Bri-Chem Corp T.BRY

Scoping Q2 to Q4 2021 Revenues

[nozzpack]

We have sufficient rig service data to scope out what we can expect for the remaining 3 quarters.

I use 2019 as the base from which to estimate 2021 Final Three Quarters  ( FTQ ) revenue and then  prorate that base using current known oil sericve activity, assuming no changes in that activity going forward.

So, we have for 2019 the following statistics

 US FTQ  Revenue                          $47.6 m
Canada FTQ Revenue                    $18.3 m
Total                                                 $65.9 m

Canada oil service  April  2021   index         34.9    
Canada oil service  April  2019   index         30.6

Ratio 2021 versus 2019                               114 %

US oil service April 2021  index                   936
US oil service April 2019  index                  1321

Ratio 2021 versus 2019                               71 %

So, we have a simple computation of the form $18.3 m X 1.14 plus $47.6 m X 0.71 = $54.7 million

This number ( $54.7 m ) is the estimated revenue for the last 3 quarters of 2021.

As computed, it is very consevative for the Canadian estimate, as we already know that May and June  oil rig activity have grown considerably ( see recent posts )

As computed, it is probably a bit consevative for the US estimate although there trend there is relatively stable recently.


In Summary, 2021 is shaping up to be a very good year, with total revenues likely to exceed $65 million, when all is said and done, given current activity data and their trends.

As revenue increases, gross margin shoiuld increase somewhat from their base of 20 % observed in Q1/21, oweing to the fact that certain costs are fixed.

SGA is now down to just 10 % of gross revenues, which computes to operating earnings=Ebitda above $5.5  million.

Along with an excess of Receivables over Payables of $4 million going forward, LT debt should be reduced to very modest levels at exit 2021.

At a very modest 5.5 times Ebitda, fair value is above $1 per share.

[nozzpack]

"As computed, it is probably a bit consevative for the US estimate although there trend there is relatively stable recently." Actually, I have understated the conservative nature of the US rig trend. April 0f 2019 at 1321 was the high for that year , as the rig index declined to 1108 by December of 2019....a 17 % decline. For Canada, rig index increased from April to June. So, both

[nozzpack]

2021 EV to Ebitda for oil service stocks is 11.5 times..... https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html Taking my projected Ebitda of $5.5 million, BRY Enterprise Value should be about $60 million. Remove $12 m in debt and the market cap fair value is about $48 million which is $2 per share.