TIDMPOS
RNS Number : 4504Z
Plexus Holdings Plc
11 December 2014
Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil
equipment & services
11 December 2014
Plexus Holdings PLC ('Plexus' or 'the Company')
AGM Statement
Plexus Holdings PLC, the AIM quoted oil and gas engineering
services business and owner of the proprietary POS-GRIP(R)
friction-grip method of wellhead engineering, known for its safety,
time and cost saving capabilities, will hold its Annual General
Meeting ('AGM') today. At the AGM Jerome Jeffrey Thrall, Chairman,
will make the following statement:
"The twelve months ended 30 June 2014 saw us deliver record
results for the year. We were delighted to report a 65.1% year on
year increase in profit after tax to GBP5.05m; 25.9% increase in
profit before tax to GBP5.38m, a 5.7% increase in revenue to
GBP27.02m, an 18.7% increase in EBITDA to GBP9.02m; and a 62.9%
increase in earnings per share to 6.01p. This excellent financial
performance is the result of another year of significant progress
in terms of supplying our best in class POS-GRIP wellhead systems
to leading international oil and gas companies worldwide for
exploration jack-up drilling operations, particularly in the "Rest
of the World" where sales outside of the UK and European North Sea
grew by 17%. This progress demonstrates the strength of our rental
exploration business model and the increasing recognition of our
proprietary POS-GRIP technology for not only its safety and
technical capabilities but for its capex saving capabilities too.
We also have been encouraged by the announcement by the Government
in the Autumn statement in relation to the Wood Report, which
confirmed that a new North Sea cluster area tax break allowance
will be introduced to support investment in more challenging high
pressure high pressure ('HPHT') field projects. Contract wins post
our year end include Centrica plc in the Southern North Sea, Det
Norske Oljeselskap ASA offshore Norway, and BG Group (UK) in the
North Sea.
"As we continue to grow our core rental exploration drilling
business it is essential that we make the necessary investment in
infrastructure to support operations, and planned future expansion.
In September 2014 we successfully acquired an additional 36,000 sq.
ft. work shop and office facility in Aberdeen from Baker Hughes for
GBP2.4m, effectively doubling the size of our main operational
headquarters and enabling some efficiency gains as we consolidate
our ancillary sites in Aberdeen. Whilst we have traditionally
enjoyed a strong market position in the North Sea for supplying
HPHT POS-GRIP wellhead equipment, we have continued to expand our
geographic reach into regions such as West Africa, Asia and
Australia. This, coupled with the creation of an Asian hub in
Singapore, which has already provided the equipment for our first
well in China with Shell China, ongoing business activities in
Malaysia with the formation post year end of Plexus Products (Asia)
Sdn Bhd, and further activity in Brunei, supports the Directors
confidence in the future.
"We are actively pursuing new and potentially sizeable revenue
generating opportunities outside of our core organic jackup
drilling exploration rental market sector. Such strategic
initiatives include our Joint Industry Partnership ('JIP')
initiative to design and develop a safer new generation subsea
wellhead ('HGSS') to address a number of key technical and safety
concerns that have arisen following the Macondo offshore well
incident in the Gulf of Mexico in 2010, and which importantly can
be tested for the first time to standards that match those of
premium connectors so that the wellhead is no longer the weak link
in the well architecture chain. To date we have nine consulting
partners signed up to the JIP including seven oil and gas majors in
BG Group, Eni S.p.A, Maersk, Shell, Total, Tullow Oil and
Wintershall. Significant progress has been made with the design
process now completed, and testing due to be completed imminently.
The next milestone will be to agree the running of a prototype, for
which a commitment will be sought for the second half of the 2015
calendar year. With this in mind we look forward to 2015 and the
developments that this may bring in terms of moving nearer to our
first entry into the multi-billion dollar subsea global market.
"Furthermore, we have a second JIP in place with oil and gas
major, Maersk, to develop an up to 20,000 psi HPHT Tie-Back
Connector, that will for the first time allow HPHT exploration and
pre-drilled production wells to be converted to either subsea or
platform producing wells. The connector will deliver significant
savings in terms of capital expenditure and accelerate the process
of bringing a well into production. Full product testing has
commenced, and is planned to be completed by the end of 2014
calendar year. Discussions are ongoing in relation to identifying a
suitable well for a field trial.
"It is important that I take this opportunity to comment on the
significant decline in the oil price which has gathered apace since
our year end, and where at the end of June it approached US $115
per barrel and today stands at nearer to US $60 dollars per barrel.
Such a steep decline has inevitably resulted in much speculation
about what this means for the oil industry and future capital
expenditure programmes. However it is important to consider what
lies behind this situation and how long it is likely to last, and
which sectors of the oil and gas industry are most likely to be
effected. Clearly there are a number of geopolitical dynamics at
play which are far too complex to go into detail today, and that
what is important is how long the fall in the oil price is likely
to continue; which sectors are most likely to be affected; and what
it means for exploration activity.
"Encouragingly for Plexus a number of oil companies and
institutions see the current price levels as something that could
recover quite quickly. For example only this week Bank of America's
energy expert was quoted as saying that once the excess oil has
been whittled away they "expect a pretty sharp rebound to the high
US $80's or even US $90 in the second half of next year".
Furthermore although it was widely reported that ConocoPhillips
announced plans to reduce its capital spending by 20% in 2015
versus 2014, exploration drilling would only be "down slightly"
year on year, and that as we anticipated shale drilling would be
one of the main areas for reduced activity, which of course Plexus
is not currently involved in at all. In addition BP only recently
updated the City with its exploration and production plans until
2020, and said that the price drop was not likely to affect its
long-term plans.
"Whatever the short term effects are from this current price
volatility, what must not be forgotten is that the medium to long
term demand prospects for oil and gas are undiminished and will of
course increase with population growth and increasing
industrialisation around the world. Even if it is unpopular to say
so in some quarters, it is a widespread view that wind farms, tidal
energy, and solar panels will not replace hydrocarbons in the
foreseeable future. ExxonMobil said in its 2014 "The Outlook for
Energy: A View to 2040" report that global population growth will
result in a 35% greater demand for energy, and that 60% of the
demand increase will be supplied by oil and natural gas. Such
market dynamics would inevitably lead to increased exploration and
production expenditure, and it is not surprising therefore that
Douglas-Westwood recently reported that it expected "sustained and
substantial growth" in the global oilfield services market which it
forecasted to grow from US $354bn in 2014 to US $521bn in 2018.
"In terms of the nature of Plexus' organic business which funds
our longer term strategic goals it must not be forgotten that we
specialise in supplying equipment for wells that in many cases are
involved in prolific long term HPHT gas fields where the operating
costs per barrel equivalent are significantly below the levels that
are currently being experienced, and where some fields have up to
twenty five years to recover their capital costs. Conversely
onshore shale and tight oil & gas formations are highly capital
intensive to develop and typically have very steep production
decline profiles. Therefore although we are of course taking these
global dynamics very seriously, I must stress that we currently
remain confident for this year and beyond, and that it must not be
forgotten that our goal has always been for the POS-GRIP method of
engineering to become a new global standard for wellhead equipment
not only for jackup drilling but also for exploration and
production applications for land, platform and subsea. We as a
company, and your board, have never been as convinced as we are
today that we offer unique superior solutions and deliver critical
safety and performance standards, particularly in relation to the
provision of instant casing hanger lock down and superior long term
metal-to-metal sealing which the industry is calling out for,
particularly for HPHT and subsea applications where we believe we
lead the market in terms of wellhead design. The scale of this
opportunity is huge, and can only be helped by the fact that Plexus
uniquely is able to offer significant time savings to operators
which is now more important than ever in this age of careful cost
control, and that such benefits are anticipated to be even more
significant for our new HGSS subsea wellhead design.
"Having successfully positioned Plexus as the supplier of choice
in the HPHT exploration market in the North Sea, we intend to use
this as a springboard to become a leading supplier of critical
wellhead equipment to the global oil and gas industry, which is
estimated as being a US $4.5bn market, versus the much smaller
circa US $400m jackup drilling market that we currently operate in.
To this end we are only now just beginning to look at ways of
capitalising on our reputation for superior safety and operational
excellence and time and cost saving benefits with suitable
partners, and to explore how to access the significant commercial
opportunities that exist in markets that include China, Russia and
the US.
"Finally, as announced on 29 October 2014, I am pleased to
confirm that the Board has recommended the payment of an increased
final dividend of 0.62p per share for FY 2014, an increase of 12.7%
to the previous year, which will be submitted for formal approval
at the AGM today."
**ENDS**
For further information please visit www.plexusplc.com or
contact:
Ben van Bilderbeek Plexus Holdings PLC Tel: 020 7795 6890
Graham Stevens Plexus Holdings PLC Tel: 020 7795 6890
Derrick Lee Cenkos Securities PLC Tel: 0131 220 9100
Nick Tulloch Cenkos Securities PLC Tel: 0131 220 9772
Felicity Winkles St Brides Media & Finance Tel: 020 7236 1177
Ltd
Frank Buhagiar St Brides Media & Finance Tel: 020 7236 1177
Ltd
Notes to Editors:
Plexus Holdings PLC, which began trading on AIM in December
2005, is an oil and gas engineering and services business, which
supplies wellhead and mudline suspension equipment for exploration
and production applications. Based in Aberdeen, with offices in
London, Cairo, Kuala Lumpur, Singapore and a presence in Houston,
Texas, it has developed and patented a friction-grip method of
engineering for oil and gas field wellheads and connectors,
POS-GRIP(R), which involves deforming one tubular member against
another to effect gripping and sealing.
The Company plans to accelerate the roll out of POS-GRIP
wellhead equipment as a superior alternative to current technology
and for it to become the future industry standard for wellhead
design. In particular, the technology has advantages in High
Pressure/High Temperature (HP/HT) and Extreme HP/HT (X-HP/HT) oil
and gas environments, for which there is growing global demand and
where Plexus is being increasingly recognised as the supplier of
choice. Importantly, the Company is focussed on extending its
proprietary technology into an increasing number of subsea
applications. In line with this, in March 2011 the Company launched
a Joint Industry Project ('JIP') initiative to develop a new subsea
wellhead design, HGSS(TM), utilising its friction-grip technology
in collaboration with key oil and gas operators and service
companies. BG, Royal Dutch Shell, Wintershall, Maersk, TOTAL,
Tullow Oil, ENI, Oil States Industries Inc., and the UK entity of
the world's largest offshore drilling company have joined the
initiative to date as Consulting Partners. The JIP is nearing
completion and the resultant HGSS subsea wellhead design will
include a combination of key features never before seen in a subsea
wellhead which include being rated to 15,000 psi, 4,000,000 pounds
of 'instant' casing lockdown capacity, and importantly rigid metal
annular seal technology qualified to match the performance of
premium connectors. The JIP will also be designing solutions for
annulus pressure monitoring and access for 'bleed off' capability
to address sustained casing pressure ('SCP') issues which for many
years have been recognised by the industry as a serious industry
problem. The design process has now been completed, with testing is
due for completion end 2014, and the running of a prototype in the
field targeted for the second half of 2015.
To date, POS-GRIP wellhead systems have been used or selected to
be used in over 300 oil and gas wells by international companies
including AGR, Apache Energy Australia, BHP Billiton, BG
International, Bowleven plc, BP, Brunei Shell Petroleum, Cairn
Energy, Centrica, ConocoPhillips, Dana Petroleum, Dubai Petroleum,
GDF SUEZ, Global Santa Fe, Maersk, Niko Resources, Petro-Canada
Trinidad & Tobago, Red Sea Petroleum Operating Company, Repsol,
RWE, Senergy Limited, Shell China, Shell Egypt, StatoilHydro,
Silverstone Energy, Talisman Energy, Tullow Oil, and
Wintershall.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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