TIDMNTQ
RNS Number : 8897V
Enteq Technologies PLC
12 April 2023
Enteq Technologies plc
("Enteq" or the "Company")
Sale of XXT and Year-end Trading Update
Enteq Technologies plc (AIM: NTQ.L) the energy services
technology and equipment supplier, is pleased to announce the sale
of the XXT MWD (measurement while drilling) intellectual property
and the associated assets ("XXT"). In addition, the Company
provides a trading update for the financial year ended 31 March
2023.
Sale of XXT
The sale is a result of a strategic focus to improve the
Company's medium term cash position to underpin investment in
product line development, primarily the deployment of SABER, the
rotary steerable drilling solution.
The XXT intellectual property (previously amortised over time to
a book value of nil) and associated product lines and trademark,
together with selected technology agreements, customer account
receivable balances, and inventory have been sold for a cash
consideration of c.$1.89m; further selected customer account
receivables and inventory have also been sold for up to c.$1.27m to
be paid in cash over a 12 month period, all sold to Rime Downhole
Technologies LLC (the "Assets" and the "Disposal").
In the year ended 31 March 2022 the Assets achieved revenue of
c.$1.35m, a loss before tax of c.$2.24m (after allocation of
central costs) and were held at a total carrying value of c.$2.97m
at 30 September 2022.
Following the Disposal, the Company will focus on the SABER
product in addition to developing related technologies to further
support SABER's introduction to customers. The Disposal reflects
Enteq's focus on differentiated specialist MWD technologies, and
the rotary steerable sector (SABER) where there is a larger
addressable market. The Company will retain operations at premises
in Houston, USA, and Andoversford, UK.
Trading Update
Trading reflects the focus on improving the cash position
coupled with continuing investment in the SABER product line. A
disciplined approach has been taken to move away from sales of
lower margin products and a loss-making business to manage working
capital more efficiently, resulting in decreased revenues and
increasing available liquidity for the investment program. Revenue
for the year ended 31 March 2023 will be in the region of $6.1m
($4.2m in the first half and approximately $1.9m in the second half
of the financial year) . The adjusted EBITDA(1) loss for the year
is expected to be $0.8m (profit of $0.1m in the first half of the
year and loss of $0.9m for the second half of the financial year)
.
The cash balance as of 31 March 2023 (prior to receipt of the
XXT sale proceeds of up to c.$3.2m) was $5.3m ($1.8m as of 30
September 2022 and $4.8m as of 31 March 2022). This increase in
cash during the second half of the financial year reflects an
intense effort on improving the cash position throughout the year
whilst continuing investment in SABER. The completion of the
disposal in March 2023 of the freehold premises in Houston, Texas
realised $2.3m, after selling expenses.
SABER
The on-going investment in the SABER product line included the
live drilling testing for SABER in a hard rock environment at a
test-site in Norway earlier this calendar year, with final
modifications now being implemented. As previously announced, the
encouraging performance in Norway has given the green light to
proceed to additional directional drilling testing which is
scheduled in North America for summer 2023, with subsequent
customer field trials.
Andrew Law, CEO of Enteq Technologies plc, commented:
"The Company's strategic direction remains focused on
commercialising SABER, supported by complementary technologies,
which are being developed in-house and with partner-agreements. The
XXT sale provides additional security to the cash position to
underpin SABER development and expansion."
The Company expects to announce its results for the year ended
31 March 2023 on 20 June 2023.
(1) Adjusted EBITDA is reported profit before tax adjusted for
interest, depreciation, amortisation, foreign exchange movements,
performance share plan charges and exceptional items.
For further information, please contact:
Enteq Technologies plc +44 (0)20 8087 2202
www.enteq.com
Andrew Law, Chief Executive Officer
David Steel, Chief Financial Officer
finnCap Ltd (NOMAD and Broker) +44 (0)20 7220 0500
Ed Frisby, Fergus Sullivan (Corporate Finance)
Andrew Burdis, Barney Hayward (ECM)
About SABER
SABER (Steer-At-Bit Enteq Rotary Tool) is an evolution of
traditional rotary steerable systems (RSS). SABER directional
drilling technology is based on intellectual property licenced from
Shell and subsequent Enteq developments. SABER will widen Enteq's
addressable market, accessing the large rotary steerable drilling
market, where the SABER tool can offer a differentiated and
cost-effective alternative to the traditional technology. SABER
utilises internal hydraulic pressure differentials to create side
force at the drill bit for geo-steering, rather than pushing
against the borehole wall (pads and pistons) to change direction.
The advantage of internalising the steering mechanism is expected
increased reliability and reduced downtime. The Company is bringing
SABER to commercialisation. For additional information please visit
www.enteq.com/products/rotary-steerable-system-srss/
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
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END
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