PASON SYSTEMS $32.79 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.7 million; Market cap: $2.7 billion; Dividend yield: 2.1%) is trading near all-time highs as it continues to benefit from the boom in U.S. shale oil and gas drilling.
Pason rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors in Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended June 30, 2014, the company’s revenue rose 26.1%, to $103.8 million from $82.4 million a year earlier. Pason saw higher sales in all markets, but especially in the U.S.
Pason earned $17.6 million, or $0.21 a share, in the latest quarter. A year ago, it lost $39.4 million, or $0.48 a share, but that included a pre-tax lawsuit settlement of $61.6 million. Pason holds cash of $144.6 million, or $1.75 a share, and has no debt.
The company raised its quarterly dividend by 13.3% with the October 2014 payment, to $0.17 from $0.15. The shares now yield 2.1%.
The outlook for North American drilling remains strong, despite normal fluctuations in oil and gas prices and lobbying by environmental groups to limit hydraulic fracturing (or pumping sand at high pressure to collapse the rock and bring oil to the surface).
Pason Systems is still a buy.
