses, far exceeding expectations thanks to the buoyant US onshore drilling market and a strong portfolio of products that are designed help operators trim costs.

US shale drillers took confidence from the firming of oil prices in the second half of 2016, with many participants hedging prices when oil neared $55 per barrel that resulted in the onshore rig count increasing by 45% to 919 rigs.

But Hunting noted that the increase in US onshore oil production has, however, led to oversupply concerns persisting and being a major contributor to oil prices finishing June at just over $46 a barrel.

"International drilling activity is now anticipating modest improvements during H2 2017," said Proctor, "which provide cautious optimism about the group's performance in the final months of the year.

While sounding bullish on cost discipline across the business "to ensure that Hunting exits this market downturn, a leaner and more profitable group, while retaining its experienced workforce", the outgoing CEO acknowledged that "the outlook for the full year remains dependent on the oil price".