Plexus Regulatory News (POS)

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services

 21 December 2017 

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® 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, Ben van Bilderbeek, Chief Executive, will make the following statement:

"30 June 2017 marks the end of our 12-month financial reporting period. This year it also marked what is likely to prove to be the low point for Brent Crude in 2017, which during the summer traded as low as US$46 per barrel compared to above US$60 today. As a supplier of proprietary best in class wellhead equipment to leading operators such as ENI, Maersk, Total, Royal Dutch Shell and Statoil, our financial performance for the 12 months to 30 June 2017 mirrored the challenging trading conditions faced by the oil and gas sector over the course of the year, specifically the jack-up exploration market where Plexus has in the past earned the bulk of its revenues.

"We believe that our wellheads are superior in terms of performance, reliability and safety whilst at the same time offering significant cost savings to operators. They have been used on over 350 wells worldwide, but our equipment cannot combat a depressed exploration drilling market, particularly where we have been so dependent on the North Sea. Full year revenues of £4.75m (2016: £11.23m); an EBITDA loss of £2.48m (2016: £1.56m loss); a loss after tax of £5.7m (2016: £5.79m loss) after incurring £4.47m of depreciation and amortisation; and a basic loss per share of 5.41p (2016: 6.39p loss per share), all reflect the depressed levels of exploration activity experienced over the course of the year to 30 June 2017. Conversely, however, the current financial year very much represents a new beginning for Plexus, not just in terms of the strengthening of the oil price which, thanks to improving sentiment, today trades above US$60 per barrel, but also in terms of corporate activity and a new strategic direction.

"As announced in October 2017, the signing of a conditional contract for sale of our jack-up exploration business to tier one oil and gas engineer Technip FMC is game-changing. Not only will the pending sale generate an immediate cash payment to Plexus of £15m less certain adjustments, which has the potential through a three year earn out to increase the total value of the transaction to as much as £42.5m but, along with a proposed Collaboration Agreement with Technip, it provides industry recognition for our proprietary POS-GRIP friction based method of engineering. Importantly this milestone repositions Plexus as an IP-led research and development licensing business based around POS-GRIP, and one that will have the resources and focus to pursue applications based on POS-GRIP in other markets such as production and subsea wellheads either organically or through licensees, as we look to embed our technology across the energy sector. The outstanding conditions that need to be met before completion relate to employee transfers and contract novations, both of which are progressing well and we look forward to updating the market in due course.

"We already have a growing family of POS-GRIP products, a number of which are available for deployment out in the field or are ready for commercialisation. Our POS-SET Connector™, which utilises POS-GRIP for use on abandonment operations, has been used by Centrica Energy Exploration and Production on a gas well originally drilled 35 years ago in 1982 offshore Holland; in September 2017, Plexus was awarded a purchase order from Centrica North Sea Limited to supply our POS-GRIP "HG" 10,000psi adjustable production wellhead for a gas production well in the UK Southern North Sea.  Abandonment and production are two substantial markets, and both are areas which we will be targeting going forward. Subsea exploration and production is another valuable market and here too we have a product that is ready for deployment out in the field. Furthermore, as envisaged by Plexus under the terms of the Collaboration Agreement between Plexus and Technip, both parties will look to work together to develop Plexus' existing POS-GRIP IP for applications in other segments of the energy industry such as geothermal, fracking and wind energy.

"Our goal has been and continues to be to build on our near 100% market share of the high pressure/high temperature market in the North Sea and establish POS-GRIP as the go-to technology for operators all over the world. Having won orders for wells in hydrocarbon jurisdictions as far afield as Asia, Africa and Australia, notable progress has been made. We believe the sale of our jack-up exploration rental business and the Collaboration Agreement with a global company with the market reach and expertise of Technip will accelerate the roll-out of our family of products, not just in jack-up exploration but across the wider energy sector. Together with an improving outlook for the industry that is founded on supply and demand moving closer towards equilibrium, Plexus is well placed to fully realise the potential of its ground-breaking technology and in the process generate significant value for all its shareholders." 

**ENDS**

For further information please visit www.posgrip.com or contact:

NOTES:

Plexus Holdings PLC is an AIM traded oil and gas engineering and services business, which supplies wellhead and mudline suspension equipment together with associated equipment and services for exploration and production applications. Based in Aberdeen, with a presence in London, Cairo, Kuala Lumpur, Singapore and Texas, it has developed and patented a friction-grip method of engineering for oil and gas field wellheads and connectors, POS-GRIP®, which involves deforming one tubular member against another to effect gripping and sealing.

To date, POS-GRIP® wellhead systems have been used in over 400 oil and gas wells by numerous international companies. In particular, the technology has advantages in High Pressure/High Temperature (HPHT) and Extreme HPHT (X-HPHT) oil and gas environments, for which there is growing global demand and where Plexus is being increasingly recognised as the supplier of choice. Plexus has recently successfully completed the supply of an X-HPHT exploration wellhead to Total for the Solaris well which is believed to be the deepest and highest pressure well ever drilled in the North Sea.

Plexus is also extending its technology into an increasing number of other applications:

· In September 2015 it launched a prototype of the 'Python™ Subsea Wellhead' developed as part of a Joint Industry Project in collaboration with BG, Royal Dutch Shell, Wintershall, Maersk, TOTAL, Tullow Oil, ENI, LR Senergy, Transocean and Oil States Industries Inc. 

· It recently also completed a JIP in conjunction with Maersk to develop a downhole HPHT Tieback connector which for the first time allows the reconnection of production casing to HPHT exploration and production wells

· It developed and qualified a new product called POS-SET Connector™ which is designed to re-establish a connection onto rough conductor casing previously cut above the seabed to facilitate tieback or abandonment operations

Having proven its POS-GRIP technology in the niche jack-up exploration market Plexus is now focused on extending its applications into the much larger multi-billion dollar land and platform production well market as well as actively pursuing a first time use of the new Python subsea wellhead into the important subsea sector. Such strategic initiatives will be pursued both organically and with trading partners and licencees.