Hot Times for Oil Service Companies in the Gulf

Posted On May 11, 2010 | by AllenCaron

Late Breaking Addition

Huntington, CA-based ACT Clean Technologies, Inc. (Pink Sheets:ACLH, http://www.actcleantech.com) with a market cap of $9 million, provides environmentally-safe remediation solutions to hazardous waste problems such as oil spills.  The company was trading at $0.05, up $0.03, and had traded 54,000,000 shares in unusually heavy volume by mid-morning on Wednesday.  Its three-month average volume is 466,000 and the 52-week range is $0.00 to $0.06.

Along with the massive oil leak in the Gulf of Mexico, oil services companies of all stripes have been in the spotlight recently.  A team led by BP (NYSE:BP) experimented with a fascinating– if fruitless– attempt to drop a 100-ton, 40-foot tall structure to trap leaking oil at the site of the oil spill. http://www.aolnews.com/nation/article/bp-has-spent-350m-on-oil-cleanup-considers-new-options/19470765

Offshore oil rig courtesy of Transocean website

This alone is a fascinating story– it was the biggest such chamber ever constructed, and although the technology had been used in shallow water, it had never been tried in deep water, in this case 5,000 feet below sea level on the bottom of the Gulf. http://www.cnn.com/2010/US/05/03/oil.spill.desperate.measure/index.html

Unfortunately it failed, and BP was set to deploy a smaller, 2 ton dome.  Engineers believe the smaller dome may work because its size will reduce the amount of water in the pipe, reducing the amount of ice crystals, which had caused the larger dome’s pipe to clog. http://www.aolnews.com/nation/article/bp-has-spent-350m-on-oil-cleanup-considers-new-options/19470765

There are numerous oil services and related companies (far too many to mention here), but we thought it might be interesting to take a look at how some of these companies are faring under the current climate given the situation in the Gulf of Mexico.

Although we write about small caps, Switzerland-based Transocean Ltd. (NYSE:RIG, www.deepwater.com) is the world’s largest offshore drilling contractor with a market cap of $22 billion, and certainly in the spotlight at the moment.  BP leased the company’s Deepwater Horizon rig which exploded on April 20 and killed 11 people 40 miles off the Louisiana coast in the Gulf of Mexico.

The company disclosed $200 million in fresh costs related to Deepwater Horizon, in addition to more than $1.1 billion in company-related expenses tied to the environmental disaster. http://www.marketwatch.com/story/transoceans-spill-price-tag-hits-13-billion-2010-05-06

Transocean CEO Steve Norman said that the company hasn’t seen any less interest in deep water drilling from its clients since the accident.  Transocean is currently leasing rigs to BP to drill a relief well over the next 90 days in a move to stop the leak.

The problem in the Gulf is very complex, and will need the contributions of many different types of oil services companies that perform many different functions– repair companies, maintenance companies, equipment companies, and manufacturing companies.  Some other small oil service companies of interest include the following:

Texas-based Lufkin Industries(Nasdaq:LUFK, www.lufkin.com) is a $1.1 billion market cap company that sells, manufactures and repairs oil field pumping units.  The company was trading on Tuesday morning at $79.67, down $0.23.  The 52-week range is $36.38 to $90.20.  It traded 3,000 shares as compared to its average three-month volume of 159,000.

Tetra Technologies, Inc. (NYSE:TTI, www.tetratec.com) operates as a diversified oil and gas services company in three divisions:  Fluids, Offshore and Production.  It is a $819 million market cap company based in The Woodlands, TX.  On Tuesday morning, it last traded at $11.66, down $0.13 with volume of 37,000.  The 52-week range is $6.32 to $14.64, and the average three-month volume is more than 700,000.

Tulsa,OK- based Matrix Service Company (Nasdaq:MTRX, www.matrixservice.com) with a market cap of $290 million specializes in helping oil companies with infrastructure needs and provides repair, construction and maintenance services to the energy sector in the US and Canada.  The company was trading on Tuesday morning at $11.70, down $0.34, with volume of 16,000 shares.  Its three-month average is 189,000 and the 52-week range is $8.22 to $13.21.

Also in Texas, Allis-Chalmers Energy, Inc. (NYSE:ALY, www.alchenergy.com) is a $253 million market cap company that provides services and equipment to oil and natural gas exploration and production companies in the US.  It last traded on Tuesday morning at $3.85, down $0.07 with volume of 25,000.  The average three-month volume is 232,000 and the 52-week range is $2.00 to $4.94.

The smallest company in our brief survey is CE Franklin Ltd (Nasdaq:CFK, www.cefranklin.com) a microcap based in Calgary with a market cap of $109 million.  The company distributes and repairs oilfield equipment– pipes, valves and flanges.  It was last trading at $6.85, up $0.25, and had traded only 600 shares early Tuesday morning.  Its 52-week range is $4.75 to $7.78, and its average three-month volume is 6,100.

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