Hunting PLC: Subsea and Titan shine, but Kuwait's tender delay casts a long shadow

Energy security and AI power demand drive diversified growth, but the Middle East conflict postpones a record order.

HTG.L · Earnings Call · 2026-08-21

Diversification pays off

Hunting PLC’s first-half results were a testament to the strategic pivot “We have delivered a diversified array of results and opportunities that have come into our fold.” — Jim Johnson, CEO · 2026-08-21 The Organic Oil Recovery and subsea business are no longer side bets—they are the engine of growth. Subsea revenue surged 95% year-over-year, with the recent Flexible Engineered Solutions acquisition contributing $50 million alone. The Titan perforating segment staged an impressive turnaround, with revenue up 45% and international sales doubling. CEO Jim Johnson credited the team’s focus on cost, supply chain, and technology. This diversification is reflected in the company’s own keyword trajectory, where growth area and power demand have emerged as top themes for the quarter. Encouragingly, the non-oil and gas revenue stream grew to $38 million, aided by the Dearborn operation, which is now heavily oriented toward aerospace, defense, and power gen. “If you look at recent months, up to 90% of the business has been non-oil and gas,” noted Johnson, highlighting the company’s shift into higher-margin industrial applications. The Gulf of America continues to be a bright spot—the company just booked a $16 million titanium stress joint order from a new client, displacing a competing solution. This momentum aligns with the global narrative of energy security and offshore reinvestment.

The KOC setback

Despite the strong operational performance, the headline disappointment was the cancellation of the highly anticipated Kuwait tender. The company had been in first place for what would have been its largest award ever, “well in excess of $300 million,” but the Middle East conflict forced a re-tender.

We are disappointed on the whole KOC thing, but those are things out of our control.
Jim Johnson, CEO · 2026-08-21

The delay pushes the revenue into 2027, and the company trimmed its full-year EBITDA guidance to $138–141 million. Still, a new tender from KOC for a different field ($120–180 million) has just been issued, and management remains optimistic given their virtual mill concept and technology lead. The order book stands at $386 million, with $260 million expected to convert in the second half. This is a classic case of a company caught in a geopolitical headwind, but not idle—the pipeline of opportunities is robust.

Riding the power demand wave

Hunting is well-positioned to benefit from the structural demand for electricity. The company’s natural gas exposure is central, as gas-fired power plants become the bridge to a data-center-driven grid. Johnson noted that “the AI-driven power demand issue is really playing into the strengths we have in our Titan business, as well as our North American OCTG business.” The Dearborn operation, which has pivoted to power generation components, is seeing “phenomenal” demand from customers like Caterpillar, which is booked out two years on natural gas turbine equipment. This theme is not just domestic—international markets from Argentina to Saudi Arabia are opening up for unconventional drilling, and the company’s advanced manufacturing division is capturing renewed interest in electronics and power applications. The Guyana opportunity, anchored by ExxonMobil, continues to be a multi-product line engine. As the world wakes up to the need for reliable power and the inevitable role of hydrocarbons, Hunting is sitting on a broad, high-margin portfolio that is arguably the strongest in its history.

Outlook

The second half should see improved EBITDA margins toward the 12–13% range, with return on capital expected to exceed 10% by year-end. Free cash flow conversion remains at 50%, and the company is committed to shareholder returns—raising the dividend 13% to $0.07 per share and continuing aggressive buybacks. As CFO Bruce Ferguson said, “We are in a really good pristine position there in terms of future capital allocations or optionality over our M&A.” The stock may be off on the KOC news, but if the retender comes through and the power demand story accelerates, Hunting could be a compelling re-rating candidate. The key is reversion to its pre-2019 growth trajectory—but this time with a more diversified, higher-margin business. Jim Johnson’s parting words: “The shares are on sale today.”