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Small-Cap Oil Companies The Sleuth
One diversified small-cap could be greatly rewarded by capitalizing on the deeper, more costly wells oil and gas exploration companies will be drilling over the next several years, especially in its primary Gulf Coast market. That company is Newpark Resources (NR: NYSE). Newpark provides drilling fluids, technical services and disposal of exploration and production (E&P) waste to drilling sites in the U.S. Gulf Coast, West Texas, the Rocky Mountains, Canada, Mexico and areas of Europe and North Africa surrounding the Mediterranean Sea. ******************************** An Average Gain Of 107% So Far In 2006 Looking for more great oil picks? Billions of dollars are set to flow into these 11 overlooked companies that can solve America's oil crisis and secure access to energy. These new energy saviors have already brought us gains as high as 546%. Yet these off-the-radar picks are set to pile up even bigger and faster profits in the months ahead. Read on for details... ******************************** The business can be broken up into three main services. The first is drilling fluids. While Newpark management says its biggest competition from major firms falls in this category, the company holds several patents on fluid technology that help keep it in the mix. Second are composite mat products. The company manufactures and delivers interlocking composite mats to E&P sites that allow the oil company's heavy machinery to have access. Essentially, these mats form a temporary highway and work station in remote, environmentally difficult locations. These mats are patented by the company as well, and are used as an alternative to traditional wooden mats. Then there's waste disposal. The company hauls E&P waste from offshore rigs in a fleet of 48 double-skinned barges. It also operates injection wells in Texas, where waste is forced into the ground. 25-30% of the waste the company removes is recycled as road base or construction fill. Increasingly strict environmental regulations help grow this side of Newpark's business, where the company says that the scope of services required by oil and gas companies has increased. On top of this, 39% of Newpark's revenues were derived from 20 major customers, and no one customer accounted for more than 10% of its consolidated revenues. Because Newpark does not rely on one or two major customers for the bulk of its revenue, losing a customer would not significantly affect the company's bottom line. ******************************** $161,118.95 Gains in 1 YEAR Options guru Steve Sarnoff had a perfect record in 2005: He recommended 30 plays and EVERY SINGLE ONE saw gains -- totaling a possible $161,118.95... You could join a small group of readers that has already had the chance to reap $1 million in profits... Just check out this special report... ******************************** So why is Newpark Resources a gamble? The company is making money, its operating margins are better every year and it's in a high-demand, growing industry. There's nothing here not to like... Despite its promise, Newpark has gotten itself into trouble this year over stock option backdating. An internal investigation was launched and earnings were recently restated all the way back to 1998. While the earnings restatements did not significantly impact the company's progress over the past few years, the investigation has left investors in the dark almost all year. That's where the gamble comes in, and where you could capitalize on Newpark while its share price is depressed. You see, we haven't heard from Newpark for almost a year. The company has delayed filing its quarterly reports, and now expects to announce first, second and third quarter earnings all on November 9. And because the company has stayed mum during its investigation, its share price has taken a beating:
So Newpark's performance this year has been a bit of a mystery. The company has, however, announced that it had shut down its water operations in August. In early 2005, the company formed Newpark Environmental Water Solutions. This part of the business used sonochemistry to remove dissolved solids from wastewater. However, the announcement in August said that executives believe the technology is not ready and that they were shutting down the operation to avoid more losses. According to its last annual report, the company invested $13.8 million up to that point in its now-defunct water treatment branch. And in connection with the shut down operations, Newpark expects to record a $20.0 million impairment charge for Q-3 2006. And while Newpark's long-term profit potential looks bright, the next few weeks are a solid gamble until we're all brought up to speed on its progress. Best,
Find out what five water stocks are set to rise big over the coming 12 months in this exclusive report... |
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Greg Guenthner is a contributing editor for Small-Cap Strategy Report and has helped in developing the Million Dollar Portfolio... <click here for full bio> |
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