Plexus Holdings plc, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® method of wellhead engineering, announces its interim results for the six months to 31 December 2020.
· Following the sale of the wellhead Jack-up exploration rental wellhead application business (the "Jack-up Business") to FMC Technologies Limited ('TFMC'), a subsidiary of major oil services provider TechnipFMC (Paris:FTI)(NYSE:FTI), on 1 February 2018, the interim results and prior periods are reported as required on a continuing and a discontinued operations basis.
· Continuing operations sales revenue £419k (2019: £49k)
· Continuing operations EBITDA loss (£1,214k) (2019: £1,809k loss)
· Continuing operations loss before tax (£1,995k) (2019: Loss £2,763k)
· Basic loss per share from continuing activities (1.99p) (2019: 2.75p loss)
· Net cash of £2.3m (2019: £4.5m)
· The Group in addition has £3.04m in financial assets (2019: £2.96m)
Advancing IP-led strategy to establish POS-GRIP technology in new markets via licensing and direct sales - building on historical success of North Sea Jack-up exploration where Plexus' leak proof wellhead equipment raised standards, delivered substantial cost savings for operators and gained a significant market share. At the same time Plexus continues to reduce overhead costs without impacting on operational and R&D capabilities which are expected to be available to our partners and customers.
Licencing/Collaborative Agreements for POS-GRIP and other proprietary Plexus IP now in place with two of the top three major international service companies:
· Signing of a non-exclusive licence for POS-GRIP surface production wellhead technology with Cameron International Limited ('Cameron') (a Schlumberger group company) in November 2020
· Good progress being made with Cameron regarding the development of an inaugural wellhead design incorporating the POS-GRIP method of engineering
· The new Cameron licence compliments existing IP Collaboration Agreement with TFMC
Russia and the CIS
· Strategy centred on supporting licensing partner Gusar's ongoing efforts to pursue contracts for POS-GRIP Jack-up exploration wellheads in the Russian market
o First wellhead successfully installed as part of the inaugural contract for POS-GRIP rental wellhead equipment secured by Gusar with global energy giant Gazprom in 2019
o Follow on well planned for 2020 did not go ahead due to COVID-19 impact on drilling programmes, but activity is anticipated to return this year which potentially would deliver further revenues under this contract
Initiatives underway to expand licencing activities for additional POS-GRIP products and applications
Direct Sales Activity
· Targeting organic growth via direct sales of surface production wellheads to customers, particularly for UK and European North Sea regions
o Surface production wellhead system order secured from Spirit Energy in July 2020
o Sales pipeline of project activity is preserved despite delays due to the COVID-19 led economic downturn
o Operators have generally delayed, rather than cancelled development plans due to COVID-19, meaning that most prospects remain live
o Participating in the tender process for a range of projects
o Interest being expressed by operators where total cost of ownership considerations, maintenance and leak free integrity, and remote monitoring are likely to become increasingly important
Recent strengthening of the oil price, combined with the need to address the impact of reduced capital expenditure over the past year is being seen as a sign that 2022 will see a major recovery for the oil and gas sector
· Hydrocarbons, and in particular natural gas are expected to play an important role in the world economy for many years to come despite the ongoing focus on renewables
· Like many companies the full extent of the impact of COVID-19 on the Company's trade, customers and suppliers is not yet known
Chief Executive Ben van Bilderbeek said:
"In what has been without doubt a challenging 12 months for the global economy, and in particular for our industry due to the effects of the COVID-19 pandemic, the UK is, at the time of writing, making excellent progress with the rollout of its mass vaccination programme which provides cause for optimism that the green shoots of recovery can begin to surface and grow into the second half of 2021. In tandem, momentum continues to grow for a carbon neutral world, and the oil and gas industry is positioning itself to be in the mainstream rather than on the fringes of this movement. For our industry to be able to make this journey, there is a growing recognition that out-dated technologies are no longer fit for purpose and must be replaced by cleaner, more efficient, and more reliable methods and equipment in order for the industry to have any realistic chance of meeting net-zero targets. We believe that Plexus, with our field proven POS-GRIP leak-proof technology, is well positioned to maximise the opportunities that are now beginning to open up to us, especially in relation to natural gas, the cleanest fossil fuel, which it is widely reported will increasingly be used to produce hydrogen, over the coming years.
"The ongoing pandemic and associated lockdowns both in the UK and around the world, while highly disruptive, did not prevent progress being made towards rolling out the dual focused strategy we have put in place to establish our POS-GRIP technology in new markets through licencing and direct sales activity. In July 2020 we announced the award of an order for a POS-GRIP surface production wellhead system from Spirit Energy. The contract is progressing as planned, and as a result we would expect to recognise the majority of revenues from this contract in the second half of FY21.
"In terms of licencing, in November 2020 we were delighted to announce an important initial Licence Agreement with Cameron, a Schlumberger group company, the world's leading oil services provider. We are excited about the potential that this new relationship offers for POS-GRIP technology in the surface production wellhead sector, and indeed have been very encouraged by the level of positive engagement to date by our newest licencee in these early days of the partnership. Good progress has been made in relation to the technology transfer process, and the design of an initial low-cost wellhead product is advancing. We very much look forward to updating our shareholders on progress in the months and years to come.
"The Cameron licence agreement is the third we have secured for our technology in recent years, alongside the collaboration agreement with top tier services provider TFMC and the agreement with our licence partner Gusar for the Russian and CIS markets. Building a portfolio of diversified revenue streams both in conjunction with licencees and partners, as well as organically, is central to our business model. Our technology lends itself to this. Being able to deliver a higher standard wellhead solution, particularly wherever metal to metal sealing is required opens a host of potential markets for POS-GRIP, including in the fast-growing 'green' space such as carbon storage, as well as geothermal which is one of many sub sectors and applications we have identified where POS-GRIP can make a difference. Nuclear energy is another, especially where exotic materials are relevant, and which do not always lend themselves to threaded connectors.
"For now, the half year results, including revenues of £419k, are in line with internal budgets and the Group's revenues are projected to be higher in the second half of the financial year; results for the full year are anticipated to be in line with market expectations. I look forward to providing further updates on our progress."