This ad comes to us from Andrew Mickey at Breakaway Investor, who we’ve heard from a few times before. The solution was suggested by a few readers, the first of whom was Randy Last-name-withheld-to protect-the-innocent, and one of them, one of the Stock Gumshoe Irregulars who wishes to remain anonymous (we’ll call him Streetsifter … his idea), actually wrote in with some good detail that I’ll share with you below.
Mickey will rush you the free report about the company teased here for a $49 subscription … but thanks to the Gumshoe and the Irregulars, you’ll find it here gratis … in just a few moments.
This company is in oil services, and, as you might imagine from the title of this post, it’s based in Texas.
The firm last year “announced the most dangerous partnership in big oil since ExxonMobil, ConnocoPhillips and ChevronTexaco.”
What does that mean? This company is partnering with CNOOC for offshore oil drilling services in Asia … and Mickey expects them to break out by the third quarter of this year. According to Mickey, they are aiming to “Dominate the #1 supply chain in the next 40-year oil boom.”
So what’s the company? A lot of clues are provided, here are a few:
Specific references to a few of company’s ships, “When a drill bit breaks, the 230-foot ship Hondo River is there to fix it. When the cigarettes run low, the Texans bring in the 155-foot Tennessee River. And when a rig needs to be towed, the 242-foot Northern Chaser is the workhorse ship of choice.”
Profit margin of 53%
Operating margin of 23%
(both those are reportedly from 2005)
So … this company supplies services to the oil drillers, and it is poised to work with CNOOC throughout Southeast Asia, including, one assumes, the specifically teased oil fields discovered off of Cambodia.
So … enough patience … thanks to the Gumshoe’s readers, I can tell you that this company is definitely …
Trico Marine (TRMA)
The comments here are all from Streetsifter, the chosen nom de plume of our anonymous Irregular:
The 30 Jun 06 announcement can be found at http://files.shareholder.com/downloads/TRMA/125712776x0x50383/78c94dff-bf99-44dd-937e-f6cda471cace/50383.pdf. It confirms the teaser ad reference to “the patronage of the Chinese National Offshore Corporation (CNOOC),” which turns out to be through CNOOC’s wholly owned subsidiary, China Oilfield Services LTD (COSL).
The teaser ad say the firm has a market cap under $1 billion, and a 23% Profit Margin. Trico’s $617 market cap and 22.13 Profit Margin can be confirmed at
But the “dead giveaways” are the teaser ad’s specific references to a few of company’s ships, “When a drill bit breaks, the 230-foot ship Hondo River is there to fix it. When the cigarettes run low, the Texans bring in the 155-foot Tennessee River. And when a rig needs to be towed, the 242-foot Northern Chaser is the workhorse ship of choice”
230 Foot Hondo River is listed among Trico Marines “Rig and Platform Supply Boats” at http://www.tricomarine.com/fleet/rig.aspx
155 foot Tennessee River is one of Trico Marines “Crew and Utility Boats” detailed at http://www.tricomarine.com/fleet/crew.aspx
And making it three for three, the 242 foot Northern Chaser is listed as a Trico Anchor Handling, Towing Supply Boat” at http://www.tricomarine.com/fleet/anchor.aspx
The teaser ad makes no mention that the current Trico Marine is the “successor company” that emerged effective April 05 from the “predecessor company” that went into Chapter 11 bankruptcy.
I also believe the teaser add has a mistake regarding the “2005 profits”, since the 10K shows an operating loss for 2005, but profits for 2006. But there are too many other direct hits for the solution to be anything other than Trico Marine.
So (back to the Gumshoe’s words here) … as an investor in oil services myself, and as a pretty strong believer in the general theory that offshore oil drilling is likely to expand significantly, especially in Asia, I find this a company worth investigating. I have no idea whether there will really be any short term bump towards the end of this year, but like many companies in oil services this firm is indeed trading at a fairly low PE (around 10 or so, though analysts don’t see their earnings growing next year).
The one warning is that this is a very competitive business, and the ships in question here are not in quite the same kind of short supply as the massive oil tankers or drilling rigs that we know have huge yard backlogs right now. TRMA is priced almost exactly the same as its bigger competitors like Gulfmark, Tidewater, and Seacor, so if you believe that they have a competitive advantage due to their smaller size or their deal with CNOOC then maybe there’s a reason to pick up these guys ahead of their rivals — that, as always, is for you to decide.
Thanks again to all the readers who wrote in to solve this one, and especially to the Irregular who wrote up his solution so tidily. Good luck, all.
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