Hunting PLC (LSE:HTG) shares dropped over 15% in early deals on Tuesday, as the oil services engineer cautioned that the US onshore market remains weak due to low natural gas prices.
The firm’s Hunting Titan division merely broke even for the third quarter, it said.
Hunting said it is planning cost-cutting in the Titan business to align it with current market conditions.
It noted reduced prices for gas and oil, denting sentiments in the sector which it said will likely lead to lower client activity throughout the remainder of the year – most notably impacting Hunting’s short-cycle Perforating Systems product group.
At the same time, to support liquidity, the company secured $300 million in new borrowing facilities, including a $200 million revolving credit facility and a $100 million term loan, replacing a $150 million Asset Based Lending (ABL) facility.
The company told investors it now retains some $393 million of total liquidity.
"Our balance sheet remains strong, coupled with a significantly improved year-end cash projection. We are pleased to have agreed new borrowing facilities in recent days,” chief executive Jim Johnson said in a statement.
Johnson added: “Whilst the outlook for the international and offshore subsectors of the industry continues to remain firm, the slower than anticipated improvement within the US onshore has led to a deterioration in our short-term trading expectations.
“As a result, we are reducing EBITDA guidance; however, we still expect to be broadly within the range guided at the start of the year."
The Hunting CEO, meanwhile, also noted that it is continuing to review high-quality acquisition candidates, with a focus on subsea and well completions.
Hunting said its OCTG, Advanced Manufacturing, and Subsea product lines are performing in line with expectations.
The group sales order book stands at approximately $652 million, driven by the OCTG and Organic Oil Recovery (OOR) segments.
In London, Hunting shares were shares were down 61.5p or 16.7% in Tuesday morning’s trade, changing hands at 310.38p.