Plexus Regulatory News (POS)

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil Equipment & Services

This announcement contains inside information

Plexus Holdings PLC ('Plexus' or 'the Company')

First Sale of Equipment by Russian Licensing Partner to Gazprom

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, is pleased to announce its Russian licensee, Gusevsky Valves Plant LLC ('Gusar'), has entered into an initial agreement to supply Gazprom with two sets of its Tersus™ - TRT Mudline Suspension System ('MLS') for the construction of shallow water exploration gas wells on the Kara Sea Shelf in 2019. Gusar is in the process of localising the manufacturing of Plexus' MLS equipment under terms of a licence from Plexus. The value of this initial order is in line with similar rates achieved in the UK Continental Shelf. 

This MLS order is the first breakthrough order secured by Gusar for the Russian and CIS market and is in line with Plexus' strategy to establish its best in class equipment in Russia, a top three hydrocarbon producer in the world with significant gas reserves. The order follows the sale by Plexus of its MLS equipment to Gusar in April 2017 to assist in demonstrating to Russian operators the benefits and advantages of its proprietary system (see announcement of 3 April 2017). It also follows the agreed sale by Plexus to Gusar of two POS-GRIP 18-3/4" rental wellhead sets and associated equipment and tooling for circa £1.4m (see announcement of 14 February 2018) which will form the basis of Gusar's POS-GRIP rental exploration wellhead inventory.

The Directors believe the Plexus MLS system is the best possible technical solution for jack-up drilled wells in terms of performance, reliability and safety, and over the years it has been used in combination with POS-GRIP® Adjustable Wellhead Systems on over 350 wells operated by majors such as Royal Dutch Shell, Statoil and Total. Importantly, the Company is confident that today's MLS sale by Gusar to Gazprom will lead to further orders in Russia and the CIS, not just with regards to MLS but even more significantly for POS-GRIP® adjustable jack-up rental wellhead systems.

Plexus' CEO Ben Van Bilderbeek said, "Following today's announcement, Plexus' MLS equipment will soon be deployed in the huge Russian market which, due to the level of upcoming gas drilling activity, represents a major commercial opportunity for Plexus, and its licensee Gusar. Furthermore, with gas being targeted in the current shallow water campaign, it is clearly imperative that the best equipment is deployed to ensure drilling operations are completed safely and that gas leaks are avoided. Thanks to the superior qualities of our POS-GRIP wellhead and gas-seal technology, which has raised standards in high pressure/high temperature jack-up exploration drilling, we are confident our equipment will play an increasingly important role in this programme. 

"The CIS is a key target market for Plexus. This is not just down to the vast volumes of hydrocarbon reserves it holds and the importance of gas within the country's energy mix, but also because the CIS provides a readymade example of the licensing model that lies at the centre of our strategy post the sale of our jack-up exploration business to FMC Technologies Limited (excluding the CIS). Thanks to our growing suite of POS GRIP- based products, including production wellheads (both surface and subsea), and connector technology for abandonment operations such as our POS-SET Connector, there is scope for Plexus to build a portfolio of licensing agreements with key partners covering specific geographies and products, each generating a revenue stream through royalties earned on equipment rented out or sold. 

"This is an exciting stage in Plexus' development, and I look forward to providing further updates on our progress as we focus on positioning Plexus as the provider of superior enabling technology for the energy sector at a time when there is an increased focus on the need to address for example methane leaks where we believe that metal-to-metal seals are essential and which need to be scientifically proven to have verified integrity."

Alexander Beryozkin, General Director of Gusar, said: "Today's contract follows an extensive period of engagement with Gazprom to demonstrate the advantages of Plexus' technology. We anticipate that this contract to supply mudline suspension systems and exploration drilling equipment to Gazprom will be followed by an order for rental wellhead equipment and related services, which in turn will open up further opportunities for Gusar to participate in Russian offshore gas exploration both with Gazprom and other operators.

"The mudline suspension systems to be manufactured by Gusar according to the licence from Plexus delivers superior well integrity features, ensuring maximum safety and efficiency for offshore gas well construction on the shelf - an important factor for exploration activities in the Arctic conditions."

Further Information

The Plexus MLS comprises hangers, running tools and TA Cap. It is used during jack-up exploration drilling operations to transfer the weight of each casing string to the conductor and the sea bed and also to provide a means to reconnect to the well for future production. Thanks to the simplicity of the proprietary design and its unique features, the Plexus MLS is proven to deliver excellent reliability, superior well integrity, and significant time savings. These unique features include surface casing riser washout without rotation of the riser; all interfaces being externally testable before running; split cages with optimised stiffness and debris handling which enhances reliability; and the installation and recovery of the TA Cap under full BOP control. Due to the importance of gas in its energy mix, Russia represents a key market for Plexus as POS-GRIP technology and HG® metal-to-metal sealing have been proven to be ideally suited to the high pressures and temperatures associated with gas.

**ENDS**

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

NOTES:

AIM-traded oil and gas engineering services company Plexus (AIM: POS) is an IP-led company that has developed a range of products and applications based on its patent-protected POS-GRIP friction-grip technology. Having proved the qualities of POS-GRIP within the jack-up wellhead exploration market through the sale of this business to TechnipFMC (Paris:FTI, NYSE:FTI), in early 2018, the Company is now focused on establishing its technology and equipment in other markets including surface production, subsea and de-commissioning. 

Its suite of new products and applications includes: the Python™ Subsea Wellhead (a new standard for subsea wellheads and the result of a Joint Industry Project supported by BG, Royal Dutch Shell, Wintershall, Maersk, Total, Tullow Oil, eni, Senergy, and Oil States Industries Inc); the POS-SET™ Connector for the growing de-commissioning and abandonment market; HP/HT dual marine barrier risers which provide an efficient, safe and cost effective solution for use on jack-up rigs; an innovative HP/HT Tie-Back connector product; and a new Well Tree product. Importantly, the Company has a Collaboration Agreement with TFMC, which provides a platform to enable the seeking of further develop and commercialise these and other applications utilising POS-GRIP technology.