BMO Capital Markets Initiates Coverage on Poseidon BMO Capital Markets Initiates Coverage on Poseidon Concepts (TSX:PSN) - Video Summary Posted on www.InvestmentPitch.com
Vancouver, British Columbia, January 11, 2012 - BMO Capital Markets initiates coverage on Poseidon Concepts (TSX:PSN). Analyst Michael Mazar gives the company an outperform rating and a $15 price target.
InvestmentPitch.com has produced a "video news alert" about Poseidon Concepts based on this report. If this link is not enabled, please visit www.InvestmentPitch.com and enter "Poseidon" in the search box.
Poseidon is a Calgary-based energy services company specializing in the provision of fluid containment systems for use in well-site storage of various oilfield fluids, particularly fracturing fluids.
The company operates a fleet of roughly 250 proprietary, modular storage tanks throughout North America that, when assembled, are of much large size than traditional on-site storage tanks. This is an increase from just 25 tanks at the beginning of 2011.
Historically, well completion fluids have been stored in either 400 barrel capacity tanks with several dozens of these tanks arranged in a "tank farm" system, or in lined "pits". Poseidon's modular tanks, which come in three sizes, can store up to the equivalent fluid as roughly 100 traditional tanks, significantly reducing transportation costs, set-up time and fluid heating costs.
Analyst Michael Mazar believes the transportation and time savings, coupled with even modest heating cost savings are sufficient for modular tanks to gain significant market share.
Poseidon personnel invented the product and are in possession of patents in Canada along with a key patent pending in the U.S.
The company currently trades at $13.50, below BMO Capital Markets' $15.00 target price. With approximately 75 million shares outstanding, the company is capitalized at $988 million.
The shares currently carry a yield of 8.2% and a payout ratio of 79%, based on the 2012 cash flow estimate. In light of the company's relatively low growth capital requirements, high level of long-term contract coverage, roughly 60% of equipment is currently on long-term contracts, and well-defined growth profile, Mazar believes the current dividend level can at least be maintained and actually expects dividend growth in the medium to longer term.
He also points out that there is no remaining "trading overhang" associated with Poseidon's shares following the spin out from Open Range. All tax selling has been done and any "lock up" periods have expired.
For more information about Poseidon Concepts, please visit the company's website www.poseidonconcepts.com, call 403-453-1943 or email investor.relations@poseidonconcepts.com.
For a copy of the research report, contact your nearest BMO Nesbitt Burns' office. Their branches are listed on their website at www.BMOnesbittburns.com
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