Plexus Holdings hails ‘milestone’ licensing deal

Plexus chief executive Ben van Bilderbeek. Picture: Contributed
Plexus chief executive Ben van Bilderbeek. Picture: Contributed
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Oil and gas technology group Plexus Holdings has signed a “transformational” deal to roll out its wellhead equipment around the globe.

The licensing agreement will see Chinese oilfield services giant Jereh manufacture, rent and sell the Aberdeen-based firm’s technology across Asia, Brazil, India and the Middle East.

Plexus has developed its Pos-Grip wellhead system with the aim of preventing the types of blow-out behind the 2010 Gulf of Mexico disaster that killed 11 people and triggered the worst oil spill in US history.

The Aim-quoted firm, which has already seen its Pos-Grip systems used or selected for more than 350 oil and gas wells by the likes of BP, Cairn Energy, Repsol and Statoil, said the tie-up with Jereh was a “transformational milestone”.

Chief executive Ben van Bilderbeek, below, said the deal “moves Plexus from a supplier of specialist wellhead equipment for exacting applications, into the mainstream volume market, where the ability to engineer and manufacture to high standards whilst controlling costs by design and practice, are the necessary ingredients for success”. He added: “The timing of this union is most appropriate as Plexus is launching its Python subsea wellhead system at the Aberdeen Offshore Europe Exhibition in September, whilst Jereh is focused on developing its supply chain into Brazil, where the subsea applications from our unique technology have the potential of delivering the greatest dividend.”

Plexus will be entitled to royalty percentages from Jereh through the rental and sale of its Pos-Grip applications made under the licensing agreement, and said the Chinese group was expected to “aggressively” pursue sales opportunities in the production well market.

Analysts at Cenkos said: “At this stage it is hard to quantify the scope of opportunity to Plexus (and Jereh for that matter) but this is nothing short of a quantum leap for the company.”

The agreement will see Jereh, which employs more than 5,000 people and is listed on the Shenzhen stock exchange with a market value of about £4.4 billion, take a 5 per cent stake in Plexus after subscribing for £8 million worth of shares at 180p each.

It also has the right to buy a further 5 per cent interest in the firm and nominate a non-executive director to its board. “Jereh is strongly established in China and Asia and is poised to pursue opportunities for our technology in the Middle East, at a time where this region presents major challenges for Western companies,” said van Bilderbeek.

The tie-up came as fellow Aberdeen firm EnerMech secured a 12-month extension to its five-year cranes and lifting contract with BP Exploration in the Caspian Sea. The original order was valued at about $50m (£32m), and the extended agreement – which includes two further one-year options – will generate an extra $10m a year for EnerMech.