Adieu to Boots & Coots

Boots & Coots (WEL) announced first quarter results for the period ending March 31, 2010. Revenues came in at $53.3 million compared to $54.7 million for the same period last year. Net income for the quarter was $0.7 million, or $0.01 per diluted share, compared to $1.9 million, or $0.03 per diluted share for the first quarter of 2009.

Boots & Coots, Inc. is a well known provider of integrated pressure control services to onshore and offshore oil and gas exploration companies. The company operates in three business segments: well intervention services, equipment services and pressure control services.

All business segments held up quite well during the first quarter as evidenced by a mere 2.5% revenue decline compared with last year. Several one time costs, unfortunately, wrecked earnings.

Mobilization costs for the new ONGC (Oil and Natural Gas Corporation of India) secure and salvage project, higher than expected currency devaluation costs in Venezuela and expenses relating to the announced merger agreement with Halliburton (see below), all had a negative impact on the quarter.

Future

On the near term future, the Company’s CEO, Mr. Larry Winchester, sounded optimistic as he stated: “We have started to see signs of increased utilization in the domestic market, and demand for our services in the international markets continues to improve”.

There won’t be a near term future for Boots & Coots however… at least not one as a public company.

As previously announced, Boots & Coots entered into a definitive merger agreement with Halliburton Company (HAL), the second largest oilfield services company in the world. With the deal, worth about $240 million, Boots & Coots stockholders will receive $3.00 per share for each share of Boots & Coots common stock they hold.

Conclusion

When the merger agreement was announced, early April, we didn’t immediately sell our shares as we thought (or hoped) there might be other interested parties willing to pay a higher price. Apparently, this is not the case and so we’re going to sell the remainder of our shares on Monday morning at $2.95.

We’ve enjoyed our ride with Boots & Coots since we picked it early 2009. We sold half our shares at $2.00, early March 2010 and now we will most likely be able to sell the remainder at $2.95. This gives us an overall profit of 117%.

We’ll use the money to re-invest in another oil services company or a mining company. We currently have our eye on a few of them in both industries and as soon as we’re comfortable with one of them, you’ll be the first to know.

What do you think about mining stocks and oil services companies? Is this the right time to invest in them? Do you currently own shares of companies in those industries and do you want to share them with us?

2 comments… add one
  • Matt May 9, 2010, 6:26 pm

    I unfortunately sold my 10000 stocks of WEL back at $2.2, so I’m not very happy. Here again the patience was not as good as it could be. I still made 96%, but could have made more…
    Anyway, I think this is good time for Energy related companies (a long as they are NOT off-shore -drilling) and I actually put some money where my mouth is…
    I own PGNE, quite a bit – just waiting with it to go up (hopefully). I also bought some more
    I also bought few XOM stocks at $63.5 as I think they will definitely rebound.
    Am thinking of some BP, but I think it will go down some more this week and bottom out about $47.
    I also have few stocks of KNDR, as I think the alternate energy will also pick
    So, here it is for whatever it’s worth…

  • admin May 10, 2010, 12:28 pm

    Hi Matt,

    Many thanks for you comment and although you may not be happy with it, congratulations on your WEL trade. I felt the same when I saw Boots & Coots continue its way up after I sold half of my position at $2. But that’s the way it is. Timing a stock or the market is always incredibly difficult, not to say impossible.

    I’m glad you agree on the energy related companies. XOM and BP are a bit out of my small cap league, but I think they have been oversold and will bounce back in the near future.

    I must admit I hadn’t heard of PGNE and KNDR. Both look very speculative, but nevertheless interesting enough to research further.

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