Enteq Upstream PLC (LON:NTQ) has told investors that its financial results for the twelve months ended March 31, 2020 will be “broadly in-line” with expectations, though it cautioned over the impact of coronavirus (COVID-19) on its current and future trading environment.
The oil services firm, in a statement, said revenue for the year would be in the region of US$11mln and underlying adjusted earnings (EBITDA) is expected at around US$3mln. It ended March with US$10.3mln of cash.
Enteq flagged a recent downturn in demand in the North American drilling market, against the backdrop of coronavirus and weak oil prices, and said it intends to make a significant non-cash write-down of both intangible assets and its inventory. It noted that the total non-cash write-down would be around US$6.9mln.
As many North American shale operators significantly reduced capex and opex, Enteq has responded by launching its own reductions to overheads. It has reduced its US workforce by about 60%, and implemented group-wide salary reductions from April 1.
All contract staff have been released and discretionary spending has been curtailed. All board members have elected to take a significant proportion of their remuneration in shares.
The company said it is in the process of applying for governmental assistance in the USA.
Enteq described its balance sheet as “secure” and said that, with an adjusted cost base, it will allow for investment in selected engineering development projects. The company’s strong technical partnerships will also be maintained, it added.
Presently, the company said it is not possible to give guidance for the expected level of future trading in the medium term.
It noted, however, that international markets – especially China, Russia and Saudi Arabia – are expected to be more resilient than North America, and, it intends to pursue opportunities in those markets.
Enteq’s full-year results are expected on June 17, 2020.