Announcement: Results for period ended 31 March 2015

Limited company accounts 10.9.0 Enteq Upstream plc ("Enteq", the "Company" or the "Group") Final results for the year ended 31 March 2016

AIM traded Enteq Upstream plc, the oil & gas drilling technology company, today announces its financial results for the year ended 31 March 2016.

Key features

• Full year revenue reduction of 66% mirrors reduction in North American rig count.

• Normalised overhead1 reduced by 38% on an annualised basis.

• Cash balances increased over both September 2015 and March 2015 positions.

  Financial metrics

  Years ended 31 March:

  2016	2015
  $6.3m	$18.5m
  $(0.7)m	$(0.8)m
  $2.7m	-
  -	$39.5m
  $4.7m	$47.2m
  3.7 cents	3.1 cents
  8.0 cents	80.1 cents
  $15.1m	$14.1m

  • Revenue

  • Adjusted EBITDA2

  • Inventory write down

  • Impairment of intangible assets`

  • Loss before tax

  • Adjusted loss per share3

  • Loss per share

  • Cash balance

  Outlook

• Uncertainty over oil price trend continues to impact customer confidence resulting in constrained capital expenditure and ongoing drilling cost reductions in North American market

• Further market penetration anticipated in Far East, Middle East, Africa and Russia

• Ongoing focus on cash conservation and overhead reductions

Martin Perry, CEO of Enteq Upstream plc, commented:

"Enteq has adapted to manage a rapidly declining market and has adjusted the cost base to preserve future cash balances and profitability. The business is secure and ready to respond to growth opportunities around the world and in North America when the market shows signs of recovery."

For further information, please contact:

Enteq Upstream plc +44 (0) 1494 618741 Martin Perry, Chief Executive Officer

David Steel, Finance Director

Investec Bank plc (Nomad and Broker) +44 (0) 20 7597 4000 Chris Treneman, Patrick Robb, David Anderson

1 Normalised overhead is reported administration expenses before amortisation adjusted for depreciation, bonus charges, R&D costs, PSP charges and provisions.

2 Adjusted EBITDA is reported profit before tax adjusted for interest, depreciation, amortisation, foreign exchange movements and exceptional items.

3 Adjusted loss per share is reported loss per share adjusted for exceptional items, amortisation and foreign exchange movements.

Chairman's statement

Review of the Year

The severe down-turn in the global oil and gas industry as a result of depressed oil prices has continued to adversely affect rig utilisation and hence revenues for Enteq.

The price for West Texas Intermediate Oil had an average price of $93.17 in 2014, $49.67 in 2015 and is forecast to average $40.32 for 2016 and $50.65 for 2017 (source U.S. Energy Information Administration, 10 May 2016). The land based rig count in North America dropped from 1,031 in April 2015 to 451 in April 2016, a reduction of 56%. The International count dropped from 902 to 726 (source Baker Hughes Rig count. 6 May 2016).

Enteq revenues reflected these reductions, falling from $18.5m in 2015 to $6.2m, a reduction of 66%. Through protecting margins and very significant and early control of overheads, Enteq delivered an adjusted EBITDA loss of

$0.7m which was inline with expectations. Cash was preserved through the year with a cash balance of $15.1m at the end of March 2016, compared with a balance of $14.1m at the end of March 2015. An exceptional, one-off, non-cash reduction in the carrying value of inventory ($2.7m) was taken at the year-end in order to reflect the current trading patterns.

Despite the excess equipment available in the market due to the decline in activity Enteq has maintained customer loyalty and market share.

Employee numbers have further reduced from 56 at the end of March 2015 to 21 at the end of March 2016 and all those who have left deserve recognition and thanks for their past contributions. The remaining team work diligently to maintain the core of the company and be well positioned for any recovery.

As a further contribution to cost reduction and as a reflection of the company's changed profile I will be stepping down from the position of Chairman at the AGM in September 2016 and will leave the company. Iain Paterson, currently a Non-Executive Director, will take the role of Chairman. Iain and Robin Pinchbeck, the other remaining Non-Executive Director, have many years of oil industry and public company experience.

Prospects

The world macro-economic conditions of supply and demand in the oil & gas sector continue to create an uncertain market for drilling and the timing of any recovery cannot be certain.

Enteq continues to uncover new opportunities for sales of equipment outside North America and continues to maintain positive relationships within a changing customer base. Enteq's strong cash balance and continuing tight cost management means that the company is positioned to benefit from any market recovery.

Neil Warner Chairman Chief Executive's operating and strategic review

Market Overview

Enteq supplies Measurement While Drilling equipment to the oil and gas industry world-wide to enable directional drilling.

Directional drilling is carried out by oilfield service companies who either purchase equipment from 3rd parties such as Enteq or develop the equipment themselves. Measurement While Drilling equipment is used on every rig which drills directional wells.

Due to the sustained low oil price during 2015 and the first quarter of 2016, on-going reductions in the number of rigs drilling have occurred. In North America, which accounted for 90% of revenues in the last financial year, the rig count reduced from 1,031 to 451 during the year. There is therefore considerable excess capacity of equipment available, un-utilised, in the market.

During times of excess capacity, sales of new equipment and spare parts are severely restricted due to the 'cannibalisation' of spare equipment in order to keep operational systems in work at minimal costs.

Enteq has continued to develop markets outside North America, with some new agreements confirmed in the Middle East, Africa, Russia and the Far East.

As a result of the poor market conditions a number of oilfield service companies have ceased trading and severe cuts have been made across all of the customer base, however relationships have been maintained wherever possible and overall market share should have been preserved.

Competition

Some consolidation has taken place amongst other 3rd party suppliers of equipment and all players in the market have had to undergo significant reductions. In the current depressed market place very little development or innovation has been taking place. Enteq retains a strong independent position as a result of the strong balance sheet.

Product development and introductions

Enteq has maintained the core disciplines within engineering and software development. A new software version and some added functionality have been released. A patent application for an innovation is in process.

Sales & Marketing

Regular contact is maintained with the entire customer base from the operational hub in Houston and by the Chief Operations Officer in North America. International opportunities and sales are generated from the UK office and by a representative in China. Business development trips are made as and when required.

Future strategic direction

Enteq will maintain a sustainable small business suitable to the current market conditions. The company is positioned for a recovering or stabilised market. International prospects remain good. By protecting the cash on the balance sheet Enteq can offer security but also, at the right time, take advantage of recovery opportunities by sensible investment. Enteq continues to believe in a long term strategy of consolidation of technologies and distribution.