HYD.AL - Hyduke Resources Ltd. (rumors that they are into acquisition mode again):
COMPANY OVERVIEW
Hyduke Resources Ltd. is an oilfield service company specializing in drilling related equipment and services. The company currently operates three independently managed yet integrated divisions:
 B.W. Rig Repair & Supply - manufactures service rigs, as well as repairs and/or rebuilds service rigs and derricks. B.W. Rig's supply division carries a complete stock of drilling rig supplies.
 Reliable Airflow Sales & Service - manufactures and customizes pneumatic and air-control products used on drilling rigs and other industrial applications.
 Canwest Crane - specializes in the sale and installation of truck mounted boom cranes, articulating (folding) cranes and winches used in the oilfield, mining and construction industries.
FINACIAL PERFORMANCE
Hyduke was established as an Alberta Stock Exchange Junior Capital Pool in the spring of 1996. Over the past three years, management has grown Hyduke into a $30 million (as at April, 1998 FYE) revenue base company through internal growth and acquisitions (Figures 1 and 2).
As a result of the downturn in the oil and gas service sector in late 1997 and through calendar 1998, Hyduke's financial results were negatively impacted. For the year ended April 1999, Hyduke produced revenues of $14 million and incurred a cash loss of $900k. Despite an unfavorable fiscal 1999, Hyduke retains a strong balance sheet with $1.4 million in working capital, shareholder's equity of $3.1 million and total debt $100k ($2.8 million including operating lines).
Based on improved fundamentals in the oil and gas sector with a corresponding favorable impact on oilfield service companies beginning in late calendar 1999 and 2000, Hyduke expects financial performance to be more in line with fiscal 1998 results. Hyduke's fiscal 2000 budget is for revenues in the $27 million range and EBITDA of $2 million.
As at April 30, 1999, Hyduke had 7.5 million basic and 8.3 million fully diluted shares outstanding. Hyduke shares are thinly traded with a 52-week high and low of $4.10 and $0.40 respectively. Hyduke shares have recently traded in the $1.30 to $1.50 range.
MIMCO ACQUISTION
Hyduke recently acquired Mimco Enterprises a Calgary based machining company with a 24 year history providing machining services primarily for the oil and gas and mining sectors using specialized computer controlled equipment. Mimco also has a line of proprietary drilling related tools used in drilling operations. Mimco produced revenues of $5.8 million in fiscal 1998 (FYE August) and EBITDA approximately $700k. 1999 results suffered as a result of the oil and gas industry downturn and a working capital crunch.
Hyduke acquired Mimco's operations for $2.45 million which includes debt liabilities of approximately $2.3 million. The appraised value of Mimco's equipment is approximately $3.2 million, $1.9 million of which was purchased in the past two years. As part of this transaction, Bank of Montreal Capital Corporation converted $900k their portion of Mimco debt to Hyduke equity in addition to providing a $400k working capital equity infusion all at a deemed value of $1.60 per share.
Hyduke is currently restructuring Mimco's operations to ensure continued revenue growth and positive cash flow contribution. Hyduke expects Mimco to achieve revenue performance of $6 million (on an annualized basis) and positive cash flow in its fiscal 1999 year.
INVESTMENT PREMISE
 Track record of strong financial performance in normal industry conditions
 Positioned to benefit from improved service industry performance
 Recent and potential acquisitions add immediate shareholder value and provide excellent growth opportunities
 Positive synergies amongst business units which will lead to additional opportunities
Astute management - acquisition track record and resulting company growth
 Continued growth opportunities available through selective consolidation in drilling industry
Hyduke will continue to identify and evaluate various acquisition opportunities, which are consistent with our goal of becoming a major, vertically integrated, full service provider of drilling related equipment, supplies and services.
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