Plexus Feels Impact of Rig Shortage

Plexus Holdings, the owner of the proprietary POS-GRIP TM method of wellhead engineering has noted recent reports of a significant tightening of exploration and appraisal well rig availability in the North Sea. This development has begun to result in delays in the commencement of certain rental projects. Although Plexus is increasingly focused on servicing the more specialised High Pressure/High Temperature (HP/HT) applications, this development is of particular relevance to Plexus at the current time as the introduction of its wellhead technology to the rental market place over the last few years has mostly been through working with third party turnkey well management companies operating on behalf of smaller exploration and production companies. It is these companies that are most affected by the resulting significant increases in rig rental day rates which together with the deployment of rigs around the world that might have been available to the North Sea has limited their ability to secure rigs. Although this development will impact Plexus in the current financial year, as more rigs become available for exploration drilling Plexus is confident that it should benefit accordingly.

Despite the impact of industry wide rig shortages, Plexus' rental business in the more specialised High Pressure/High Temperature (HP/HT) areas with the larger international oil companies is continuing to grow with recent tender wins generating work for BP Egypt and ConocoPhilips. Most significantly the level of interest in Plexus' "HG" metal to metal seal production wellheads also continues to gain momentum, and the directors expect Plexus to be awarded a contract imminently for the supply of wellhead equipment for 2 new production wells for a major operator in the North Sea.

Plexus is further encouraged by the continuing and increasing level of exploration and production activity that is taking place around the world in ever more technically challenging unconventional fields. The Directors are confident that this trend and in particular the growing need for HP/HT applications supports the Company's strategy of becoming over time a new wellhead standard, particularly as recent reports confirm that unconventional oil and gas fields will become increasingly important in the drive to meet future global energy needs.

Plexus' CEO, Ben van Bilderbeek, commented:

"Our strategy of convincing the oil and gas industry over time of the technical, performance, and safety benefits of wellheads utilizing POS-GRIP TM technology remains firmly on track, and we now have our second and third "HG" wellhead projects in the North Sea underway. "HG" is our high performance metal seal technology which is activated using POS-GRIP TM. It is particularly reassuring to note that these latest wins are production wellheads of a lower pressure (6,500 psi) variety, confirming our belief that the market for POS-GRIP technology will indeed span the pressure spectrum. In addition the recent tender win for HP/HT (15,000 psi) exploration wellheads with BP Egypt further broadens our market reach and profile which we are seeking to build on through various marketing initiatives currently underway in the Far East; Middle East; and North America (Gulf of Mexico)."


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