Geospace Technologies Corp (NASDAQ:GEOS) has a pivotal role in the energy sector, but don’t expect its shares to go soaring–not in the immediate future anyway. The most that Geospace can do for the medium term is perhaps bring some cheer to every Tom, Dick, and Harry as they see some moderation of gas pump prices, which certainly have nowhere to go but higher. On the other hand, Geospace’s shares can be a productive addition to your portfolio.
You see, where Geospace Technologies is actually engaged in is the oil and gas services industry, specifically in its subsector of seismic data collection. Esoteric as its business may sound, the company’s shares have lately drawn a lot of investor interest. As a matter of fact, Geospace landed among the top gainers for the Feb. 7 NASDAQ trading day after the company announced that its first quarter profit was more than double that of a year earlier following strong revenue growth. During the day’s post-market trading, its shares rose by 4.44 percent to $97.99 per share.
Seismic Tools’ Vital Role in Oil Search
What fueled the stocks’ ascent was Geospace’s first quarter net income of $22.01 million, or $1.70 per share, an increase from $8.69 million, or $0.68 per share, in the year-earlier quarter. First quarter sales revenue soared by 80 percent to $77.75 million from $43.28 million in the year-ago period. Both net profit and revenue results substantially exceeded expectations of stock analysts, with some crystal balls indicating just $1.21 in earnings per share for the first quarter.
The rosy performance of Geospace provides a glimpse of the great importance of seismic data collection to the oil and gas exploration industry and how a company with such a core competency can harness the many opportunities in the business.
Heightened Search for Hydrocarbon Deposits
Bear in mind that exploration of new sources of hydrocarbon fossil fuels in recent years has been stimulated by aging oil fields, which have fallen in terms of productivity. Also, the ever-increasing prices and demand for oil and gas are drivers to increased investments in exploration activity. Searching for hydrocarbon deposits and digging oil wells, onshore or offshore, are multimillion-dollar investments. Hence, what oil search companies want are technologies like those that Geospace has, which can help locate hydrocarbon deposits more accurately and speedily for optimal results.
Several other companies servicing the oil and gas exploration industry are benefiting from the increased spending on oil and gas exploration following the continuing growth in demand for energy. One is Bolt Technology Corp. (NASDAQ:BOLT), whose shares were recently upgraded by TheStreet from hold to buy following its strong revenue growth, which has significantly outperformed the 11.1 percent industry average. The company’s net income during the September 2012 quarter rose 136.7% to $1.70 million from a year ago, a growth greatly exceeding that of the S&P 500 and the energy equipment and services industry.
The company has four operating units: Bolt Technology Corporation, A-G Geophysical Products, Inc., Real Time Systems Inc, and SeaBotix Inc. Its four business segments consist of seismic energy sources reportable segment (Bolt), underwater cables and connectors reportable segment (A-G), seismic energy source controllers reportable segment (RTS) and underwater robotic vehicles segment (SBX).
$160-Million Bonanza from Norwegian Deal
Notably, one of the major primers of Geospace’s first quarter revenue growth is a $160-million contract in the Snorre and Grane fields on the Norwegian continental shelf. Under this contract, Geospace will supply Statoil ASA(ADR) (NYSE:STO) 660 kilometers of (410 miles) of seabed seismic reservoir monitoring systems on the Norwegian continental shelf.