Hunting cuts profit outlook as oil prices fall

Falling oil and gas prices and a slowdown in the US onshore market have forced Hunting to cut its profit outlook for this year.
The FTSE 250 oil and gas services provider said its adjusted earnings would be about 8 per cent lower than expected at between $123 million and $126 million, from previous guidance of $134 million to $138 million.
The weakness centres around its Titan business, which provides services to the American onshore market and has suffered from falling oil and gas prices, uncertainty about the outcome of the US election and consolidation across the industry.
The price of the one-month Henry Hub contract has fallen by about 20 per cent over the past 12 months to $2.35 per million British thermal units.
The Titan division, which was expected to make a profit, is now expected to break even during the third quarter after an anticipated improvement in trading failed to materialise and poor performance is expected to continue for the rest of the year.
A cut-back in sales and administration costs is planned alongside the closure of some of the company’s 12 North American distribution sites in response to the market downturn.
Profit guidance for next year will be given when the company updates the market on its fourth-quarter performance in January. Analysts at Investec, the investment bank, reduced their adjusted earnings forecast for next year by 10 per cent to $155 million, reflecting tougher trading conditions.
Securing a record $145 million order to supply pipe connection services for oil and gas drilling from the Kuwait Oil Company in May had prompted the group to lift its profit outlook. Cash generated from that contract is expected to push the net cash on Hunting’s balance sheet to between $60 million and $70 million by the end of the year, double the level in the middle of October.
The shares fell 67p, or 18 per cent, to 306p in morning trading in London, making it the biggest faller on the mid-cap index.
Trading elsewhere was more encouraging, with the rest of Hunting’s four operating arms performing in line with the market’s expectations. Adjusted earnings have risen 16 per cent over the first nine months of the year.
The group was badly hit by Covid, suffering aggregate losses of $60 million over 2021 and 2022 after the oil market slumped. However, it returned to a pre-tax profit of $50 million last year after revenue rose to $929 million, from $726 million.