Everyone has heard of, and many folks know about big oil and gas companies like Exxon Mobil (XOM) and Chevron (CVX). But more interesting and more compelling stories lie with smaller oil and gas companies. I will look at five of those, determining which are most suitable for investment.
Caldive International, Inc. (DVR)
DVR trades on the NYSE at about $2.50 per share, near the low end of its 52 week range of $8.19 to $1.50. DVR has a market capitalization of just over $230 million, and has not declared a profit in two years, so has no P/E calculation. It pays no dividend.
DVR specializes in supporting platforms and work related to offshore oil drilling. Its business took a significant hit with the closing of much of the Gulf of Mexico to new drilling. While DVR has sought to replace that with efforts in Australian waters and with a 2012 contract with Mexican state firm Pemex for a new pipeline, DVR is unlikely to profitable to any degree as long as production growth is fallow in the Gulf of Mexico.
An effective measure of DVR’s travails is found in the degree to which has been actually using its fleet of boats. For the third quarter of 2010, DVR utilized 69% of its shipping fleet on a calendar day basis. In the third quarter of 2011, that same ratio fell to 49%. DVR lost $34 million in the third quarter of 2011, has only $7 million in cash on hand, and is relying on bank debt to meet its working capital needs. While Jim Cramer likes this stock, I do not. To continue reading, click here