OIL exploration firm Getech reported a strong end to its financial year after signing a number of new contracts worth more than £3m in total.
The Leeds-based company was hit by lower spending across the whole oil and gas exploration sector late last year, but the group said it is now seeing strong demand for its consultancy services.
The firm, which was spun out from the University of Leeds, said it is confident this will continue over the coming year.
In the year to July 31 the group expects to report revenue of £6.6m and pre-tax profits of £1.0m, down from original expectations of pre-tax profits of £2.4m.
Analyst Eric Burns at house broker WH Ireland expects to see “material recovery in the bottom line to a pre-tax profit of £2m this year”.
This is based on a recovery in client demand alongside Phase II of Getech’s Globe mapping programme.
“Although patience will be required for Getech to rebuild its rating, we believe the shares to be an excellent recovery buy and introduce a new 60p price target which would equate to 12 times current year earnings,” he said.
Getech said it has cash reserves of £3.4m which, along with committed income for the next period of Globe and other projects, will provide a strong balance sheet for expanding current operations, developing new business streams and strategic acquisition targets.
The group said it expects to receive significant retrospective tax credits for the previous two financial periods.
Looking forward, chief executive Raymond Wolfson said the company is well placed for growth.
“The tight exploration market during the period since early 2013 made trading for many exploration service companies very difficult.
“While we were similarly affected, we have seen a significant upturn in recent weeks and consider that, under the challenging business environment, we have delivered a strong set of results.”
Getech is also seeing the results of investment in leading edge technology such as the multi-satellite gravity data project.
The first three-year period of Globe was completed last month.