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Commentary: Oil price, Zephyr, Hunting


WTI (Aug) $82.33 -83c, Brent (Sep) $85.75 -79c, Diff -$3.42 +4c
USNG (Aug) $2.37 +5c, UKNG (Aug) 74.5p -3.0p, TTF (Aug) €32.08 -€1.32

Oil price

Oil drifted yesterday, hurricane Beryl hit the Port of Houston and weakened but some offshore production was shut in and a great deal of the refining capacity has been temporarily lost which means that demand for crude in the area will be down for a little while and may affect the inventory stats down the line.

The US retail gasoline prices were very little changed although there were no prices from the Houston area in the stats. Up one cent w/w 6c m/m and down 5.7c y/y doesn’t change the meter but with the US in what looks like a very hot summer the aircon will be on…

Zephyr Energy

Zephyr has announced the commencement of the well production test on the State 36-2R LNW-CC well at the Company’s flagship project in the Paradox Basin, Utah.  

The well is currently flowing both natural gas and condensate, and the Company is encouraged by initial results.

Over the next two weeks, the well will be flowed and production tested to more rigorously determine the reservoir pressure, fluid composition, well flow rate and bulk reservoir permeability, and to deliver an early estimate of the overall potential recoverable resources.

Zephyr intends to announce initial results and analysis as soon as possible at the end of this two-week period, assuming no unexpected delays to the production test programme.

Colin Harrington, Zephyr’s Chief Executive, said:
“Zephyr’s operations team has worked extremely hard to deliver this well, and I am delighted that we are already flowing both natural gas and condensate.  While the preparation for flow testing was extended due to the impact of the heavy weight drilling fluids in the wellbore, coupled with the need for careful operating procedures in a high-pressure environment, I believe the efforts have resulted in a well that has now fully cleaned up and appears to be in a very good state for flow testing.

“We look forward to observing the hydrocarbon volumes produced, the gas/oil ratios and the reservoir pressures during this test, after which we will announce our findings.  We’ve appreciated the support of our shareholders during the run-up to this exciting event for the Company.”

This is a very solid announcement from Zephyr but just to put things straight, the company, who are amongst the most open about keeping shareholders in touch, had said that they would tell shareholders when the production test was starting and that is simply what this is about. 

For me it is actually pretty good news in its own right even though it is only the start of testing. For starters the fact that they are seeing both gas and condensate straight away is encouraging as typically one would expect to see gas first and then oil/condensate later as the flow back progresses.

And shareholders should not panic, in my view this announcement was never meant to be anything technical today, it really is only the start of the process and CEO Colin Harrington and the whole team are feeling in a good spot right now. Nevertheless the next two weeks should be exciting and shareholders have every right to dream the dream, watch this space…


Hunting has today issued a trading update, ahead of its Half Year Results to be released on Thursday 29 August 2024. 


  • Sales order book at 30 June 2024 was c.$700m compared to $565m at 31 December 2023, supported by orders totalling $231m from Kuwait Oil Company (“KOC”).
  • H1 2024 trading has been ahead of management’s expectations driven by the strong performance in the Group’s OCTG, Subsea and Advanced Manufacturing product groups.
  • Perforating Systems reported headwinds in the period, leading to the implementation of a cost reduction programme that is projected to save c.$6m-$7m annually.
  • Good progress with Energy Transition strategy, with geothermal orders being secured in Asia Pacific, Europe and North America.
  • EBITDA for the first half of 2024 is likely to be in the range of $59m-$61m – ahead of management’s expectations and c.22% ahead of H1 2023 and c.13% ahead of H2 2023.
  • EBITDA margin of c.12% (H1 2023 – 10%; H2 2023 – 12%) delivered in the period and remains on track to achieve 12-13% for the full year.
  • Balance sheet remains robust with total cash and bank / (borrowings) expected to be $(11)m-$(9)m at 30 June 2024, with a cash inflow of c.$23m in Q2, as cash generation increases.


  • Outlook for the full year 2024 and 2025 is positive given the KOC orders secured, which will be recognised beginning in Q4 2024 through H1 2025.
  • Group performance for H2 2024 is projected to be ahead of H1 based on performance and cost reduction measures, therefore management is increasing EBITDA guidance for the 2024 full-year to c.$134m-$138m.
  • Management anticipates EBITDA to Free Cash Flow conversion to be c.50% for the full year and are targeting total cash and bank / (borrowings) at 31 December 2024 of between $30m-$40m.
  • Based on the quantum of the sales order book, which extends into 2026, management anticipates EBITDA to be in the range of $160m-$175m for the year ended 31 December 2025.
  • Capital expenditure for the full year 2024 is anticipated to be c.$40m-$45m.

Jim Johnson, Chief Executive of Hunting, commented:
“At c.$700m, our sales order book nears the highest in the Company’s history, which supports strong revenue and earnings visibility well into 2025. We are delighted to have secured the significant orders from KOC. This achievement is the result of over six years of collaboration with KOC, supported by Hunting’s industry leading premium connection technology, our strategic supply chains and our commitment to our clients to deliver value. 

“Our business success has supported strong delivery of the Hunting 2030 Strategy. Management remains confident of delivering our EBITDA to Free Cash Flow target of 50% based on our expected financial performance for the remainder of the year.”

Hunting has again rubber stamped its position as leading oilfield services company with this excellent report today, pretty much wherever you look it shows solid progress and profitable growth. Trading is ‘ahead’ of management expectations and bear in mind that this is on the back of a number of upgrades to guidance going back some two years and since when the shares have tripled.

Despite positive flagging, areas such as OCTG, Subsea and the Advanced Manufacturing Product groups have all contributed to another significant rise in the order book and which now stands at c.$700m against $565m in December ’23 and includes orders of some $231m from the KOC.

The only fly in the ointment I can see is that perforating systems has reported ‘headwinds’ in the period but that area has seen cost reductions of some $6-7m already. Back on the positive front is the Energy Transition strategy where geothermal orders have been received in Asia Pacific, European and North American markets. 

To the nitty gritty, EDITDA has beaten management expectations in the first half at c.$59-61m which itself would be up 22% on H1 ’23 and c.13% up on H2 ’23. Inevitably this has meant that second half guidance has been raised and for FY ’24 the board advise $134-138m and of course up for FY ’25 as well now guided to $160-175m.

And just in case there is any doubt about margins, they remain at 12%, in line with the 12-13% target and for those critics the new business is holding steady. All this means that the balance sheet remains ‘robust’ with cash generation increasing. 

So I can add very little to what is indeed another fine performance from Hunting whose management has delivered as promised and continues to do so. The shares remain on an undemanding multiple and from what I can see the future looks good, after all the order book now extends into 2026. I rest my case, Hunting has raised the bar and is the undoubted leader in the field, a position that ain’t changing anytime soon.

H1 2024 Trading Statement


H1 2024

H2 2023

H1 2023





Sales orderbook












EBITDA margin




Total cash and bank / (borrowings)ii




i.  EBITDA for H1 and H2 2023 has been restated to include the Group’s share of associates’ and joint ventures’ results.
ii. Q1 2024 total cash and bank / (borrowings) $(34)m.

The Group’s sales order book is anticipated to be c.$700m at 30 June 2024, reflecting the material orders received from KOC in the period. The 2023 year-end sales order book was $565m.

The monthly revenue run rate in H1 2024 is expected to be c.$82m, which compares to $79.6m in H1 2023 and $75.2m in H2 2023.

EBITDA in H1 2024 is expected to be in the range of $59m-$61m, including the Group’s share of associates’ and joint ventures’ results. Management anticipates an EBITDA margin of c.12% to be recorded in the period, which compares to 10% in H1 2023 and 12% in H2 2023.

Working capital has increased marginally in the period, however, total cash and bank / (borrowings) is projected to be c.$(11)m-$(9)m at 30 June 2024, as cash collections have improved through the second quarter, with a c.$23m inflow during Q2.

During Q2 2024, the Company has commenced purchasing its ordinary shares at a monthly rate of c.$1.0m for transfer to the Employee Benefit Trust operated by the Group to satisfy future share award vestings.

Outlook for 2024 and 2025

The outlook for the Group remains positive given the strength of international and offshore markets, which are the primary beneficiaries of global industry capital spend, which is driving momentum within Hunting’s OCTG and Subsea product groups, along with further progress within Advanced Manufacturing’s end-markets. Natural gas prices are expected to improve in the second half of the year across North America and into 2025 as LNG capacity is planned in the US which, if achieved, will support the outlook for gas-focused drilling. This should lead to a modest recovery within Hunting’s Perforating Systems product group, with shorter-term trading improvements to be driven by the cost efficiency initiatives noted below.

With the inclusion of the impact of the KOC orders, management now anticipates 2024 full year EBITDA to be in the range of c.$134m-$138m.

In the second half of 2024, management projects that working capital will reduce, driving an EBITDA to Free Cash Flow conversion for 2024 of 50% or greater. Year-end total cash and bank / (borrowings) is now targeted at c.$30m-$40m.

Capital expenditure for the full year 2024 is anticipated to be c.$40m-$45m. The Company continues to have the financial flexibility to undertake M&A where it can secure opportunities, which it believes will enhance its business both operationally and financially.

Based on the anticipated timing of the KOC order fulfilment, whereby the majority of the revenue and EBITDA will be recognised in in 2025, management anticipates full-year 2025 EBITDA to be in the range of c.$160m-$175m.

KeyFacts Energy Industry Directory: Malcy's Blog

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