Hunting slumps after profit warning

Hunting slumped 5% on Thursday after saying that declines in the oil and gas market in the second quarter, which had been expected, resulted in a 76% drop in profit from operations in the first five months of the year compared with 2014, and warning that the outlook remains unclear.

In a trading update ahead of its half-year results on 27 August, the energy services group pointed to a 34% drop in wells completed in the US and 33% worldwide, compared to the first quarter, whilst warning that the industry outlook remains unclear.

With the exception of its fully booked Subsea division and US Connections facility in Louisiana, all other facilities are operating at or slightly above one shift, said Hunting.

Canadian operations, Drilling Tools and Trenchless have delivered trading losses during the period and have had reductions of headcount by nearly 50%. Headcount reductions across the company’s operations represent approximately 25% of the workforce since the start of the year, resulting in annualised savings of approximately $41m.

“The 56% decline in North American rig counts combined with the 12% decline in International rig counts since the start of the year have heavily impacted historical purchase volumes, caused customer destocking with modest replacement and existing equipment continues to be cannibalised,” said Hunting.

Looking ahead, it said the outlook was unclear, although weekly rig count declines have slowed, some divisions have seen improvement in enquiries and/or the order and customer sentiment is improving.

“Our optimism for the long term is steadfast as new facility investment continues toward completion and numerous innovative products are being developed,” it said.

N+1 Singer said: “They say there are some tentative signs of improvement in enquiries and the company remain positive for the long term. It’s going to be a long road back and the long term nature of this sector means contracts are likely to continue to see price and volume downs. The same goes for the rest of the oil services stocks.”