Shares in Aberdeen firm Offshore Hydrocarbon Mapping (OHM) shed more than one-third of their value yesterday after it said it might need more money to ease a cashflow squeeze.
OHM, which specialises in controlled-source electromagnetic (CSEM) imaging surveys to find oil and gas, said increased costs were likely to put its working capital position under pressure later this summer. It added it was considering several options to help with short-term working capital alongside a stable long-term source of investment funds.
The trading update sent its shares plummeting by about 35% to 8.25p.
OHM, which has its headquarters at Bridge of Don, said it was encouraged by continuing evidence of an improving market for CSEM and support for the company from its clients. Its OHM Leader vessel has been working on projects in the Asia-Pacific region recently and a new contract, worth more than £1.3million, is expected to follow on from this work.
OHM also said progress on some projects had been hampered by scheduling delays resulting from naval exercises and seismic vessel operations. This led to an increase in costs and the need for more cash, according to the firm.
OHM forecast losses before interest, taxes, depreciation and amortisation, of £2.8-£3.3million for the six months to August 31, on expected revenue of £6.6-£7.1million.
Last year, losses for the same period, its second half, came in at £1.8million on £3million revenue.
OHM said it expected to have about £600,000-£800,000 in cash available at the end of August, but feared the figure could drop below this later this year because of working-capital requirements. It added: “We expect to delay some of our planned capital expenditure programmes as a result.”
In April, OHM said revenue had been hit severely by delayed projects in the six months to February 28 but a growing order backlog would drive a second-half improvement.
It reported first half pre-tax losses of £6.18million – including a £2.1million one-off non-cash charge from the conversion of vessel charter commitments into shares – compared with a £5.63million deficit a year earlier.
Revenue in the latest period came in at £3.25million, against £6.22million previously. OHM raised £2.5million via a share placing in the first half, with a further conditional £3.36million added after the period end.
It has been working on reducing costs and said in February last year it would reduce its workforce by 40 to 66. It emerged two months later that bosses had taken substantial pay cuts.
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