Description of Business
The Plexus Group is an established oil and gas engineering, and service business based in Aberdeen, with an office in London and subsidiaries in Singapore, Malaysia and Brunei. Plexus began trading on the London Stock Exchange AIM Market in December 2005. The Plexus Group has developed and patented a friction grip method of engineering for oil and gas field wellheads and connectors, named POS GRIP® which involves deforming one tubular member against another to effect gripping and sealing.
POS-GRIP technology was invented by the Plexus Group's founder and CEO, Ben van Bilderbeek, an accomplished engineer and successful entrepreneur with over 35 years' industry experience, and a track record of developing and commercialising specialised wellhead and drilling equipment.
The Directors believe that by using POS-GRIP technology in wellhead systems a number of significant advantages over existing 'slip and seal' and 'mandrel hanger' wellhead technologies are offered which can include, depending on application:
- Enhanced safety
- Larger metal to metal seal areas
- Virtual elimination of movement between the sealing parts
- Fewer components
- Simplified design and assembly
- Enhanced corrosion resistance
- Simpler to manufacture
- Reduced installation cost
- Lower unit cost
- Increased reliability
As oil and gas exploration and production shifts to more extreme operational environments in response to increasing demand, the Directors recognise that there is a significant marketing opportunity in unconventional fields. They believe that the POS-GRIP wellhead technology is ideally suited to enable some of the more extreme fields to be commercially viable, particularly where high pressure and high temperature ('HP/HT') conditions exist.
Notwithstanding what the Directors perceive as the clear advantages of POS-GRIP technology in niche markets such as jack-up exploration drilling, which can generate high operating margins, the Directors consider that the greatest commercial potential for POS-GRIP technology is in the mainstream production wellhead market. In order to exploit this market, the Company recently introduced a further proprietary POS-GRIP product line known as the HG® wellhead. The current worldwide market for wellheads and x-mas trees is estimated by the Directors to be in excess of US$2 billion per annum.
POS-GRIP wellhead systems have been used around the world in more than 250 oil and gas wells to date by international customers and end users including, Apache, BP, BG, Brunei Shell Petroleum , ConocoPhilips, Petro-Canada, Shell, BHP Billiton, Talisman Energy, Tullow Oil, Global Santa Fe, Gaz de France, Maersk, Statoil and Wintershall, including in Australia, UK and Norweigan North Sea, Egypt, Brunei, Cameroon, Russia, Trinidad, Tunisia and Malaysia.
Plexus is also developing new markets for its proprietary technology. With the encouragement of, and in collaboration with a number of key oil and gas operators and service companies including ENI, Maersk, Royal Dutch Shell, Tullow Oil, Wintershall, Total, Breda, Transocean, ADTI, Oilstates and Senergy, Plexus has launched a Joint Industry Project ('JIP') to develop a best in class POS-GRIP Deepwater 'HGSS®' Subsea Wellhead design. In addition, testing is well advanced on a POS-GRIP HP/HT Tie-Back Connector which has been designed to allow operators to pre-drill HP/HT production wells and tie-back to a platform, resulting in considerable savings calculated to a range from £50m to £300m per well.
The Directors believe that its presence on AIM and the resulting raised profile, combined with access to additional working capital facilities, will accelerate the roll out of POS-GRIP technology as a superior alternative to current wellhead technology. It has particular advantages in HP/HT oil and gas environments for which there is increasing demand throughout the world. The Company's long term goal is to develop POS-GRIP technology as the future industry standard for wellhead design. This objective includes the distribution of POS-GRIP technology through licensees to maximise market penetration. The Directors believe that over time the Plexus Group can become a member of the ‘first tier' of global wellhead systems suppliers.