Oil and gas engineer Hunting’s stock plummeted this morning after it cut its profit forecast thanks to lower oil prices.
Despite reporting a 16 per cent rise in profit during the third quarter, the London-listed energy services firm flagged falling sentiment and lower client activity in the sector.
“Whilst the outlook for the international and offshore subsectors of the industry continues to remain firm, the slower than anticipated improvement within the U.S. onshore has led to a deterioration in our short-term trading expectations,” said Hunting chief executive Jim Johnson.
Hunting now expects its full-year profit for 2024 to come in between $123m (£95m) and $126m (£97m), down from its previous forecast range of $134m (£103m) to $138m (£106m), or an eight per cent fall.
The company’s stock price fell by almost 17 per cent upon market open.
Hunting specifically pointed to break-even trading on its Titan operating arm segment as a factor in its fears over the future, thanks to “ongoing subdued US onshore market and low natural gas pricing”.
“Cost cutting initiatives are being planned to further right-size the Titan business to prevailing market conditions,” it added.
The group also said it had begun a new $300m committed borrowing facility, with a $200m revolving credit facility and a $100m term loan.
Hunting, which earlier this month was described as a “top pick” by Berenberg Research in the energy space, had seen its stock price skyrocket 26 per cent since the start of 2024 until this morning. It is now currently only up four per cent year-to-date.
“Our balance sheet remains strong, coupled with a significantly improved year-end cash projection. We are pleased to have agreed new borrowing facilities in recent days,” added CEO Johnson.
“Management is also continuing to review high quality acquisition candidates, with our focus being on subsea and well completions.”