It has been a few months now since I last penned something on Getech (GTC), so, given there has recently been some further positive news, I thought now was a good time to resume some comment.
For anyone looking in for the first time there are other articles here on the blog explaining the nature of the business, but I’ll briefly recap.
The company is a well established business providing specialist services that enable oil, gas and mining operators to best locate and develop their assets.
It works with some major blue chip players, despite its relatively small size and has some highly regarded technology.
Alongside this, it has more recently acquired access to the growing Hydrogen space where it is already involved in the location and development of Hydrogen hubs for transport.
Whilst more recent investors here will perhaps have bought in for the Hydrogen story, for my own part I invested prior to that element, largely for the core historic business and also for the reason that at the then 12p, the company looked deeply undervalued.
The shares since then and over the last 12 months have been as high as 37p, but currently sit at 28p valuing the business at £19m.
This still looks very much on the value side, given net cash, a freehold property asset up for disposal and double-edged prospects for growth, particularly in light of current global events and climate change issues.
So, yesterday the company announced that it had secured new contract wins to the value of £1.2m in the geoscience data and energy space.
The contracts include multi-year licences with both new and existing customers, so perhaps bode well for the current industry climate and future prospects.
In order to find out more I have had another catch up call with CEO Jonathan Copus who sounded upbeat when we spoke.
Copus says that energy is absolutely front and centre of peoples strategic thinking at the moment and for many reasons. “The story has very much been about decarbonization”, says the CEO, “but now, it is very much firmly around security and supply. The model for the company has always been built around our foundation business with the product we built and the unique data”.
With that in mind, things appear to be going well for this historic aspect of the business, as opposed to more recent lean years that impacted on both revenue and profits. “Part of yesterday’s announcement was about building the order book and our recurring revenue, although we didn’t update specifically what the levels of those things are” says Copus. “That is because we will do a trading update before we report our results, but clearly it is a really good sign that people, both existing and new customers are renewing or taking on licences and those add up to some pretty chunky numbers”.
Going further Copus says, “within those sales there are our traditional energy customers who have been exclusively in the past oil and gas but are increasingly looking to diversify”.
He adds that across this, GTC’s Exploration Analyst software product which is used in oil and gas exploration is also applicable to other areas such as carbon capture and geothermal.
This, he says, opens the door to not only new customers, but existing one’s that are also looking at opportunities to diversify, which he says provides for opportunities for asset-based projects. “The positive news yesterday is fundamentally good, not just for the cash health of the business, but for the growth potential of the business as well”.
At this point, I have to enquire as to whether GTC has any customers or exposure to Russia, to which Copus confirms that there is none whatsoever.
I also ask as to whether as a result of various issues arising across the energy space over the last six months or so as to whether GTC has seen increased activity across the space. “Absolutely” says Copus, “and obviously energy prices are high and not just across the hydrocarbon space as everything is just more expensive”.
As a result of this it fundamentally means that oil and gas companies are recording record profits where although a lot of the cash is going into buy-backs, equally, some of that is now getting redeployed into their core business and that is good for us”.
For GTC, the current situation looks like a win-win, as not only is it very well placed to benefit from increased activity across oil and gas exploration and development, but with high prices across these areas, it makes, according to Copus, other areas relating to energy more economically attractive.
He says that the current high prices serve to concentrate the minds on other aspects across the decarbonization space and effectively level the playing field on a geothermal project or large scale integrated hydrogen initiative.
Looking at where both aspects of its business sit, Copus says it is a very interesting and fast moving environment of which GTC is very much a part of.
Touching on the Hydrogen space where there has been positive news around both Shoreham and Inverness, the CEO also sounds an upbeat tone.
He says that things are definitely progressing as they’d hoped for and accelerating, particularly in relation to further opportunities for the company. “It is also worth noting that as energy prices increase, other new technologies become more viable to develop” Copus adds.
And In relation to their current Hydrogen exposure he says, “Shoreham is a great example of a really neat self contained decarbonization project with wind, solar, hydrogen and ammonia, so when the time is right we will be take people to Shoreham to show them exactly what it is like”.
The anchor customer in relation to this project is marine and the CEO says that you need this as it de-risks your first capital commitment.
Regarding its Inverness project, Copus says that this is different in that the key customer is rail which ties in well with its deal with Eversholt the major rail rolling stock company. The location of the project appears sound as it is right next door to rail yards where the refuelling process takes place.
Whilst it is still early days, progress is being made and Copus is keen to kick on and progress adding “I’m pleased with how things are going and clearly through the course of this year there will be more things to update on those projects. We are also squeezing the pipeline as hard as possible to bring other projects to the fore as well that fit in around that”.
Copus also enthuses about the recent arrival of Max Brouwers as Chief Business Development Officer who was previously at Shell as head of energy transition.
Having him on board is really helpful and making a big difference with GTC’s plans says Copus and it provides the company with opportunities across Europe where Brouwers is predominantly based. “There is a lot of stuff going on in Europe that we want to be part of as well as the UK, so having boots on the ground there is helpful”.
With so much seemingly going on, the CEO says that they are aware of the increasing need to inform and communicate with investors and that is an area they will be upping, particularly on the engagement front.
The forthcoming pre-close trading update should come next month and investors will hear more on the current prospects along with the runway ahead which looks set for further news and developments.