Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil equipment & services
26 April 2016
Plexus Holdings PLC ('Plexus' or 'the Company')
Completion of a Subscription Agreement to Raise US$5 Million
& Accelerate Entry into the Major Russian Oil & Gas Production Wellhead Equipment Market
Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP® friction-grip method of wellhead engineering, is pleased to announce that it has raised US$5 million through the issue of 6,764,893 new ordinary shares in the Company ('Subscription Shares') at a price of 52.05 pence per share ("Subscription Price") pursuant to a share subscription agreement (the 'Subscription Agreement') with the Russian oil and gas equipment manufacturer, LLC Gusar (OOO Gusar) ('Gusar').
The Subscription Agreement follows the Company's announcement in January 2016 regarding a licence agreement with Gusar and CJSC Konar (ZAO Konar) ('Konar') for the manufacture and supply of Plexus' jack-up exploration wellhead equipment in the Russian Federation and other CIS states (the 'Territories'). At the same time as the Subscription, Plexus, Gusar and Konar have also entered into a Commercial Agreement ("the Commercial Agreement") under which Plexus will work with Gusar and Konar to finalise an additional licence agreement to enter the Territories' larger and more active surface land and platform production wellhead equipment markets.
· The Board expects that entry into the Subscription Agreement will enable Plexus to fast track its entry into the Territories' large and important oil and gas production sector, (which was contemplated in the January 2016 jack-up exploration licence) and further diversifies the Company's revenues away from its traditional North Sea jack-up exploration market
· The development and manufacture of POS-GRIP production wellhead equipment in Russia by Gusar and Konar is expected to also widen the product range that Plexus can then supply into other territories around the world
· Activity in the Russian land and platform production sector remains buoyant as major operators in the region focus on drilling production wells to maintain / increase output
· The proceeds of the Subscription Agreement will be used to support tailored research and product development and the Company's sales and marketing efforts in Russia and other territories worldwide as well as for general working capital requirements
· The Subscription strengthens the relationship between Gusar and Plexus, and is in line with Plexus' strategy to expand its POS-GRIP wellhead equipment into major global markets by partnering with established local manufacturers and oil service providers who have existing relationships with key local operators, and in particular national oil and gas companies
· Under the terms of the Commercial Agreement, Gusar is entitled to appoint a non-executive director to the Board of Plexus for so long as it remains interested in no less than 6,764,893 new ordinary shares in the Company
Plexus' CEO Ben Van Bilderbeek said, "We are pleased to have secured additional funding for Plexus at a time when trading conditions are clearly challenging, and welcome Gusar as a new shareholder. We are also delighted to further strengthen our licensing and commercial relationship with Gusar and Konar as we advance our strategy to expand Plexus' geographic reach beyond the North Sea, and look forward to developing with our Russian partners a range of superior and locally manufactured wellhead equipment for a variety of field applications.
"Russia has for some time been a key potential market for Plexus. I am confident that our unique technology, which removes the weak casing and tubing hanger link from the well chain, will over the coming years play an important role in improving the integrity of drilling and production systems in this important market, particularly in potentially sensitive environmental areas where drilling activities are likely to take place in the future. The US Energy Information Administration ('EIA') in 2014 ranked Russia the third largest producer of petroleum and other liquids and estimated it holds almost a quarter of the world's proven natural gas reserves. With gas forming the vast majority of the Russian energy sector and our best in class wellhead equipment being ideally suited for the most challenging gas service conditions, this dynamic market offers considerable commercial opportunities for Plexus, Gusar and Konar.
"Clearly the ultimate objective of our expanding partnership is to enable our Russian partners to eventually be able to locally supply and service a superior class of wellhead which currently is imported. Our focus on Russia and the CIS is timely as we are already in discussions with major Russian operators about a number of relevant supply opportunities, and this expansion of our relationship with Gusar and Konar is particularly exciting as it has been recently reported that the oil and gas sector in Russia is benefiting from increasing levels of capital investment and activity. With this in mind, I look forward to updating shareholders accordingly."
Further Information
The Subscription Price represents a 10% discount to the 5 day average share price prior to the day before the signing of the Subscription Agreement. The Company has now received the funds pursuant to the Subscription Agreement and application has been made for the admission of the Subscription Shares to trading on AIM ("Admission"), which is expected to occur at 8.00am on 29 April 2016.
Following Admission:
· Plexus will have 96,155,469 Ordinary Shares in issue and each share has the right to one vote. Therefore, for the purposes of the Financial Conduct Authority ('FCA') Disclosure and Transparency Rules, the total number of voting rights in the Company is 96,155,469. The above figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify the Company of their interests in, or change to their interests in, the Company under the FCA's Disclosure and Transparency Rules; and
· Gusar will be interested in a total of 6,764,893 ordinary shares in the Company, representing approximately 7.0% of the issued share capital of the Company.
**ENDS**
For further information please visit www.posgrip.com or contact:
Ben van Bilderbeek |
Plexus Holdings PLC |
Tel: 020 7795 6890 |
Graham Stevens |
Plexus Holdings PLC |
Tel: 020 7795 6890 |
Nick Tulloch |
Cenkos Securities PLC |
Tel: 0131 220 9772 |
Derrick Lee |
Cenkos Securities PLC |
Tel: 0131 220 9100 |
Frank Buhagiar |
St Brides Partners Ltd |
Tel: 020 7236 1177 |
Isabel de Salis |
St Brides Partners Ltd |
Tel: 020 7236 1177 |
NOTES:
Plexus Holdings PLC
Plexus Holdings PLC, which began trading on AIM in December 2005, is an oil and gas engineering and services business, which supplies wellhead and mudline suspension equipment together with associated equipment and services for exploration and production applications. Based in Aberdeen, with offices in London, Cairo, Kuala Lumpur, Singapore and a presence in Houston, Texas, it has developed and patented a friction-grip method of engineering for oil and gas field wellheads and connectors, POS-GRIP®, which involves deforming one tubular member against another to effect gripping and sealing.
The Company plans to accelerate the roll out of POS-GRIP wellhead equipment as a superior alternative to current technology and for it to become the future industry standard for wellhead design. In particular, the technology has advantages in High Pressure/High Temperature (HP/HT) and Extreme HP/HT (X-HP/HT) oil and gas environments, for which there is growing global demand and where Plexus is being increasingly recognised as the supplier of choice.
To date, POS-GRIP wellhead systems have been used or selected to be used in over 350 oil and gas wells by international companies including ADTI, AGR, Apache Energy Australia, BHP Billiton, BG International, BP, Brunei Shell Petroleum, Cairn Energy, Centrica, ConocoPhillips, Dana Petroleum, Dubai Petroleum, ENI, GDF SUEZ, Global Santa Fe, Maersk, Niko Resources, Petro-Canada Trinidad & Tobago, Premier Oil Norge, Red Sea Petroleum Operating Company, Repsol, RWE, Senergy Limited, Shell China, Shell Egypt, Statoil, Silverstone Energy, Talisman Energy, Total, Tullow Oil, and Wintershall.
Importantly, the Company is focussed on extending its proprietary POS-GRIP technology into an increasing number of subsea applications. In line with this, in March 2011 the Company launched a Joint Industry Project ('JIP') initiative to develop a new subsea wellhead design, the 'Python Subsea Wellhead' utilising its friction-grip technology in collaboration with key oil and gas operators and service companies. BG, Royal Dutch Shell, Wintershall, Maersk, TOTAL, Tullow Oil, ENI, Senergy, ADTI and Oil States Industries Inc. The JIP is nearing completion with final qualification testing of all key features of the product under way, and the resultant Python Subsea Wellhead design will include a combination of key features never before seen in a subsea wellhead which include being rated to 15,000 psi, 4,000,000 pounds of 'instant' casing lockdown capacity, and importantly rigid metal annular seal technology qualified to match the performance of premium connectors. The building of a single string Python Subsea Wellhead system prototype commenced in February, and was launched at the SPE Offshore Europe Exhibition and Conference in Aberdeen ('OE2015') in September 2015.
Plexus is an innovative technology company always looking for opportunities to apply its proprietary POS-GRIP friction grip method of engineering to new products both within and outside the oil and gas industry. For example Plexus have recently completed a JIP in conjunction with Maersk to develop a downhole HPHT Tieback connector which for the first time allows the reconnection of production casing to HPHT exploration and production wells. In addition the Company has developed and qualified a new product called POS-SET Connector™ which is designed to re-establish a connection onto rough conductor casing previously cut above the seabed to facilitate tieback or abandonment operations. The market for permanent plugging and abandonment of wells is increasing in the North Sea and beyond, and could be an important new revenue stream for the Company.
