Aug 27, 2010 10:04 AM PDT
Bronco Drilling (BRNC), Parallel Petroleum (PLLL) and T-3 Energy (TTES) posted significant gains this morning as the Energy Sector entered the sixth day of its rally while oil continued a two day fall in price.
A rising dollar overseas has been putting pressure on the cost of oil. On Friday, an October contract was selling for $69.29 and this morning, the same contract had dropped by 32 cents in Europe, trading for $68.97 a barrel on the NY Mercantile.
Gaining as much as 34.46% ($1.53) this morning is Bronco Drilling Company Inc., (BRNC) http://www.broncodrill.com/ which is currently trading in the $5.63 range on the Nasdaq. BRNC has a new market cap of $154 million. BRNC has a 3-Month average daily trading volume of 115,011 shares and it traded 5 times that amount by mid-session; topping 665,897 shares traded.
BRNC has benefited from the Energy Sectors recent rise and the only official news from the Company came last Friday announcing the BRNC annual shareholder meeting in Duncan, Oklahoma on November 13.
The BRNC Q2 09 report issued August 10, posted Q2 revenues of $27.5 million, a drop from Q1 09 of $50.6 million and a big drop from Q2 08 of $69.8 million. Net loss for Q2 09 was $7.2 million (-$0.27 EPS), a further drop from Q1's loss of $1.7 million and a big drop from Q2 08's $4.3 million gain.
But the BRNC Q2 filing also pointed out that the Company entered into two definitive contracts to provide drilling services in the Chicontepec Basin in Mexico. The duration of the contracts is two years and will require six drilling rigs. BRNC management expects the first rigs to begin work in early September and expects all six rigs to be operating by the middle of October. It's September and if the Q2 filing news holds, the rigs are being positioned now. I believe that's also part of the rise today in BRNC's share price. Stockholders are looking past the Q2 numbers and looking forward to the placement of 6 new wells in the next 4-6 weeks.
BRNC provides contract land drilling and workover services to oil and natural gas exploration and production companies in the United States and Mexico. As of February 28, 2009, BRNC owned a fleet of 56 land drilling rigs operated in Oklahoma, Texas, Colorado, Utah, North Dakota, Louisiana, and Mexico; BRNC owned a fleet of 61 workover rigs operated in Oklahoma, Texas, Kansas, Colorado, Louisiana, and New Mexico; and BRNC owned a fleet of 63 trucks and related transportation equipment to transport drilling rigs to and from drilling sites.
At $5.63, BRNC is far off its 52-week high of $13.56 set on 09-12-08 and is above its 52-week low of $3.34 set on 07-13-08. At $5.63, BRNC is above both its 50-day and 200-day moving averages. BRNC has trailing twelve month revenues of $227 million. BRNC is widely held by institutions. Its shares out versus float ratio is close enough to parity not to raise any red flags about stability.
Oil producer Parallel Petroleum Corp., (PLLL) http://www.plll.com/ gained 13.04% ($0.33) in early trading this morning. PLLL is currently trading in the $2.77 range on the Nasdaq with a new market cap of $114 million. PLLL has a 3-Month average daily trading volume of 393,251 shares and it easily doubled that volume by mid-session passing 884,900 shares traded.
PLLL had no official Company news today and is riding the rally of the Energy Sector. The PLLL Q2 09 results released on August 4, were less than spectacular, but a balance sheet review revealed the Company to have shareholder equity near $78 million.
Contracts and premiums...
For Q2 09, PLLL had a net loss of $9.6 million, or a loss of $0.23 per diluted share. Included in the net loss was a $13.3 million pre-tax loss on derivatives. The Company received net cash payments of $5.5 million on settlements of derivative contracts during the period. That was better than Q2 08 for PLLL which had a net loss of $29.2 million, or a loss of $0.70 per diluted share. Included in the net loss for Q2 08 was a $71.6 million pre-tax loss on derivatives. PLLL paid net cash settlements of $14.6 million on derivative contracts during the period. PLLL had no derivatives classified as hedges during Q2 09 or Q2 08.
In addition to the shareholder equity, The PLLL Q2 09 balance sheet posted current liabilities of $29.9 million, including current derivative and put premium obligations of $5.8 million. Long-term liabilities were $389.5 million, including $371.2 million of debt and $8.1 million of derivative and put premium obligations. The PLLL revolving credit facility was $230.0 million as of June 30, 2009 and outstanding borrowings under the revolving credit facility at that same date were $225.0 million.
PLLL buys and develops oil and natural gas reserves in Texas and New Mexico. PLLL operations are primarily located in the Permian Basin of west Texas and New Mexico, the Fort Worth Basin of north Texas, and the onshore Gulf Coast area of south Texas.
As of December 31, 2008, the company had total proved reserves of approximately 21.2 MMBbls of oil and approximately 71.8 Bcf natural gas.
At $2.77, PLLL is far below its 52-week high of $11.13 set on 09-23-08 and is far above its 52-week low of $0.68 set on 03-17-09. At $2.77, PLLL is ahead of both its 50-day and 200-day moving averages. PLLL has trailing twelve month revenues of $120 million. Its shares out versus float ratio is near-parity.
Like Bronco, T-3 Energy Services Inc., (TTES) http://www.t3energyservices.com/ provides the machinery to make oil drilling work and it gained 4.44% ($0.89) in early trading today riding the rally. TTES is currently trading in the $20.84 range on the Nasdaq with a new market cap of $269 million. TTES has a 3-Month average daily trading volume of 182,808 shares and it was a quarter of the way there by mid-session.
TTES had no official news today, but unlike so many SmallCap oil industry stocks, it had a good second quarter (all things considered). The TTES Q2 09 report of August 4, posted a net income of $4.9 million, or $0.38 per diluted share. Q1 09 net income was $3.8 million, or $0.30 per diluted share (which included pre-tax charges for separation and acquisition costs of $4.2 million, or $0.22 per diluted share after tax. Excluding these items, net income and diluted earnings per share for the first quarter of 2009 were $6.6 million or $0.52 per diluted share). Down a little I admit, but TTES keeps earning money.
TTES revenues dropped in Q2 09 by 11.2% to $55.7 million from Q1 09 revenues of $62.8 million. During the quarter, industry declines and the seasonal spring break-up in Canada caused average worldwide rig counts to decrease at more than twice this rate, or 25%. Good news: for the quarter, revenues on items destined for delivery to customer locations outside the United States represented 61% of total revenues, which is sequentially up from 56% and reflects the TTES focus on international markets. Gross margins were 37% for Q2 09 compared to 38% for Q1 09.
TTES designs, manufactures, repairs, and services products used in the drilling and completion of new oil and gas wells, the workover of existing wells, and the production and transportation of oil and gas primarily in the United States and Canada.
At $20.84, TTES is below its 52-week high of $52.74 set on 09-22-08 and is far above its 52-week low of $8.05 set on 12-30-08. At $20.84, TTES is ahead of both its 50-day and 200-day moving averages. TTES has trailing twelve month revenues of $267 million and a trailing twelve month EPS of $0.37. TTES is widely held by institutions. Its shares out versus float ratio is at parity.
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