Plexus plummets again despite Russian licensing deals

In what is said was a "significant strategic milestone", Plexus has agreed an exclusive licence agreement with LLC Gusar Ltd and CJSC Konar to undertake the rental, manufacture and servicing of Plexus' jack-up drilling wellhead exploration equipment into the large oil markets of Russia and the other former Soviet states.

Plexus said the agreement provided it with low-cost access to these regions as it did not require significant investment in capital intensive assets such as manufacturing.

In the absence of any unexpected issues, Gusar has agreed to pay Plexus $5m within six months from the date of the agreement plus a further licence fee capital payment calculated as a multiple of EBITDA generated by Gusar's POS-GRIP business activities during the fourth year after execution of the deal.

The deal stipulates that both Gusar and Konar will make a quarterly royalty payment to Plexus based on the invoice value on all Plexus products sold, rented or supplied by Gusar and/or Konar.

"This new venture forms part of our strategy to extend our POS-GRIP jack-up exploration wellhead product line and associated services beyond our dominant North Sea high pressure/high temperature market which is currently severely impacted by the low oil price and consequent reduction in drilling activity, into new, larger growth markets around the world," said chief executive Ben Van Bilderbeek.

He noted that Russia, according to the EIA, was the third largest producer of petroleum and other liquids in 2014 and holds almost a quarter of the world's proven natural gas reserves and 5% of global crude reserves.

Shares in Plexus nevertheless were down 20% to 54.5p by 1015 GMT on Tuesday, having fallen from 119p to 70p on Monday.