Hunting cuts full-year guidance as oil prices fall
By Josh White
Date: Tuesday 22 Oct 2024
(Sharecast News) - Shares in Hunting were sliding on Tuesday morning, after the company announced it was trimming its full-year guidance amid falling oil prices.
The FTSE 250 company said it now expected EBITDA of between $123m and $126m - an 8% reduction from prior expectations, due to declining oil and natural gas prices.
However, it said year-end cash and borrowings were expected to rise significantly, reaching $60m to $70m, as receivables from the KOC contracts accelerated.
Looking at the third quarter, Hunting said group EBITDA to 30 September reached $87m - a 16% increase year-on-year, with a margin of around 12%.
The firm said its sales order book stood at $652m, driven by key contracts in OCTG and Organic Oil Recovery.
Cash and bank borrowings amounted to $4.6m.
In the quarter, Hunting started shipments of its SEAL-LOCK connection technology to Kuwait Oil Company (KOC).
While product lines in OCTG, advanced manufacturing and subsea saw stable performances, the US onshore market remained subdued, affecting the Hunting Titan segment.
Low natural gas prices led to break-even results in the perforating systems group, prompting the company to plan cost-cutting measures.
Hunting also completed a refinancing process, securing $300m in new borrowing facilities, including a $200m revolving credit facility and a $100m term loan.
The move replaced a $150m asset-based lending facility.
As of 1 October, Hunting said it had received $30m in receivables from KOC, boosting its total liquidity to $393m.
"Our 2024 full year outturn had been predicated on a strong international market coupled with some improvement in our US onshore businesses," said chief executive officer Jim Johnson.
"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.
"As a result, we are reducing EBITDA guidance; however, we still expect to be broadly within the range guided at the start of the year."
At 0832 BST, shares in Hunting were down 15.01% at 317p.
Reporting by Josh White for Sharecast.com.
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