OIL well technology firm Plexus Holdings has said conditions remain challenging in the North Sea after the downturn in exploration activity weighed on its first half performance.

However, the Aberdeen-based firm said it is well placed for the future having recently completed a deal directors hope will allow it to grow in other markets.

Led by chief executive Ben van Bilderbeek, Plexus sold the division that produces wellhead equipment for use on jack up exploration rigs to TechnipFMC for up to £42.5m in a deal that completed on 1 February.

In yesterday’s interim results, Plexus revealed the division lost £1m in the six months to 31 December after making £0.1m profit in the same period last time. Its revenues fell 50 per cent, to £2.4m.

Aim-listed Plexus said: “The six months … continued to reflect the significant down-turn in jack up exploration drilling activity across the world, and particularly in the UK and European North Sea.”

Oil and gas firms slashed spending on exploration in response to the sharp fall in the oil price since 2014.

Plexus’s chief financial officer Graham Stevens noted recent indications investment in the area may be picking up, following the partial recovery in the oil price since late 2016. But he said: “The North Sea is still tough.”

The final amount Plexus will be paid by TechnipFMC depends on the performance of the jack up business.

Plexus has cash in the bank, which it could use to support a drive to use its intellectual property to win business in other markets.

It noted the potential of the production well market and other segments of the energy sector, “which could include geothermal and fracking”.

In September it won a contract to supply a production well head to Centrica for use in the Southern North Sea. First half revenues from continuing operations were £40,000.

Total losses rose to £3.7m from £2.5m.

Directors believe it is prudent to continue the suspension of the payment of dividends.

Shares in the firm closed down 3.5p at 51p.