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Plexus Holdings PLC Conditional Placing to raise £6 million

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Oilfield Technology,



Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the POS-GRIP® friction-grip method of wellhead engineering, has announced that it has agreed the terms of a conditional placing to raise £6 million, before expenses, by way of a placing of 9230 770 new Ordinary Shares at a price of 65 pence per Ordinary Share to new and existing investors.

The Placing is intended to strengthen Plexus’ balance sheet during the current down cycle and to provide Plexus with the flexibility to support the capital requirements of its long term strategy of becoming a leading international oil and gas services company, supplying a new and superior standard of wellhead equipment and associated products for exploration, production and subsea applications.

The proceeds of the Placing will be applied across a number of the company’s areas of activity to ensure that Plexus is well placed to take advantage when sector activity resumes. In particular, the Board believes that the net proceeds of the Placing will enable Plexus to:

  • pursue existing global opportunities (beyond the Company’s on-going North Sea operations) and to continue to support Plexus’ activities in new regions – Asia, Russia and North/South America;
  • progress the Python Subsea Wellhead development programme towards a target trial in 2016;
  • support on-going development of POS-GRIP product suite (including production and subsea applications);
  • strengthen Plexus’ working capital position during the down cycle; and
  • channel targeted R&D spend towards complementary products (such as WellTreeTM, Xmas Trees) and the decommissioning market.
  • The Placing is conditional upon Shareholders’ approval being obtained for the granting of the authorities required to allot shares for cash on a non pre-emptive basis. In addition to the authorities required to conclude the Placing, the Company is seeking authority from Shareholders to issue and allot new Ordinary Shares over and above the Placing Shares, representing 10% of the Enlarged Ordinary Share Capital following the Placing, which is consistent with the 10% authority which was approved at the last Annual General Meeting of the company.

    Accordingly, the company is convening a General Meeting, to be held at 2.00 p.m. on 28 June 2016 at the offices of Fox Williams LLP, 10 Finsbury Square, London EC2A 1AF, at which the Resolutions will be proposed. Further information on, inter alia, the Placing, the Resolutions and why the Board considers the Placing to be in the best interests of the company is contained in the circular (Circular) which will be posted to Shareholders today.

    Subject to the passing of the Resolutions at the General Meeting, application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will occur at 8:00 a.m. on 29 June 2016.

    Plexus' Chief Executive Ben van Bilderbeek said:

    “We view the successful raising of £6 million as testament to Plexus’ standing as the provider of superior POS-GRIP jack-up rental wellhead equipment to the international oil and gas industry, and I would like to thank those existing and new shareholders who have supported this initiative and who recognise the company’s significant growth prospects, particularly as we begin to focus on moving into the significantly larger land and platform and subsea markets.

    “This strategy involves replicating, globally, the success we have traditionally enjoyed in the North Sea, where Plexus is the go-to provider of wellheads, particularly for the most challenging HP/HT wells such as the Total Solaris well which is being drilled currently and which we believe to be the highest pressure well ever drilled in the North Sea. Such capabilities and expertise are centred on our firm view that one of the key requirements for wellhead equipment and wellhead seals is the need to ensure that they are not a weak link in the well architecture chain and that it is therefore critical that qualification standards for casing hangers and annular seals are aligned with those for casing and tubing couplings. Importantly Plexus is uniquely able to deliver such a higher standard unlike conventional technology. The importance of such a goal was recognised some time ago by a major international oil company who provided a newly drafted Casing Hanger qualification test procedure guidelines for Surface and Subsea Wellhead and Christmas Tree Equipment, which we chose to adopt as the new standard for the Python® prototype subsea wellhead system.

    “At its core, Plexus is an IP driven oil and gas engineering services company. The funds raised today will ensure that we will be able to continue to invest in our proprietary technology and products during the current oil and gas down cycle, and at the same time support our new partners in overseas markets such as Russia. The near doubling in the price of oil from its January lows to circa US$50/bbl demonstrates how supply and demand equilibrium can swiftly move towards a point where a balance between exploration and production and consumption can prevail. With this in mind, we were encouraged to hear the new Saudi energy minister Khalid Al Falih say earlier this month that oil prices could hit US$60 by year end and that prices could rise further in 2017 as supply and demand converge. Needless to say, we are keen to be in a position to hit the ground running once activity in the sector picks up; the funds raised today will help ensure that we will be there to play our role in servicing the needs of the industry with our superior method of engineering and where our jack-up rental wellhead inventory is ready to be deployed.

    “Looking beyond the current cycle, we see demand for oil and gas underpinned by a structural shift in the world’s fuel mix: a move away from dirtier fossil fuels, particularly coal, to cleaner hydrocarbons such as natural gas. If this is to happen new wells will need to be drilled and with our equipment and HG® metal to metal seals being ideally suited to the high pressures and high temperatures associated with gas wells, Plexus stands to play a major part in this transition. Despite the challenging trading conditions, we believe that the prospects for Plexus are excellent: proven technology and equipment that has been used in over 400 wells worldwide; partners secured in new larger markets; a growing family of Plexus products based on our patent protected technology; a product offering that is ideally suited to the shifting energy mix towards gas; and a strong debt free balance sheet. I look forward to providing further updates on our progress as we focus on generating value for all our shareholders, both new and old.”


    Adapted from a press release by Louise Mulhall

    Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/14062016/plexus-holdings-plc-conditional-placing-to-raise-6-million/


     

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