8 April 2021
Enteq Upstream plc
("Enteq" or the "Company")
Year-end Trading Update
Enteq, the energy technology company, today announces a trading update for the financial year ended 31 March 2021.
During the year of COVID-19, the health and safety of our staff, their families and the broader community has been our highest priority. Through careful management and good practice, there have been no significant operational issues during the outbreak.
Enteq's trading results for the year ended 31 March 2021 are expected to be in-line with the Board's expectations, with revenues in the region of $5m and a breakeven adjusted EBITDA*. The cash balance as at 31 March 2021 was $8.1m ($10.2m as of 31 March 2020; $8.8m as of 30 September 2020) reflecting planned on-going investment during the year including the rental fleet, engineering projects and product development.
The markets in which Enteq operate have also been affected by both the dramatic swings in the oil price (from a 10-year low of around $16 in April 2020 to around $60 at the end of March 2021) and the fluctuations in the number of active drilling rigs in North America, dropping from 1,025 in March 2019 to 664 in March 2020 and then down to a low of 251 in July 2020; since recovering to the current position of 430.
Following the recent oil price recovery and subsequent upturn in activity in North America, Enteq has received repeat orders from well-established operators in North America, in addition to further Eastern Hemisphere progression in China, the Middle East and Asia. Further sales have also been made for the supply of equipment into the geothermal energy sector, a key market for Enteq. Revenue related to a shipment made to Enteq's new strategic partner in the Kingdom of Saudi Arabia has not been recognised during the accounting period to March 2021, as the registration/accreditation process remains in progress.
Enteq's SABER Tool (Steer-At-Bit Enteq Rotary Tool), a potential 'game changer' compared to current rotary steerable systems available, will enable Enteq to enter the Rotary Steerable Drilling service market which has an estimated world-wide annual value of $1.8bn in 2021, of which approximately 40% is accessible by the SABER Tool technology. The recent product launch resulted in a significant level of enquiries for further technical information. Field trials for this technology, which incorporates the patents licensed exclusively from Shell and the licensed know-how, are expected to be completed by December 2021.
Enteq intends to continue investing in engineering, testing, building prototypes and setting up a rental fleet for the SABER tool, whilst also pursuing other selected engineering projects. Strong strategic technical partnerships continue to be maintained and developed with third parties with the intention of producing further commercial products in the medium term.
The Board changes announced on 12 November 2020, came into effect on 1 April 2021, with Andrew Law, becoming the Chief Executive Officer ("CEO") and Martin Perry, the founder of Enteq and previous CEO moving to the role of Non-Executive Chairman. The other changes include Neil Hartley taking the role of Senior Independent Non-Executive Director, with Iain Paterson, the previous Chairman, continuing as a Non-Executive Director. David Steel continues to serve on the Board as Chief Financial Officer.
The Company expects to announce its results for the year ended 31 March 2021 on 7 July 2021.
For further information, please contact:
Enteq Upstream plc +44 (0)149 461 8739
Andrew Law, Chief Executive Officer
David Steel, Chief Financial Officer
Investec Bank plc (NOMAD and Broker) +44 (0)207 597 5970
Chris Sim, Patrick Robb, David Anderson
* Adjusted EBITDA is defined as operating profit before depreciation, amortisation, long term incentive charges and exceptional items.