BRNC Conference Call - HPEGuy's Take
So I finally listened to the conference call today and was about what I expected. My personal highlights. All quotes are paraphrasing and not actual quotes.
What BRNC Said: "Wexford Capital owned 100% of BRNC at the time of IPO".
HPEG Guy Take: Makes sense - the massive sell off seems to be a simple case of "we invested a ton of money, the stock went public, we made serious money, now time for something else". The Wexford situation to me isn't anything. I just can't wait until they are out of stock.
What BRNC Said: "The Well-Services industry is fragmented and we want a piece. We've got cash and we're going to use it to continue to invest and buy back debt".
HPEG Guy Take: This is great, except I am not sure its as fragmented as they say. Ever heard of a little company called Nabors? As the price of oil and gas continues to stay above $40, they'll have room to grow. I like the growth prospects and it'll serve them well. BRNC is basically almost debt free, so debt buy back isn't something I would focus on.
What BRNC Said: "We are aggressively pursuing the international market and we owe it to ourselves and our shareholders to move into international markets".
HPEG Guy Take: You think? They better start today. The domestic market will be ok for them, but the real growth opportunities are in the international arena. Everyone is talking about it - HERO is trying desperately to get out of the gulf. Without anything international right now, I worry they'll miss the boat. They stated that we could expect international rigs very soon and reiterated their aggressive stance toward international drilling.
What BRNC said: "Short term day rates will probably go down a handful of percentage points"
HPEG Guy Take: Q2 report will be the same as this one, continued sluggish day rates and leading edge contracts. They will have to negotiate several contracts in the next couple of months. There is nothing to like about this stock in the short term.
OVERALL: I like what I heard about the long term picture of BRNC and think they'll be a great small cap growth stock. The only reason to get in now is oil and gas prices. Investors will flood this sector if oil goes to $70 (its over $60 now) and you'll miss the big jump in its stock price. Otherwise, BRNC is going nowhere for 3 months. However, I love its long term outlook and think that it'll easily trump the S&P 500 for the next 2 years. If the shares get to $13.60, its at book value. BRNC is currently trading at $15.39 - a great value play. Not much downside here, so if you buy now you are assured to catch the upside coming in the next year or two. Then again, you could be sitting on a flatliner for over a year. Good news for me, I don't try to time these things - I'll be patient and hold on. If the stock goes deep into the $14s, its time to buy more, much more.