LONDON (ShareCast) - (ShareCast News) - International energy services group Hunting issued a pre-close trading statement for the first six months of the year on Tuesday,, ahead of its half year results set to be issued on 24 August.
The FTSE 250 firm said its performance in the first half benefited from the increase in onshore drilling in the US, particularly in the shale oil regions such as the Permian Basin in West Texas.

It said that growth in activity since the end of 2016 meant Hunting's perforating systems business reported results ahead of management's expectations.

"Of note has been the wider adoption of the H-1 Perforating System, which has established a strong market position given its performance, reliability and safety," said chief executive Dennis Proctor.

"To meet this demand, the perforating systems business has increased the number of shifts, recommissioned a previously mothballed facility and added personnel."

Elsewhere, Proctor said the US offshore and international drilling markets remained weak due to the low oil price.

Drilling budgets continued to be reduced by global operators, which had an adverse impact on Hunting's businesses focused on those markets.

"While Hunting's Well Construction segment has experienced difficult trading conditions in the period, sales into the onshore US drilling market, which include the segment's premium connections and specialty supply businesses, have improved during H1 2017," Proctor explained.

"The well completion segment, which incorporates Hunting's perforating systems business, has reported a profit, driven by the activity noted above, but being offset by the weaker US offshore and international markets.

"As previously noted, Hunting's European OCTG operations have reported good activity levels since the start of the year, with sales primarily driven by orders for the US shale and Middle East markets."

Proctor also said Hunting's well intervention segment saw "difficult" market conditions as deepwater drilling activity remained subdued due to the lower investment levels seen particularly in the deepwater Gulf of Mexico.

As a result of that activity, the group expected to report a positive EBITDA in the period, but remain loss making at the profit before tax level.

Cash generation continued to be closely monitored, with working capital controls still in place across the group's businesses.

Proctor said net debt at 30 June increased to approximately $8m since year-end, primarily as a result of order book increases and the associated inventory purchases required.

Capital investment continued to be "tightly controlled" as well, with spend in the period being approximately $5m.

"The outlook for the remainder of year is predicated on sustained US onshore drilling activity driving the group's performance, accompanied by cautious optimism for stable offshore and international markets during H2 2017," Proctor said.

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