Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Boots & Coots: Oil Price Benefit?

A year ago, on the brink of bankruptcy, the stock of a small but famous company shot up from about a buck a share to more than $8. As the U.S. military marched through Iraq once again, there were concerns that the country's oil wells would be sabotaged. And with good reason: When Iraqi forces were being driven out of Kuwait during Desert Storm, before leaving they set ablaze 788 wells, nearly all the wells in the country.

If Iraqis had set fire to their own 1,500 or so wells, it would have meant big business for Boots & Coots (AMEX: WEL  ) , which travels the world capping out-of-control oil fires and other emergencies. If you've ever seen the John Wayne movie Hellfighters, then you know that what it does is an incredible thing, even with modern technology.

Well, the wells didn't go boom, but the company didn't go bust either. The stock fell back to earlier levels, though, and has remained there. Last week, it reported disappointing first-quarter revenue and earnings. Revenue fell to $4.4 million from $10.9 million a year earlier, and net income was $8,000 versus $3.3 million a year earlier. (The prior period included $6.6 million in revenues from equipment sales that skew results this time around.) Peanuts, I know, especially considering what it does to get it.

But here's the thing: With oil more than $40 a barrel, this company could be poised for growth. Oil companies of all sizes, including big names such as Exxon Mobil (NYSE: XOM  ) , BP (NYSE: BP  ) , and ChevronTexaco (NYSE: CVX  ) , are benefiting from sky-high oil prices, and there's apt to be a trickle down to Boots & Coots, which besides its famed fire-fighting endeavors also offers a whole host of preventative and risk management services.

In fact, it recently signed a two-year contract to manage training, inspection, and blowout control services for the Oil and Natural Gas Commission of India, which includes 28 offshore and 94 land rigs. That contract begins this quarter. And it is waiting to deploy workers to Iraq where it will be working to help restore the country's oil infrastructure. It had expected to be there already, but there was an unanticipated reworking of the contract for the Restore Iraqi Oil program.

The company hasn't given dollar estimates on the value of these contracts, but they should definitely help out. While this isn't a stock for the faint of heart, it does appear that business may be about to increase substantially.

Our Oil and Gas discussion board is filled with talk about oil's current sky-high prices. Not a Fool Community member? Take a free 30-day trial.

Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 507841, ~/Articles/ArticleHandler.aspx, 10/21/2016 5:49:48 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 8 hours ago Sponsored by:
DOW 18,162.35 -40.27 -0.22%
S&P 500 2,141.34 -2.95 -0.14%
NASD 5,241.83 -4.58 -0.09%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/20/2016 4:00 PM
BP $36.05 Down +0.00 +0.00%
BP CAPS Rating: ****
CVX $101.87 Down -0.40 -0.39%
Chevron CAPS Rating: ****
WEL.DL $0.00 Down +0.00 +0.00%
Boots & Coots Intl… CAPS Rating: ***
XOM $87.21 Up +0.04 +0.05%
ExxonMobil CAPS Rating: ****