Nice headline moves, but the reality is that the offer price has not moved up much. Instead the spread has widened. Bid/Offer spread is a ludicrous 10%.
The market is slowly waking up to the fact that oil supply is increasing dependent on Shale Oil which has very high decline rates. That means that the industry is going to do a lot of drilling to supply this market. Buy companies that service the drilling industry like NTQ, HTG and WEIR.
"Enteq, the oilfield services technology and equipment supplier, today announces an update for the financial year ended 31 March 2018.
The Board is pleased to report that both full year revenues and underlying EBITDA are expected to be significantly ahead of its expectations. The cash balance as of 31 March 2018 was $15.5m, up $0.2m compared to 31 March 2017.
Market conditions have stabilised during the year to 31 March 2018 with the number of drilling rigs operating in North America rising from approximately 840 at the start of April 2017 to the current level of approximately 1,000. The price of West Texas Intermediate oil has risen from around $49 per barrel at the start of the financial year to around $67 currently.
Enteq has continued to invest in its manufacturing capabilities, product development and increasing its rental fleet during the year.
Enteq has also continued to develop markets outside North America, including further operational success in Saudi Arabia and the fulfillment of the initial contract in Indonesia relating to geothermal drilling announced in December 2017.
Enteq has further improved operational efficiency and enhanced customer interaction through transferring electronic component manufacturing from leased premises in California to the Enteq's owned Houston facility.
In light of these improved market conditions, prudent management and Enteq's ongoing investments Enteq is well positioned to take advantage of potential opportunities.
The Company expects to report its full year results for the year ended 31 March 2018 on 13 June 2018."
According to Stockopedia Enteq Upstream has a market cap of only £16.5m ($22.9m). According to the last set of interim results it had cash of $15.3m, so the market is only valuing the company at $7.6m. Sales increased to $2.5m in the last 6 months, with a gross margin of 70%. What's not to love? Rig count rising relentlessly. The only question is can you get hold of the stock in the market. Bid/offer spread is a ludicrous 10%+
"Halliburton Oilfield services chief is gushing about shale boom
The North American shale oil boom will step up a gear this year, the boss of the worlds second largest oilfield services provider has predicted.
Jeff Miller, president and chief executive of Halliburton, said that he was optimistic about the prospects for the oil industry generally and for North America in particular, where the companys revenues are climbing.
Shares in Halliburton rose by 4.9 per cent to $55.63 yesterday afternoon after it unveiled improved fourth-quarter results driven higher by North American shale activity. Mr Millers optimism echoed that of Paal Kibsgaard, the head of Schlumberger, the worlds largest oilfield services group, on Friday.
Halliburton, which is valued at about $50 billion, and Schlumberger, which is worth about $110 billion, help drilling companies to set up oil and gas wells. Their financial performance and commentary from management are seen as bellwethers for the oil industry....
...Mr Miller said said that he was optimistic about what I see in 2018. Revenue from the completion and production division was $3.8 billion, against $2.3 billion a year ago. The drilling and evaluation division reported revenue of $2.1 billion, up from $1.8 billion. The rise was powered by increased drilling activity in the Middle East and North America and by sales in Latin America."
"Enteq, the oilfield services technology and equipment supplier, announces an agreement to acquire intellectual property relating to an innovative drilling telemetry system for a nominal upfront consideration of £100.
On 9 January 2018, Enteq entered into an agreement to acquire, from a technology developer with a proven track record, five patents relating to the "DrillLink" system; a broadband data transfer solution for communication between "down hole" Logging While Drilling tools and the surface.
Enteq envisages developing these patents into a fully commercialised set of products during the next five years, which would be subject to royalty payments. The technology contained within these products will give Enteq access to a new and broader customer base.
Martin Perry, CEO of Enteq Upstream plc, commented:
"The acquisition of these patents continues Enteq's drive to develop new technologies that extend the applications for our product lines. Following further development the technology contained within these patents will offer the market significant cost savings through improved speed of data transfer."
Enteq, the oilfield services technology and equipment supplier, announces a contract from a new international customer.
On 7 December 2017, Enteq received confirmation and a cash deposit relating to an initial contract valued at $0.5m for operations in Indonesia. This is the first order Enteq has won in this territory. The contract is for using Enteq's core MWD ("measurement whilst drilling") technology in a geothermal application. The order will be delivered to the customer early in 2018.
Martin Perry, CEO of Enteq Upstream plc, commented:
"Enteq continues to develop new territories and applications for our equipment. This contract award represents the ongoing efforts to broaden the company's market presence."
"The increase in North American activity and international opportunities has necessitated the expansion of our global support team....."
"Near Bit Inclination and Azimuthal Gamma.
Enteq has partnered with Houston based Well Resolution Technology to give Enteq access to unique directional drilling technologies such as the WRT Near Bit Inclination and Azimuthal Gamma Ray tool......"
Enteq has been awarded a prestigious grant for a joint project with Imperial College, London, and the Chinese University of Petroleum, Beijing....."
"MFPWR Resistivity Tool
Production models of the RMS Multifrequency Resistivity Tools have now been running for over 6 months in the field with results judged to be fully comparable to those of a major international service company. Inventory levels of all sizes, including a slim 3.5 version, are being increased to meet market demand...."
"Martin Perry, CEO of Enteq Upstream plc, commented:
"Enteq has weathered the storm of severely reduced drilling activity globally over the last two years and is now entering a more stable market with a low-cost base, preserved cash balances and a strong technology platform from which to build. Uncertainty does remain and caution will continue to be exercised. However, Enteq has a solid customer base, a proven technology platform and a strong balance sheet, all of which will enable Enteq to take maximum advantage of future growth opportunities. "
Pretty good AGM statement just out, with trading in line. Note that the $15m cash pile is almost untouched:
"The increase in the number of oil and gas rigs drilling on land in the USA to a current level of around 950 (approximately 500 in September 2016, but approximately 2,000 in the Autumn of 2014) has created some stability amongst the US based directional drilling companies, who are Enteq's primary customers. Some spare capacity of older Measurement While Drilling (MWD) kits remain in the market however upgrade programmes replacing older equipment are in progress.
Outside of the USA market cash flow for the funding of new drilling programmes, and hence the demand for equipment, remains slow. However, new opportunities exist and the previously announced Saudi Arabian contract remains on plan regarding equipment commissioning and contractual payments.
The Enteq Board is confident that the company is maintaining or increasing market share for Measurement While Drilling equipment.
The Company continues to invest in new product development while exercising tight controls over costs and, as a result, cash balances remains strong as at 18 September 2017 being US$ 15.0 million (US$ 15.2 million as at 30 September 2016).
The Enteq Board continues to believe in the potential for a strong long-term future, and expect the Company's current full year trading to be in line with its expectations.
The Company plans to release its interim results for the six months ending 30 September 2017 on 15 November 2017."
Steady as she goes results. NTQ is ready for an upturn. The downside is protected by the very well looked-after cash pile, whilst there's serious upside if and when the sector continues to solidify and cap ex starts to improve.
There's around 20p per share of cash and 30p per share of net assets, compared to the current 23.5p share price.
A brief summary from Malcolm Graham-Wood yesterday:
"An old friend, Enteq Upstream has results today and due to cost cutting and generally careful progress the losses are reduced. The company say that they have retained a sustainable business in difficult market conditions and have looked after the cash, they still have $15.3m for sunnier days. Another one to keep an eye on."
- cash actually increasing to around £12.5m, against the £13.7m m/cap
- in-line revenues and EBITDA
- the overall climate improving slowly
- expansion in Saudi Arabia and new patent applications increasing NTQ's IP value
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