Hunting PLC: A High-Conviction Energy Transition Play with a Low-P/E Premium

In the evolving energy landscape, companies that bridge the gap between legacy hydrocarbon operations and decarbonization technologies are capturing unique value. Hunting PLC, a mid-cap player in the subsea and enhanced oil recovery (EOR) sectors, has emerged as a compelling case study in this transition. With a forward-looking strategy, disciplined capital allocation, and a valuation that appears disconnected from its fundamentals, Hunting offers a rare combination of affordability and growth potential.

Strategic Acquisitions: Bridging EOR and Renewable Energy

Hunting's 2025 acquisitions of Organic Oil Recovery (OOR) and Flexible Engineered Solutions (FES) underscore its dual focus on decarbonizing upstream oil production and expanding into renewable energy infrastructure. The $18.2 million acquisition of OOR technology—a proprietary EOR solution—positions Hunting to reduce CO₂ intensity per barrel of oil produced by up to 30%, aligning with global net-zero targets. This technology is already securing contracts in the North Sea, with $60 million in orders locked in over five years.

Meanwhile, the $64.8 million acquisition of FES has fortified Hunting's subsea capabilities, particularly in FPSO vessels and subsea distribution systems. FES's Diverless Bend Stiffener Connectors (DBSC) are now being adapted for floating wind farms, a sector projected to grow exponentially as countries pivot toward offshore renewables. These moves are not just about diversification—they're about capturing high-margin niches in both traditional and emerging energy markets.

Financial Metrics: A Low-P/E Stock with High EBITDA Growth

Hunting's valuation appears disconnected from its performance. As of August 2025, the stock trades at a P/E ratio of 4.81, a stark contrast to peers like Subsea 7 (23.46) and Reach Subsea (12.8). This discount is puzzling given Hunting's 16% year-over-year EBITDA growth in the first half of 2025, driven by the OOR and FES acquisitions.

The company's EBITDA margin of 13% is robust for a capital-intensive sector, supported by its high-margin subsea technologies and EOR solutions. Hunting's cash reserves of $79.3 million further enhance its flexibility, enabling it to fund growth without diluting shareholders. The recent $40 million share buyback program and 13% annual dividend growth also signal confidence in its ability to generate free cash flow.

Capital Allocation: A Disciplined Approach to Value Creation

Hunting's management has demonstrated a clear commitment to disciplined capital allocation. The FES acquisition, funded entirely from existing resources, was structured as a cash-neutral deal, preserving the company's liquidity. Similarly, the OOR acquisition was financed at a cost that aligns with its projected revenue streams, including the $60 million North Sea order book.

The company's cost-optimization initiatives, such as a 33% reduction in its EMEA workforce and the expansion of a Dubai-based test laboratory, further highlight its focus on efficiency. These measures are not cost-cutting for the sake of short-term gains but strategic reallocations to support long-term growth in high-potential markets.

Energy Transition Alignment: A Tailwind for Growth

Hunting's alignment with the energy transition is both strategic and financial. Its OOR technology directly supports the industry's push to reduce upstream emissions, while FES's subsea systems are critical for floating wind farms. The company's 2030 strategy—targeting a 50% reduction in Scope 1 and 2 emissions—resonates with global regulatory trends and investor priorities.

Moreover, Hunting's TEK-HUB™ innovation platform, which collaborates with external clean-tech developers, positions it as a solutions provider rather than a passive player in the transition. This approach ensures the company remains adaptable as energy markets evolve.

Investment Thesis: A High-Conviction Case

Hunting PLC's combination of a low P/E ratio, strong EBITDA growth, and strategic positioning in energy transition-aligned markets makes it a high-conviction long-term play. The company's recent acquisitions have diversified its revenue streams, enhanced its technological edge, and expanded its global footprint. With the subsea systems market projected to grow at 5.6% CAGR through 2032 and the EOR market at 7.43%, Hunting is well-positioned to outperform.

For investors seeking exposure to the energy transition without overpaying for hype, Hunting offers a compelling risk-reward profile. Its disciplined capital allocation, resilient cash flow, and clear path to decarbonization justify a premium valuation. While the stock's current P/E of 4.81 may seem unattractive at first glance, it reflects a market that underappreciates the company's strategic depth and growth potential.

Conclusion
Hunting PLC is not a speculative bet—it's a fundamentally strong company leveraging the energy transition to drive sustainable growth. For those with a long-term horizon, the combination of undervaluation, strategic acquisitions, and disciplined execution makes Hunting a standout in the energy sector. As the world transitions to cleaner energy, Hunting's dual focus on decarbonizing hydrocarbons and building renewable infrastructure positions it to thrive in both today's markets and tomorrow's.