UPDATE 2-Hunting in $125 mln U.S. deal, eyes more

* Deal to be earnings enhancing this year

* Says acquisition will boost well construction unit

* Company could access debt markets for bigger acquisitions

* FD says Gulf of Mexico drill ban still causing uncertainty

* Shares rise as much as 4.9 pct
(Adds detail)

By Sarah Young

LONDON, Aug 16 (BestGrowthStock) – Oil and gas services firm Hunting
(HTG.L: ) is to buy U.S. electronics company Innova-Extel for $125
million to boost its well construction unit and is looking for
further acquisitions, with a transformational deal possible.

Hunting, whose equipment is used in the construction and
maintenance of oil and gas wells, is “looking at all options”
for further purchases, finance director Peter Rose told Reuters
in a telephone interview on Monday.

“We would have 310 million pounds of cash at the end of
June. This acquisition when it completes will absorb about 80
million pounds of that so that will take us down to 230
(million) and on top of that we can access the debt markets,”
Rose said.

Shares in Hunting rose as much as 2.9 percent after Monday’s
acquisition announcement but zoomed 4.9 percent higher at 550
pence at 1229 GMT, following Rose’s comments.

“If there was an attractive deal out there or something that
could continue the company’s transformation into a higher
margin, higher growth business…then we’d view it as a
positive,” said Royal Bank of Canada analyst Todd Scholl.

The broker added that making bolt-on type smaller
acquisitions to boost existing product lines was key to
Hunting’s growth but did not rule out the company making a
bigger acquisition.

Hunting, whose customers include Exxon Mobil (XOM.N: ) and BP
(BP.L: ), said the acquisition of Innova-Extel, which it expects
to complete by the end of August, will be earnings-enhancing
this year.

The acquisition of the U.S. company, which supplies
technology which works at high temperatures and pressures, will
expand Hunting’s offering in directional drilling.

Directional drilling, where wells are drilled at an angle or
horizontally to help achieve greater oil or gas production, has
become widespread in the last decade with two-thirds of all
wells now drilled this way in 2010, according to Hunting.

GULF OF MEXICO UNCERTAINTY

A moratorium on deep water drilling in the Gulf of Mexico in
the wake of the BP spill continued to cause uncertainty for
Hunting, Rose said, adding that around 10 percent of Hunting’s
annual sales have exposure to the spill-hit region.
[ID:nLDE65S1X8]

Rose said the company was waiting to see the full impact of
the ban.

“It very much depends on how long the drilling moratorium
remains and what happens after the drilling moratorium is
removed,” he said.

The United States imposed a six-month ban on drilling in
July, revising an earlier version, but President Barack Obama
has said he would be willing to lift it if the conditions set
are met before then. [ID:nN12269656] [nWEN8403]

(Editing by Matt Scuffham and David Cowell)

($1=.6406 Pound)

UPDATE 2-Hunting in $125 mln U.S. deal, eyes more