Hunting PLC bags $60m organic oil recovery contracts in North Sea

Hunting PLC, a global precision engineering group listed on the London Stock Exchange (LSE: HTG), has secured significant contracts worth up to $60 million over a five-year period to deliver Organic Oil Recovery (OOR) technology to major North Sea operators. This move marks a substantial step in the company’s strategic plan, underscoring its commitment to leveraging innovative technologies to drive revenue and sustainability in the energy sector.

Expanding Reach with Organic Oil Recovery Technology

Hunting’s OOR technology, a form of enhanced oil recovery (EOR), is designed to optimize reservoir performance, increase recovery rates, and reduce hydrogen sulphide levels in situ. Unlike other EOR methods, OOR technology requires no additional capital expenditure from operators and offers a lower carbon footprint, aligning with the industry’s shift towards sustainable practices. The technology is particularly beneficial in extending the operational life of existing assets, a critical factor for North Sea operators focused on maximizing returns from mature fields.

Under these new contracts, Hunting will deploy its specialized water flood technology to enhance recoverable reserves, contributing to the longer-term sustainability of oil production in the region. The contracts come at a time when Hunting has also reported robust financial performance, with pretax profit more than doubling to $36.2 million in the first half of 2024, compared to $15.7 million the previous year. This strong performance has enabled the company to raise its interim dividend by 10%, reflecting its confidence in future growth​.

Aligning with the Hunting 2030 Strategy

The new OOR contracts align with Hunting’s 2030 Strategy, which was unveiled at its Capital Markets Day in September 2023. The strategy focuses on expanding into new sectors and product lines while maintaining strong margins and cash flows. It also emphasizes the development of environmentally friendly technologies that support the energy transition, a move that is increasingly important as global energy markets prioritize sustainability​.

The company has also demonstrated its commitment to the energy transition through its involvement in geothermal projects across Asia Pacific, Europe, and North America. The integration of these projects with its OOR contracts in the North Sea highlights Hunting’s diversified approach to growth within the evolving energy landscape.

Financial Stability and Future Outlook

Hunting’s financial outlook for the rest of 2024 and beyond remains positive. The company’s sales order book reached approximately $700 million as of June 2024, one of the highest in its history. This strong order book provides visibility of future revenue streams and underpins management’s confidence in achieving its financial targets, including an EBITDA of between $134 million and $138 million for the full year 2024, up from $103 million in 2023.

The company has also initiated a cost reduction program to offset headwinds in certain segments, further supporting its profitability and cash flow objectives. With a strategic focus on sustainable technologies and a robust financial position, Hunting PLC is well-positioned to capitalize on new opportunities in the oil and gas sector, both in the North Sea and globally.

Hunting PLC’s recent contracts for Organic Oil Recovery technology in the North Sea mark a significant milestone in the company’s growth strategy. By combining technological innovation with a commitment to sustainability, Hunting is reinforcing its position as a leader in the energy sector, poised to drive future growth and profitability in an increasingly competitive market.