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Thursday, March 10, 2011

The GasFrac Earnings report

This afternoon, GasFrac Energy Services Inc. (symbol GFS:CA or GSFVF.PK) announced the earnings for the fourth quarter of 2010. The results were outstanding. The key to GasFrac's performance is the level of revenue achieved. Revenue for the quarter was in excess of 41 million dollars compared to the extimates from the analysts of 37 million. This seems to be the result of higher amounts achieved for each well completion more than a higher number of completion contracts. This higher revenue bodes quite well for 2011 since neither the market nor the type of well is likely to change much in the near term.

During the quarter, there were extra expenses that pertained to commencing operations in the new areas in the USA as well as training and preparatory costs incurred in connection with the new equipment being brought on line by the company as it expands. As a result, the earnings are not a good indication of future performance.

The company did point out as expected that its first quarter results for 2011 will be hurt a bit by the two week shut down in January as a result of safety concerns after the explosion early in that month. The company says that all safety problems have been remdied and there should be no repeat of the shut down.

The company also made clear that its new equipment will be coming on line more rapidly than previously expected. This should be another force moving the company forward in 2011.

There will be a conference call tomorrow to discuss the results. At that time, we may be able to get more flesh on the bones of this report. As of now, it seems clear that GasFrac is moving forward more rapidly than previously expected. This stock has a bright future.

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