The past few sessions on the TSX have seen a particular industrial company put together a winning streak in terms of its stock price, a streak worthy of a Jeremy Lin. During this short week, with energy prices soaring once again to levels not seen since the 2008 recession hit, Calgary-based Flint Energy Services (T.FES) has achieved peak after 52-week peak, due in some small measure to the takeover it experienced at the hands of an American conglomerate.
On Monday (a holiday in many parts of Canada), it was announced that Flint was being purchase by URS Corporation (NYSE: URS) for $1.25 billion, or $25.00 in cash (all figures in Canadian dollars unless specified otherwise). The San Francisco-based URS announced it would also assume approximately $225 million in Flint debt. The deal is expected to close in this year’s second quarter.
The press release displayed the air of a father popping the buttons off his shirt for an overachieving son; Flint, which supplies construction services for the oil and gas industry, currently supports many of the largest companies operating in the oil, oil sands and gas producing regions of Western Canada and in the Southwest, Appalachian and Rocky Mountain regions of the United States. URS would use the deal to expand its reach within North American markets.
FES’ diversified activities span the full cycle of oil and gas exploration and production, including constructing well pads, moving rigs, manufacturing processing equipment, installing small and mid-diameter pipelines, transporting fluids, performing a wide range of mid-cycle production services, and constructing and maintaining large oil sands facilities.
The latest period for which there are figures is this fiscal year’s third quarter, which ended in September. Flint experienced an expected lift from increased customer midstream activities in the third quarter, with total quarterly revenues, including Maintenance Services, of $505.3 million and EBITDA of $44.9 million, compared to $406.5 million and $38.4 million in Q3 2010.
For the third quarter, Flint realized profit of $17.3 million, compared to a profit of $9.2 million in the comparable quarter of 2010. Net earnings for the third quarter were $0.37 per fully diluted common share compared to $0.20 per fully diluted common share in 2010. Fourth-quarter figures are due out in mid-March.
As to the company’s stock price, it developed nosebleed once again on Wednesday, Feb. 22, when it closed at $24.90, towering over a 52-week low of $9.08, to which it plunged last September. But given the excitement in the oil industry (whether in response to lower inventories, more saber-rattling in the Middle East, or both), this is a stock that bears watching. As always, proper due diligence is encouraged.
