OIL and gas engineering specialist Plexus Holdings has posted a big increase in losses after the fallout from the coronavirus crisis took a toll on sales in key markets such as the UK North Sea.
However, chief executive Ben van Bilderbeek said the Aberdeen-based company was well-placed to benefit from the return to growth that he reckons the industry will “undoubtedly” see in 2021.
READ MORE: North Sea firm bucks gloomy trend with plan to increase exploration activity
The prediction appears to reflect confidence that the slump in demand triggered by the coronavirus will prove to be short-lived and that the fundamentals of the market remain strong.
“The world will continue to need hydrocarbons as an energy and materials source, and in particular gas, for many years to come, and indeed currently global demand for hydrocarbons is forecast to continue to grow,” said Plexus in its annual results statement.
The company released the results for the year to June 30 amid a rally in oil and gas prices that has been driven by growing hopes that effective coronavirus vaccines will be made widely available soon.
However, with Brent crude selling for around $48 per barrel yesterday, oil prices are still around a third lower than they were in January.
Plexus’ results underline the scale of the downturn seen in areas such as the North Sea this year. Cuts in spending by firms that operate fields have impacted on Plexus, which supplies wellheads.
READ MORE: EnQuest to cut more than 500 North Sea jobs
The company lost £6.6 million, against £3.3m last time.
Turnover fell to around £0.5m from £3.6m. Mr van Bilderbeek said: ”A number of sales prospects were placed on hold.” UK revenues fell to £13,000 from £1.5m.
Plexus has made progress since the year end. It won a North Sea contract from Spirit Energy in July and agreed a licensing deal with a subsidiary of US oil services giant Schlumberger last month.
Mr van Bilderbeek noted that it had been able to cut costs in the latest year without laying off staff. It employed an average of 37 people.
Plexus sold a business that supplies equipment used on exploration wells to TechnipFMC in 2018 for an initial £15m. It is now focusing on winning business from firms operating in markets such as oil and gas production.
Plexus Holdings shares closed down 3p at 20.5p.
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