It's not too often I get to start a thread here at SI. Usually, by the time a company has captured my attention, I find that there is already a thread in existence.
I can't believe nobody else is following this company ... so here goes, I'll try to start it off.
I'll post several recent news releases as follow-up to what I have to say, but to summarize ...
The company has about 20 million shares outstanding. They are in the business of manufacturing "drilling motors" for oil and gas drilling. These motors are driven by the "drilling mud". They seem to be in a market segment (oil and gas service companies and drill tool suppliers) that is quite hot right now. By the calendar year-end, estimates are that there will have been a record 16,000 wells drilled in the province of Alberta, and the forecast for 1998 is even more wells to be drilled. Anyone that follows this sector knows that demand is high and appears as if it will continue. Their year-end (May 31) financials (released Sep. 24th) and their first quarter (August 31) financials (released Oct. 31st) appear very healthy and are definitely improving.
The company is currently involved in a proposal (subject to shareholder approval -- meeting to be held Nov. 14th) to buy their major customer, Wenzel Downhole Tools and a number of patents currently owned by Wenzel. It's one of those classic situations where a supplier is buying out their own primary customer. From past experience, these kind of deals usually work out well.
Most recently they announced a contract that will give them some very healthy revenues and cash flow throughout 1998.
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