Enteq Upstream PLC (LON:NTQ) has highlighted a “satisfactory trading recovery” since mid-March’s slump amidst the COVID-19 outbreak and low crude oil pricing.
Half year revenue and adjusted EBITDA are likely to be in line with management expectations, the company said in a statement ahead of today’s AGM.
New sales opportunities are being targeted outside the company’s traditional North American onshore shale-based market, with the proportion of revenue from outside this area now expected to be around 75% in the first half of the year.
The majority of international sales have been in China where strategic drilling for gas in challenging downhole conditions can be satisfied by Enteq equipment. In May, the company landed a US$1mln contract with a new Chinese customer and Enteq noted that the customer has since given an indication of further orders.
Additionally, a US$0.9mln contract was won in Saudi Arabia in August though the company noted that this revenue will only be recognised after the equipment has passed a Saudi Aramco accreditation process.
READ: Enteq lands Saudi order for new product
“The North American market remains extremely subdued with the number of active drilling rigs continuing to fall from 1,025 at the start of April 2020 to the current level of 261, with resulting over capacity of equipment in the market,” the company said.
“Enteq's rental revenue from the North American market is expected to continue until the current financial year end at reducing levels with limited renewals expected.”
The company, meanwhile, in a separate statement, today announced the appointment of Andrew Law as commercial director. Law has been with the company since January 2019, and his remit has been to focus on expanding Enteq's market share outside North America.
“His successful track record of increasing Enteq's presence in both China and the Middle East has improved the global positioning of Enteq,” said chairman Iain Paterson. “His strategic approach to new markets and technologies will greatly assist the Board with our plans for growth."
Chief executive Martin Perry, meanwhile, added: “It is pleasing that Enteq continues to expand its market share and opportunities outside North America.
“The significant contract awards in both China and Saudi Arabia, demonstrate that Enteq's products continue to offer new customers a proven, cost effective and reliable solution for their drilling requirements.
“Investment in new and differentiated technology will enable Enteq to address a substantially larger sector of the world market."
Enteq noted that its project using licensing from Shell, the Rotary Steerable System development programme, is advancing and continues to meet project milestones. A prototype deployment scheduled for 2021.