Boots & Coots shrs dive as few Iraqi wells on fire
3/21/2003 12:01:36 PM
NEW YORK, March 21 (Reuters) - Shares of Boots & Coots International Well Control Inc. (WEL) , an emergency response company that fights oil well fires, fell as much as 23 percent in midday trade on Friday, as it became evident that the Iraqis have set fire to only a small number of oil wells.
The Houston-based company's stock has enjoyed a recent run- up, partly on expectations a U.S. bombing campaign against Iraq would prompt Iraqi forces to set oil wells and oil fields on fire, as they did in Kuwait during the 1991 Persian Gulf War.
Boots & Coots -- as well as Halliburton Co. (HAL) and other rivals -- could drum up big business by winning contracts to put out those fires.
But Britain's defense chief, Admiral Sir Michael Boyce, said on Friday that only seven oil fields had been set on fire by the Iraqis and that all key components of the southern oil fields were safe.
By contrast, Iraqi forces torched more than 700 oil wells in Kuwait during the last war.
"In general, people thought all 3,000 oil wells in Iraq could be torched and people started multiplying the number of wells torched times the revenue per well that Boots & Coots normally gets from a well fire and it can be in the millions, so you could see a fairly large number," said Michael Shonstrom of Shonstrom Research, who does not have a rating on the stock and owns some of its warrants.
He added that it is unlikely Iraqi leader Saddam Hussein and his forces will do much damage to the nation's oil wells and fields.
"It's all well and good to blow up Kuwaiti wells, but when you're blowing up your own wells, it's a little more difficult intellectually to do that. It's like eating your own children," he said.
"And to the extent that Saddam thought he could survive, he'd certainly want the ability to sell oil."
Boots & Coots shares were down 28 cents, or 20 percent, to $1.12 in trade on the American Stock Exchange.
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