Hunting reported first-half core profit that more than doubled on Thursday and announced plans to slim down its non-core assets as the British oil and gas services firm aims to expand its presence in the energy transition markets.
Shares fell by 7% in early trading, as its order book came at the lower end of its outlook range of $530-$550 million.
Hunting, which counts Exxon Mobil and Chevron among its clients, said it would transfer its manufacturing and assembly operations of its main well testing site to Dubai from the Netherlands, and close its Oklahoma City operating site, among other measures.
The company, which has been divesting its legacy non-core exploration and production assets this year, said it would continue to increase its position within energy transition markets by offering new technology and critical supply channels to stakeholders in the sector, which is flush with government decarbonisation subsidies.
Hunting's move comes at a time of Inflation Reduction Act in U.S. aiming at net zero, which includes provisions to cut carbon emissions and boost domestic production and manufacturing.
"Global energy markets continue to display growth, stability and resilience, despite the macroeconomic narrative from some Western economies," the company said in a statement.
Major oilfield service providers are projected to witness a lift in profit as resurgent demand in international markets and strong offshore drilling helped counter tepid activity in North America.
Hunting said offshore drilling continues to boost momentum in South America, West Africa, the Middle East and Asia Pacific.
Hunting's core profit for six months ended June 30 rose 106% to $48.7 million, aided by strong sales order books across business units including the key North America segment. It sees a similar performance in the second half.
RBC in a note said "We see these initiatives as part of management's push to increase efficiencies, margins and returns; costs are expected to be $3-5m, with efficiencies coming through from next year."
The transfer of main testing site to Dubai will be closer to customers, the noted added.
(Reuters - Reporting by Chandini Monnappa and Anchal Rana; Editing by Subhranshu Sahu and David Evans)
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