Superior Well Services, Inc.: Well positioned for growth

Warren Buffet once said that “if a business does well, the stock eventually follows.”

Superior Well Service, Inc. (Nasdaq: SWSI) is one company that literally does wells (oil and gas, to be specific) and its business appears extremely well-positioned for revenue growth despite stiff pricing competition and oil and gas price volatility.

The Indiana, Pa.-based company’s primary expertise lies in stimulating oil and gas extraction for its clients with high-pressure gas and fluids that fracture underground formations. Superior also offers high-tech “down-hole” surveying using special tools that transmit data (including rock type, porosity, well integrity and the presence of hydrocarbons) back to surface computers. Additionally, the company has well-cementing and perforation capabilities.

The company set up shop in 1997 with two service centers in the Appalachian region. From those humble beginnings, it has grown to around $465 million in market capitalization with 25 service centers in five regions serving 600-plus clients.

What distinguishes Superior from numerous smaller players is its high-tech capabilities and geographic spread. However, it is Superior’s competitive pricing and flexibility that have allowed it to chip away at the market share of much larger firms in the oil and gas service industry such as Halliburton Company (NYSE: HAL) and Schlumberger Limited (NYSE: SLB).

Take the third quarter of 2007 for example. Revenues jumped 29% sequentially in the Appalachian region and 16% in the Southeast region but fell in all three other regions because of drilling activity declines and pricing pressures. The quick-thinking management took advantage of the situation and halted some projects in the slowing Rockies and Mid-Continent regions to divert resources to Appalachia and the Southeast where activity had picked up.

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below