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Upstream Oil & Gas services company Hunting is leader of the this morning, its shares up a handsome 10.8% to trade their best since late June. This comes courtesy of a solid set of H1 financials, the company having benefited from strength in its key Titan/US businesses, especially from shale drilling and higher oil prices, allowing management to offer a positive/stable outlook and reinstate a dividend – a welcome vote of confidence in the oil market’s revival.
H1 revenues +39% was eclipsed by both a five-fold rise in underlying EBITDA and a return to pre-tax profitability. Even management’s cautious highlighting of “potential headwinds from steel trading tariffs” is doing nothing to dampen investor bullishness, the shares having broken above July/Aug resistance to test late-June highs of 840p and bulls now eyeing May’s near 6yr ceiling around 930p, which would offer another ~10% upside.
Note peer Petrofac also benefiting (shares +0.6%, albeit off its best levels) from the positive read-across, reversing from a negative sector close yesterday due to a jump in GBP (Brexit deal hope comments from Barnier) depressing the perceived value of largely USD-denominated revenues, profits and of course dividends. Wood Group -1.4% may look to be bucking the trend, but this is almost entirely attributable to it trading ex-dividend, implying it is still holding roughly net flat on what is a clear down day for UK equities, the GBP jump holding its ground.
Mike van Dulken, Head of Research, 30 Aug 2018
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Prepared by Michael van Dulken, Head of ResearchComments are closed.