Plexus Holdings (POS ), an oil and gas engineering services company, announced a £5m contract award for its proprietary POS-GRIP wellhead equipment and sealing technology. Plexus shares soared 58% on the news.
The equipment will be deployed over the next 12 months, with the order currently valued at over £5m. Approximately £2.5m of milestone payments will also be received and accounted for as deferred revenue in the current financial year. Plexus said the full value of the contract will be recognised in the year ending 30 June 2024.
Plexus will deploy its equipment on a rental basis. Part of the deployment will be the operation of POS-GRIP components, including leak proof metal-to-metal HG seals, in a subsea environment. This will demonstrate "key elements" of a full Python subsea wellhead, Plexus explained.
Ben van Bilderbeek, Plexus CEO, added: "I believe that a combination of our developing remedial and decommissioning capabilities, our Python® subsea wellhead products, and the rental and sale of Plexus exploration and production wellhead systems, places Plexus in a good position to capitalise on a growing range of opportunities..."
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This is a major win for Plexus and its proprietary POS-GRIP wellhead technology. The £5m contact puts the small company on the map, validates its R&D and ability to deploy a bespoke solution, and significantly raises future revenue visibility and cash flow projections. Markets reacted strongly, sending POS shares up 58% today. Shares are now up 135% year-to-date.
Contracts such as this signify a strong return of the oil and gas market. A January 2023 "Research and Markets" report on the global wellhead equipment market projects a CAGR of c. 9.3%, resulting in a doubling of market size by 2030 to c. US$11.8bn.
Plexus has indicated increased enquires for its rental exploration wellhead and mudline hanger technologies offered in partnership with Schlumberger, as well as its remedial/decommissioning and Python subsea wellhead products. POS-GRIP is ESG and NetZero compliant, giving Plexus an additional edge in the market.
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