OIL and gas engineering firm Plexus Holdings has highlighted continued tough conditions in the North Sea as the company announced a sharp fall in first half sales.

Aberdeen-based Plexus had £3.77 million revenues in the six months to 31 December, down 44 per cent from £6.76m in the same period of the preceding year.

The company, which produces wellheads, said the results were impacted by an extended period of low oil prices and ongoing reduced levels of exploration activity, particularly in the North Sea.

Last month it said sales were running materially below expectations.

The Aim-listed company’s experience shows how cuts in spending by oil and gas firms in response to the fall in crude prices since 2014 have impacted on the supply chain.

Yesterday chief executive Ben van Bilderbeek said the partial recovery in the oil price since Opec members agreed late last year to cut production to support the market had encouraged firms to look at exploration projects more closely.

However, he cautioned that more efficient shale production in the US and the threat of some countries not sticking to production targets continues to cast a shadow over exploration activity levels.

Plexus said: “In view of the ongoing reduction in exploration drilling activity and resultant financial performance, it is prudent to continue the suspension of the payment of dividends.”

The company cut pre tax losses to £2.5m in the first half from £3.5m.

Plexus cut workforce numbers by around 50 per cent between September 2015 and March last year.