'Revenue miss' warning sends OHM to record low on disappointing sales

Published on Tuesday 2 September 2008 21:27

OFFSHORE Hydrocarbon Mapping (OHM) shares sank to a record low yesterday after the oil services company warned full-year revenue may miss forecasts by more than 20 per cent.

Aberdeen-based OHM said in a statement that revenue for the year to 31 August was likely to be 10.6-11 million, compared to the 14m pencilled in by brokers KBC Peel Hunt.

Executive chairman Dave Pratt said that, while he believed the group's technology was proven and he was optimistic that the industry would eventually use it widely, adoption so far is "frustratingly slow".

But the company said it now expected to report a pre-tax loss of at least 9m, compared to a loss of 1m a year ago, while its cash pile stands at around 8m.

Before several recent profit warnings OHM was expected to report its maiden profit this year.

Yesterday OHM said that slow progress in securing surveys in the first half of the year had continued in the second half.

Revenue was further hit by a delay in the latest exploration licensing round in Norway, but OHM said the expected revenue had been pushed into 2009 rather than lost.

Founded on technology developed at the National Oceanography Centre in Southampton, OHM provides CSEM testing for oil explorers.

This uses electromagnetic pulses, which can differentiate between liquids, potentially showing the difference between oil and water in reservoirs.

In 2007, CGG Veritas, the world's largest provider of seismic testing, took a 15 per cent stake in OHM.

Many analysts believe the technology is a major leap forward from traditional seismic testing, but take-up of the technology has been much slower than expected.

After peaking at 295.5p in August last year, shares have now tumbled almost 90 per cent, falling 5p to 31p yesterday, valuing the Aim-listed company at just 13.4m.