OYO Geospace Corp (OYOG)

This is a re-load after the recent pummeling this one has taken, but here is my original pitch:


For some reason, the baby out w/ the bathwater syndrome has captured the American investor's mindset. Therefore, in my personal portfolio, and in CAPS, I am picking up (and rating) oil service companies to outperform the S&P over the next several years, as the latter is tied more closely to the languishing / stagnant US market dynamics, while oil service companies are becoming more and more truly global investments.


SmartMoney had a nice write-up on OYOG's products @ http://www.smartmoney.com/undertheradar/index.cfm?story=20070516&afl=yahoo&pgnum=1">http://www.smartmoney.com/undertheradar/index.cfm?story=20070516&afl=yahoo&pgnum=1


Here are some relevant excerpts:


' "The 4-D seabed seismic, that's what you own the company for," says Bo McKenzie, an analyst with Pritchard Capital Partners. "If you look at the oilfields around the world, you're getting 30% to 35% of the oil out and leaving the rest of it behind. OYO's technology gives you a much higher resolution picture that allows you to tap the stuff you were missing. The easiest oil to find is the oil you've missed in your own field."


The time-lapse data is critical because it allows developers to optimize production. British energy giant BP (BP: 69.29, +0.06, +0.1%), for example, invested about $42 million last year in its Valhall North Sea oilfield using OYO's products and services. "That $42 million may sound like a lot of money, but BP was able to pick up an additional 60 million barrels of oil," McKenzie says. "That comes to 70 cents a barrel. That's the punchline. In terms of incremental recovery, the cost is nothing."


It's estimated that OYO's technology allowed BP to reap an additional $800 million to $900 million from Valhall so far, and the market has taken notice. OYO's shares are up just 15% in the last year to $71.26 as of Tuesday's close, but have leapt 25% year-to-date. By comparison, the small-cap benchmark Russell 2000 gained about 10% and 5% over the same periods, respectively. '


Also love the conservative accounting used by them, as also quoted in the article:


"These guys have the most conservative revenue recognition policy on the planet and people don't understand it," McKenzie says. "If they got a big $100 million project tomorrow, chances are good we wouldn't see that for a year, and then it would all come in one quarter. This is not a quarter to quarter stock."