Last checked at 23 Sep 2021 07:00
Enteq Upstream plc
("Enteq" or the "Company")
AGM Trading Statement
Enteq, the energy drilling technology company, will make the following statement at its Annual General Meeting which takes place at 12.00 noon today at the offices of finnCap Group plc, 1 Bartholomew Close, London, EC1A 7BL.
With the price of a barrel of WTI oil remaining relatively steady at approximately US $70, the North American rig count has risen from 430 in early April 2021 to the current level of approximately 510. The rotary steerable system (RSS) drilling activity in North America has continued to outpace growth in the rig count. This region is expected to be a key market for Enteq's forthcoming SABER (Steer At Bit Enteq Rotary) product. However, there remains an over-capacity of Measurement While Drilling (MWD) equipment, such as that supplied by Enteq, in the market. As seen in previous market cycles, this over capacity is likely to diminish over time.
The stable, relatively high oil price during this trading period has enabled oil companies to generate significant positive cashflows. Enteq's drilling services customer base have not seen meaningful increases in the rates charged for their services; hence their free cashflow remains constrained. As such, Enteq's North America focused rental program continues to be attractive to customers, with 6 additional kits generating revenue since 31 March 2021.
The international market continues to see a muted demand compared to pre-COVID levels. International activity tends to take longer than North American to respond to changes in oil price.
The Enteq SABER project remains on-track, with all technology development milestones being met to date. Equipment is being shipped to location for down-hole testing. The results of these trials are anticipated before the end of this calendar year.
The Board's expectations for Enteq's full year revenue and adjusted EBITDA are unchanged, with increased revenues anticipated from the second half. Cash balances have reduced from $8.1m at 31 March 2021 to $5.2m as of today due to continued investment in the development and initial manufacture of SABER as well as increased MWD rental fleet.
The Company plans to release its interim results for the six months ending 30 September 2021 on 18 November 2021.
Andrew Law, CEO, commented:
"We are pleased to see initial recovery of our customer base in North America. The continued strength of Enteq's balance sheet positions us well to rapidly respond to further increases in customer demand.
The SABER technology development has progressed well through to this next phase of field testing. SABER has the potential to significantly enlarge our addressable market to include rotary steerable drilling which is experiencing growth in both North America and internationally."
For further information, please contact:
Enteq Upstream plc +44 (0)20 8087 2202
www.enteq.com
Andrew Law, Chief Executive Officer
David Steel, Chief Financial Officer
finnCap Ltd (NOMAD and Broker) +44 (0)20 7220 0500
Ed Frisby, Emily Watts, Tim Harper (Corporate Finance)
Andrew Burdis, Barney Hayward (ECM)