GASFRAC Energy Services (T.GFS) hangs on for dear life with new two-year contract
GASFRAC (TSX: GFS, Stock Forum) has been on a three-year slide that has seen share prices
go from over $13 to a measly $2.10 at the beginning of the year, producing anger among investors and accusations of gross mismanagement due to poor performance and dismal financials. Speculations abounded that the only place the company was heading was the chopping block, although there were a few die-hard opinions that even though the company was a rocky boat, it would see calmer seas.
Regardless, market confidence continued to wane as fevered demands for a complete board turnover were met with a single resignation and appointment at the end of June, driving stocks down another ~59% over two months.
According to today's new release however, the company began scrambling to turn things around for investors with the announcement that GASFRAC had inked a two-year deal with BlackBrush Oil and Gas where the company would provide fracturing services in South Texas.
The contract set up a minimum commitment of $7.2 million to the company per annum with an upside in economics as activity reaches BlackBrush's target levels.
BlackBrush laid out an expectation that it would drill 24 new wells annually in the prolific San Miguel Formation, Maverick Basin, South Texas.
The company also announced the commencement of waterless fracturing operations in New Brunswick with Corridor Resources and anticipates completion in the next few weeks as well as announcing the successful completion of several conventional treatments including Poly CO2, Nitrified slickwater and gelled water jobs in Alberta.
Jason Munro, company President, commented on the new contract, “We are very pleased to deepen our relationship with the team at BlackBrush following the excellent field results we have achieved together in the San Miguel Formation.”
He went on to explain, “Deploying GASFRAC's HOOD* technology on several wells, BlackBrush hopes to deploy even larger fracs with substantially better results.”
Then continued, “In addition, the use of infield hydrocarbons with High Reid Vapor Pressure (HRVP)* eliminated the need for supplement frac oils, resulting in a per well cost that is competitive to that of conventional water fracturing.”
And finally summed up, “This contract represents the initial phases of GASFRAC's strategic turnaround and complements our effort to become a leading provider of fracturing services in North America, utilizing conventional, energized and waterless fluid solutions.”
GASFRAC was in the news recently when the Calgary Alberta-based company announced financial results from its Q2 2014 at the beginning of August.
Market confidence was up as shares climbed 7.79%% on the news to $0.83 per share – maybe there's life in this old mare yet.
Currently there are 63.6m outstanding shares with a market cap of $52.8 million.
Source: Stockhouse (September 10, 2014 - 10:43 AM EDT)
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