AGM report3 Oct 2018 09:45
There's a good report on NTQ's AGM from a week or so ago from Mark Bentley of Sharesoc (which investors here really should join if they're not already members).
Mark re-purchased NTQ shares earlier this year. I hope he won't mind me posting an extract from his report:
Http://sharesoc.ning.com/forum/topics/the-agm-forum?commentId=6389471%3AComment%3A50447
"I attended the AGM today, 26th September. Bullet point notes, based largely on my questioning, follow. I have commented on the answers given in italics:
Q: I noted that cashflow had been boosted by a significant reduction in receivables, so asked whether this was a one off or due to a change in the business's terms of trade. A: It was a one off, due to collection of old receivables. So I expect cashflow to deteriorate going forward, as working capital will rise with business recovery and growth, together with investment in the rental fleet and in R&D. However this is not a problem due to Enteq’s strong net cash position.
Q: Next I asked about the company's competitive position. A: Enteq equipment is being used in about 20% of US land rigs, making it one of two leading suppliers to independent oil service companies. There are only 2-3 competitors supplying complete MWD kits, but more offering components. Very satisfactory - Enteq is a leader in its specialist market.
Q: Please describe the typical sale. A: Sales are primarily equipment & software. The service element is small. A full MWD kit sells for around $400k. Enteq's rental model appeals to smaller independents. The rental period is typically 20 months and the kit is largely written off over this period. Enteq vets renters carefully and has not, so far, had to take any debt recovery actions (after some 20 rental contracts). So, sales will be somewhat lumpy and are entirely dependent on oil companies’ CAPEX, though the company also advised that a reasonable rule of thumb was to assume that 20% of kit in the field needed to be replaced each year due to wear & tear. That also suggests that there might have been a backlog of replacement orders which Enteq’s clients had deferred to preserve their own cash during the downturn.
The board also commented in response to another questioner that, having laid off staff during the downturn, the company had now re-employed sufficient staff to meet current demand and was not constrained by staff availability.
Current investment in R&D, IP and patent protection was expected to lead to the company offering new products. The CEO would not be drawn on when these new products were likely to be brought to market, both due to commercial sensitivity and to the inherent risk in development and testing timescales.
Nevertheless, this implies to me that shareholders can look forward to growth from two drivers: general oil services market recovery (whilst the oil price remains firm) and new income streams from new products.
I complemented the board on their prudence and having successfull
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