Hunting Plc · LSE:HTG
Hunting — H1 2015 Earnings Presentation
27 slides from Hunting's earnings presentation, August 2015
Slide 1: Planning for the Inevitable Recovery: Half Year Report 2015
GY swntwne PLANNING FOR THE INEVITABLE RECOVERY: INNOVATIVE PRODUCTS ENHANCED CAPACITY HALF YEAR REPORT 2015
Slide 2: Financial Summary
Financial Summary Results reflect the global downturn in oil & gas markets. Annualised cost savings of $41m from workforce reductions c. 25% since December 2014. Impairments to Goodwill and other assets booked in the period of $64.1m. Balance sheet remains strong with modest net debt at half
Slide 3: Half Year Results Summary
Half Year Results Summary* H1 H1 2015 Margin 2014 Margin $m % $m % Revenue 463.6 664.1 EBITDA 44.1 10 120.9 18 Profit from operations 20.4 4 96.8 15 Finance expense 2.7 2.8 Profit before tax 17.7 4 93.7 14 Effective tax rate 28% 27% Diluted EPS 8.4c 44.9c Interim dividend per share 4.0c 8.1c * Resul
Slide 4: Segmental Results
Segmental Results* H1 H1 2015 2014 Profit from Profit from Revenue Operations Margin Revenue Operations Margin $m $m % $m $m % Hunting Energy Services Well Construction 125.5 2.8 2 182.2 24.6 14 Well Completion 277.8 15.5 6 410.7 60.5 15 Well Intervention 58.2 4.2 7 65.7 10.1 15 461.5 22.5 5 658.6 9
Slide 5: Geographical Segmental Results
Geographical Segmental Results* H1 H1 2015 2014 Profit from Profit from Revenue Operations Margin Revenue Operations Margin $m $m % $m $m % Hunting Energy Services USA 295.8 24.5) 8) 407.1 74.8 18 Canada 30.5 (3.4) (11) 41.5 0.8 2 UK 64.9 0.2) - 77.7 2.2 3 Rest of Europe 8.1 (0.3) (4) 15.2 1.4 9 Asi
Slide 6: Amortisation & Exceptional Items – Continuing Operations
Amortisation & Exceptional Items – Continuing Operations H1 H1 2015 2014 $m $m Amortisation of acquired intangibles 19.4 21.9 Impairment of goodwill 35.2 ̶ Impairment of assets 27.6 ̶ Oil & Gas reserve impairment 1.3 2.9 Continuing operations 83.5 24.8 RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 6
Slide 7: Balance Sheet
Balance Sheet June December 2015 2014 $m $m Property, plant and equipment 464.9 473.0 Goodwill 404.6 440.6 Other intangible assets 208.9 224.8 Working capital 455.6 470.6 Provisions (19.3) (24.7) Taxation (current and deferred) (35.0) (55.2) Other 44.4 40.2 Net debt (166.7) (131.0) Net assets 1,357.
Slide 8: Capital Investment
Capital Investment H1 2015 $m Facilities - Manufacturing – Houma, Louisiana 5.5 - Premium Threading and Testing – Houston, Texas 11.6 - Manufacturing – Cape Town, South Africa 5.7 - Dearborn – Fryeburg, Maine 4.5 - Other expansion programmes 6.3 Machinery and Equipment - North America 12.5 - Asia Pa
Slide 9: Cash Flow
Cash Flow H1 H1 2015 2014 $m $m EBITDA 44.1) 120.9 Working capital 14.7) (33.0) Interest and bank fees (2.6) (3.0) Tax paid (7.7) (18.1) Replacement capital investment (15.3) (33.2) Other 1.9 4.5 Free cash inflow 35.1 38.1 Expansion capital investment (35.5) (21.4) Disposal (purchase) of subsidiarie
Slide 10: Odessa, Texas
Odessa, Texas RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 10
Slide 11: Innovation
INNOVATION RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 11
Slide 12: Innovation: Well Construction Industry Challenge
Innovation: Well Construction Industry Challenge: Connection Technology which allows the drilling of wells in hostile, High Pressure High Temperature, extended reach environments while maintaining the sealing integrity to protect the environment in a Worst Case Discharge scenario. RESULTS FOR THE HA
Slide 13: Innovation: Connection Technology Division
Innovation: Connection Technology Division To meet customer demand for a premium connection that can be used in the most hostile drilling environments. Hunting developed SEAL-LOCK XD along with WEDGE-LOCK SF into our portfolio of products. Both meet post Macondo requirements. SEAL-LOCK XD pr
Slide 14: Innovation: Well Construction Industry Challenge
Innovation: Well Construction Industry Challenge: The ability to drill faster while maintaining the telemetry needed to accurately direct the drill bit to or through the targeted zone in the formation. RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 14
Slide 15: Innovation: Directional Drilling Tools
Innovation: Directional Drilling Tools To meet customer demand for a high speed mud motor and equipment to assist in the management of the trajectory of the drill bit. Hunting developed the high speed Tilted Drive Sub mud motor which is specifically designed for increased performance in unconven
Slide 16: Innovation: Well Completion Industry Challenge
Innovation: Well Completion Industry Challenge: Ability to perform extended reach completions or re-completions while maintaining firing sequences and depth of perforation, encapsulated in a safe, easy to use perforating gun system. RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 16
Slide 17: Innovation: Titan Division, H-1 Perforating System
Innovation: Titan Division, H-1 Perforating System Since they became common in the industry, perforating guns have been assembled at the rig site the same way. Lots of pieces, lots of steps, sometimes gun failures and unfortunately accidents. Hunting developed the H-1 modular perforating gun s
Slide 18: H-1 Perforating Gun Changing the Industry Practice
H-1 Perforating Gun Changing the Industry Practice Conventional Perforating Guns 14 ASSEMBLY STEPS CURRENT GUNS 14 MINUTES 14 TO ASSEMBLE COMPONENTS ONE GUN Tandem Sub-Assembly Over 55 pieces of hardware Today, perforating crews typically have four to five people assembling perforating guns. Ass
Slide 19: H-1 Perforating Gun Changing the Industry Standard
H-1 Perforating Gun Changing the Industry Standard 4 ASSEMBLY STEPS H-1 4 MINUTES TO 5 Less than 20 pieces of hardware ASSEMBLE Switches and firing mechanisms COMPONENTS ONE GUN contained in one module At Hunting, we used our experience in the field to create the H-1 perforating gun system changin
Slide 20: Innovation: Well Intervention Industry Challenge
Innovation: Well Intervention Industry Challenge: Pressure Control Equipment that maintains a small footprint during wireline activities at the well site that will close fast, redress easily and can use various types of wireline. RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 20
Slide 21: Innovation: Well Intervention
Innovation: Well Intervention Lightweight Pressure Control Equipment (PCE) System Hunting created the Lightweight Pressure Control Equipment (PCE) system to be smaller, safer, faster and more economical to the operator. Customers demanded a small footprint system that accommodates tight offshore p
Slide 22: Innovation: Well Intervention Industry Challenge
Innovation: Well Intervention Industry Challenge: Hydraulic systems supporting subsea activities that maintain functionality for long periods of time in hostile environments found on the sea floor. RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 22
Slide 23: Innovation: Subsea Division
Innovation: Subsea Division Extreme High Pressure / High Temperature Coupling Hunting developed the Xtreme High Pressure / High Temperature (XHPHT) Christmas Tree Hydraulic Coupling to meet our customer demands for a subsea hydraulic coupling that operates for years in extremely harsh environments
Slide 24: Facilities Section
FACILITIES SECTION RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015 24
Slide 25: Facilitating for the Future
Facilitating for the Future North America Expansion Gulf of Mexico - Houma, Louisiana – 311 Complex North America Roofline Fully integrated facility dedicated to offshore, able to 2.5 manufacture, assemble, store and logistically manage equipment 2.4 Global Offshore and Onshore Threading – Ame
Slide 26: Facilitating for the Future
Facilitating for the Future International Expansion North Sea Market – International Perforating 1.0 Distribution Hub- Clinterty, United Kingdom International Roofline Largest facility of it’s kind in Europe licensed to store 3.8 tons of explosives (3,500 kilograms). Regional hub for explosive 0
Slide 27: There is likely no good news for the short term – however:
There is likely no good news for the short term – however: IEA Global oil demand by 2020 = 100 MMB per day. IEA Global demand average 2015 = 93 MMB per day. Major project delays = Forward supply risk: estimated to be 5.7 MMB per day. Decline rates for best conventional reservoirs is 4% - 5%.