Plexus Holdings PLC, the AIM quoted oil and gas engineering services business, has reached an agreement with an international oil and gas exploration, development and production company, CNR International (U.K) Limited ("CNR") to supply, subject to completion of relevant contract terms, the Company's proprietary POS-GRIP High Pressure/High Temperature ("HP/HT") exploration rental wellhead system for exploration activities in the North Sea. The value of the contract is estimated at UK800,000 pounds sterling, with revenues commencing in the last quarter of 2008.
This agreement marks a new working relationship between the two companies, which Plexus hopes to build further upon in the future.
Plexus CEO Ben van Bilderbeek said, "Our continued success in attracting new customers for our proprietary exploration rental wellhead business, has now added CNR as a new customer. We are gaining market share because POS-GRIP technology has been tested to higher standards, is safer to use, and reduces rig time.
"I believe that our current share price does not accurately reflect the returns we are making from our growing rental business, and it would seem that our earnings multiples ignore the underlying potential for our proprietary technology. Plexus is valued as if it were an established technology firm, which has already matured, although, by our own estimates, we only hold a 7.5% share of a niche application, which itself represents in turn about 5% of the overall market for POS-GRIP technology.
"The growing Jack-up fleet, which independent surveyors predict will add, over the next four years, as many as 52 rigs, equipped with BOP's designed to take advantage of our HP/HT technology, offers substantial scope for expansion.
"We however will have to find a better way to articulate that Plexus remains primarily an emerging technology company, which invests a significant percentage of its revenue to fund additional facilities and personnel in support of new product development and R&D. Our remaining target markets represent approximately 95% of the opportunity for our unique technology, and as we enjoy a healthy business model we are well placed to pursue growth, whilst more operators will have the opportunity to use our systems."
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