The UK’s Oil & Gas sector
Natural gas and the crude are the fossil fuels which are found in the crude form in the crust of the Earth. These are formed over the years due to the sedimentary rock formation such as sandstone, limestone, and shale created by the compression of the remains of plants and animals.
There are lots of companies in this sector which are into discovery and extraction of the raw materials from the hydrocarbon reservoirs, drilling oil and gas wells and then subsequently selling the raw material to refineries. These companies are often referred to as Exploration & Production (E&P) companies.
E&P companies hire drilling companies to extract the raw material in the form of oil and gas. These drilling sites need maintenance and servicing which is further carried out by the third kind of entity, the Well-servicing companies.
The oil & gas sector has a significant contribution to the economy of the United Kingdom. As per some research sources, around 1.1 per cent of the global oil supply is produced by the United Kingdom.
By the end of 2018, the oil consumption in the United Kingdom was reportedly around 1.62 million barrels per day, and the offshore oil and gas industry provided employment opportunities to 300,000 plus people. The domestic oil and gas supply is important to the power supply in the region. Around 75 per cent of the power utilised in the United Kingdom was supplied by the domestic oil and gas sector.
Enteq Upstream PLC (LON: NTQ)
AIM-listed non-renewable energy resource company, Enteq Upstream Plc supplies high-end, differentiated, robust Measurement While Drilling (MWD) systems and associated parts and components to the global oil & gas Directional Drilling market. The company’s shares were admitted for trading on 18th May 2012 to the main market of the London Stock Exchange. Enteq Upstream plc has a range of high-quality blue-chip investors and trades with a ticker symbol “NTQ” on the London Stock Exchange. Enteq, through its deep engineering expertise and field focused support in most of the countries, enables its customers to offer efficient and reliable services to the oil and gas industry.
The senior management of the company comprises of the former technical team, COO, CEO from Sondex Plc, which was bought by GE as it was a successful oilfield drilling and intervention growth story.
The XXT technology, which is standard across the MWD industry, was acquired by the company in 2012 and successfully incorporated by Enteq MWD. Texas is known for its mechanical & engineering works, sensors & electronics manufacturing; hence Enteq has established an operating facility in South Houston (Texas).
The company aims to improve communication and down hole connection. It provides a lucid interface for the third-party sensors.
The company has design capability and in-house engineering based in Houston, California and the United Kingdom. The company’s products are equipped with increased data handling capacity and electronic, mechanical and software/firmware.
The new inclination sensors were developed by the company and were integrated with applications in Geothermal wells project, which was sponsored by Enteq Upstream PLC. The company had additionally acquired a unique IP, where futuristic applications are developed and envisaged. In addition, the company has filed several new patents.
Its Measurement While Drilling (MWD) system, captures and transmits data during the drilling phase from the bottom of an oil or gas well, which can be analysed to optimise the drilling operations.
The company supplies a fully integrated MWD system, which incorporates Directional sensors, Gamma Rays, Shock and Vibration measurement tools, providing robust electronic control in carrying out down hole processing along with all surface software and components. The equipment is designed to operate in extreme temperatures (175 degree Centigrade) with built to last quality that defines Enteq’s high-quality reputation in the market.
The company is committed to provide high-quality services to its customers and provides the most reliable equipment of the highest quality along with providing great aftermarket support, both commercial and technical. The company looks to take on its competitors in more complex markets by adding further technnological advancements.
The company aims to create and enhance shareholder value making advancements in technology and by increasing the market share by achieving sales volume in the international market and providing superior support across geographies. The company is financially sound and has the potential for further product development and growing organically.
Enteq Upstream PLC was granted a full patent for the PowerHop technology by the UK Patent Office. In a down-hole environment, while drilling is carried out, the PowerHop technology provides a unique solution, which enables wireless data and power connectivity for Measurement and Logging. The company has invested approximately $2.7 million in the development of this system till date. The company is working upon agreements for the commercialisation of the patented technology with customers. This technology will broaden the $9 billion directional drilling market as it has improved connectivity to enable a broader range of sensor technology.
The recent granting and filing of patent applications validate Enteq's committed approach to develop new technologies that offer additional functionality to company’s existing customer base.
Business performance for H1 FY20-NTQ
(Source: Company’s Filings, London Stock Exchange)
The company released its interim results for the six months period ended 30th September 2019 of the fiscal year 2020 on 14th November 2019. The company’s revenue increased from US$4.2 million in the first half of the fiscal year 2019 to US$6.5 million in the first half of the fiscal year 2020. The company’s adjusted EBITDA increased from US$0.6 million in the first half of the fiscal year 2019 to US$1.5 million in the first half of the fiscal year 2020. The company’s post taxation loss increased from US$0.4 million in the first half of the fiscal year 2019 to US$0.5 million in the first half of the fiscal year 2020. The loss per share of the company was around 0.4 cents in the first half of the fiscal year 2020. The cash balances of the company decreased to US$10.7 million in the first half of the fiscal year 2020 in contrast to US$11.8 million in the first half of the fiscal year 2019.
For innovative Directional Drilling technology, the company signed an exclusive agreement with Shell. The company witnessed surge in both North American and International revenues during the reported period.
Share price performance-NTQ
(Source: Thomson Reuters) Daily Chart as on Dec-19-19, before the LSE market close
While writing (as on 19th December 2019, at 10:30 AM GMT), Enteq Upstream PLC’s shares were trading at GBX 27.00 per share; which remained flat in comparison to the previous day closing price level. The total market capitalisation of the group at the time of writing was hovering around £17.75 million.
The shares of the Enteq Upstream PLC have struck a high of GBX 33.00 (as on November 13, 2019) and a low of GBX 18.00 (as on January 02, 2019) in the last twelve months. At the current price point, as quoted in the price chart, the company’s shares were trading 18.18 per cent below the high price point attained in the last twelve months and 50 per cent above the low price point attained in the last twelve months.
At the time of writing, the stock's average daily traded volume for 5 days was 8,707.20; 30 days- 47,819.93 and 90 days – 32,192.57. The company’s stock beta (5Y monthly) stood at 0.85, which implies that the company’s stock is less volatile in comparison to the benchmark index.
The shares of the company were trading below the 30-days and 60-days SMA while writing. The stock’s daily average traded volume for 5 days dipped by 81.79 per cent in contrast to 30 days daily average traded volume.
On a YTD (Year-to-Date) time interval, the shares of Enteq Upstream PLC surged by approximately 40.63 per cent and were up by 1.89 per cent in the last quarter. However, Enteq Upstream PLC’s shares have delivered a negative return of 8.47 per cent in the last one-month period.
RSI (Relative Strength Index) of the Enteq Upstream PLC’s shares for the 30-days, 14-days and 9-days were hovering in the mid-range, were recorded at 39.64, 27.95 and 18.31 respectively. In addition, the RSI for 3-days of the company’s stock stood at 0.57.
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