Home Business NewsBusiness Hunting shares get drilled even as firm predicts return to the black

Hunting shares get drilled even as firm predicts return to the black

by LLB Reporter
30th Jun 22 12:10 pm

A blossoming order book, an upturn in business in the USA and management’s forecast of a return to a net profit in 2022 are not proving enough to support shares in Hunting as financial markets continue to fret about a recession and a possible drop in demand for oil. A cash outflow in the first quarter of $38 million is also spooking investors.

AJ Bell Investment Director Russ Mould says: “Both factors may be enough to persuade some investors to take flight. Patient portfolio builders could decide to tough it out, though, given the energy crisis is already leading to increased drilling activity both in the USA and worldwide, especially as Hunting’s shares are already trading near ten-year lows and the stock trades on a low multiple of both asset values and past peak earnings

“Hunting is not a pure play on oil and gas, since around a fifth of revenues come from the steel, aviation, medical, telecoms and space sectors, although that diversification can at least help Hunting weather the vagaries of the oil industry’s spending cycles.

“But the company supplies its metal tools, valves, joints and components to both oil companies and oil equipment giants such as Schlumberger, Baker Hughes and Halliburton, who then use or provide kit that facilitate the extraction of oil and gas from wells.

“The US rig count is up 60% year-on-year to 753 and the worldwide figure up 29% to 1,628, according to data from Baker Hughes. Growth in global rig activity has slowed in spring, despite steady acceleration in America, but neither active rig figure is anywhere near their past highs, or the levels seen when oil last traded north of $100 a barrel.

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