It is not very often one gets the opportunity to invest in a company which is now growing at a prodigious rate, debt-free, cash flow positive, sitting on $9m cash, and whose operations actually benefit the environment. You will have to suspend disbelief for a moment, while I tell you that this company is in the oil services industry, uses the wonderful “razorblade” model for recurring sales, and boasts amongst its growing client list Chevron, Anadarko, Sabic - Saudi Basic Industries Corp, QatarGas, US Army, and General Motors, to name a few. I had not heard of it before, and what brought it to my notice was the recent preliminary results statement, announcing a 96.5% increase in revenues 2012 vs. 2011. Of those revenues, 25% were for the “razors” and 75% for the “blades” Amazingly, I can’t see it mentioned on any bulletin boards, so it seems to be off the private investors’ radar, at least for now.
The Company : MyCelx, (registered in USA, listed on AIM: MYX)
SP: 465p (450/480 spread)
Website: http://www.mycelx.com/
BACKGROUND:
The oil industry spews out between 3 and 10 barrels of wastewater for every barrel of oil that it produces, and this water has to be cleaned of its petrochemical hydrocarbons, before re-use or disposal. This is a highly regulated part of the industry, and strict standards are imposed over the required purity of the discharged water. This is a role that MyCelx seems to be doing very well, with a growing number of Exploration & Production multinationals using them to manage both UPSTREAM water (resulting from the oil and gas production process) and DOWNSTREAM (process water produced from petrochemical and refining operations).
MyCelx’ water cleaning system comprises a “coalescer” or a “polisher,” (or a combination of the two), which the Company sells or rents out to end users, and which uses consumable media supplied to the customers on a recurring basis. The system is capable of reducing hydrocarbon contamination to a level of under 10 parts per million (“ppm”) which, the company believes is “disruptive” of the industry. Existing methods typically achieve only between 30 and 50ppm purity, and with a larger footprint requirement. Footprint is an issue, particularly in “off-shore” Oil & Gas production, where the space is at a premium.
THE “MOAT”
The…
And by coincidence, Midas Daily Mail tipster published a nice summary on Saturday18 may 2013, which I assume will appear in the Monday newspaper.
http://www.thisismoney.co.uk/money/markets/article-2326673/M...
......The firm joined AIM only two years ago but already numbers some of the world’s biggest oil companies as clients. The shares closed at 470p on Friday and will almost certainly move higher over the next few years..........
......The firm is growing fast. In 2011, sales were $6.3million (£4.1million). They were $12.3million last year and they are expected almost to double again this year to $23.2million, rising to more than $50million by 2015.
The group is also expected to move into profit this year, with a pre-tax figure of $1.6million, soaring to almost $10?million in two years’ time. MyCelx is based in Georgia but is chaired by former UK Energy Minister Tim Eggar, who has almost 30 years’ experience in oil and gas. Eggar joined MyCelx just before it floated and his appointment was widely seen as a vote of confidence in the firm.
Midas verdict: MyCelx shares are 470p and have done well since flotation. However there is plenty more mileage in this stock. Buy.
(thanks Paul Pilot for the link)
Regards Freddie
