Hunting PLC on Tuesday cut its annual profit guidance, as a recent decline in oil and US natural gas pricing has hit sector sentiment.
Shares were down 16% to 312.31 pence early Tuesday in London. The wider FTSE 250 index was down just 0.2%.
London-based Hunting makes equipment for the energy industry. It now expects 2024 earnings before interest, tax, depreciation, and amortisation between $123 million and $126 million, its outlook cut from the $134 million and $138 million range. In 2023, Ebitda totalled $103.0 million.
In the nine months to September 30, Ebitda was 16% higher on-year to $87 million, with an Ebitda margin of about 12%.
The third-quarter was largely in-line with management’s expectations.
‘With the recent decline in the oil price and renewed falls in US natural gas pricing, sentiment has reduced in recent weeks in areas of the sector, which will likely lead to lower client activity within certain product groups throughout the remainder of the year, most notably within the short-cycle Perforating Systems product group,’ Hunting said.
Chief Executive Officer Jim Johnson said previous guidance had been ‘predicated on a strong international market coupled with some improvement in our US onshore businesses’.
‘Whilst the outlook for the international and offshore subsectors of the industry continues to remain firm, the slower than anticipated improvement within the US onshore has led to a deterioration in our short-term trading expectations,’ Johnson explained.
Hunting had a sales order book worth $652 million as of September 30, support by oil country tubular goods and organic oil recovery contracts. It said it has started shipments of OCTG threaded with its Seal-Lock connection technology to Kuwait Oil Co.
Hunting also has entered into $300 million in new committed borrowing facilities, composed of a $200 million revolving credit facility and a $100 million term loan. The borrowing facilities are from a four-bank syndicate comprised of existing lender Wells Fargo and HSBC, plus new lenders First Abu Dhabi Bank and Emirates NBD. The RCF has a term of four years, and the term loan has three years.
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