Posts Tagged ‘transportation’

Buzz Stock of the Day – Crosstex Energy, Inc. (XTXI)

Wednesday, June 24th, 2009

Shares of Crosstex Energy, Inc. (Nasdaq: XTXI) were up more than 22 percent today.

Earlier this month, the Dallas-based natural gas transportation and processing company announced an agreement to sell its assets in Mississippi, Alabama and South Texas for $220 million to Southcross Energy LLC. Crosstex’s assets in Mississippi and ALabama consist of about 780 miles of intrastate gathering and transmission pipelines. The South Texas assets consist of about 1,400 miles of intrastate gathering and transmission pipelines.

Proceeds from the sale will be used to pay down more than $200 of the partnership’s debt. This will satisfy the targets for debt reductions in Sept. 2009 and Dec. 2009 established in recent amendments to its debt facilities, Crosstex said in a statement.

“The sale of our Mississippi, Alabama and South Texas assets enables us to strengthen our balance sheet as we pursue our strategy to increase liquidity, reduce leverage and improve profitability,” said Crosstex president and CEO, Barry E. Davis in a news release. “We continue to focus on the growth of our strategic assets in North Texas and Louisiana, as well as our treating business, and remain committed to being a premier provider of midstream energy services.”

More than 92 percent of Motley Fool’s CAPS members believe the stock will outperform the S&P 500 this year.

The Energy Information Administration, in its Annual Energy Outlook 2004, estimates that natural gas demand in the United States could be 31.41 Tcf by the year 2025. That is an increase of 38 percent over 2002 demand levels.

The EIA expects residential energy demand to increase 25 percent between 2002 and 2025. Residential use of natural gas is expected to increase by 1.5 percent per year from 2002 to 2010 and 0.9 percent from 2010 to 2025, increasing 25.5 percent from 2002 to 2025. Residential natural gas consumption accounts for 22 percent of all consumption in the U.S.

Probably the most important long term driver of natural gas demand in the residential sector is future residential heating applications. Between 1991 and 1999, 66 percent of new homes, and 57 percent of multifamily buildings constructed used natural gas heating. In 2003, 70 percent of new single family homes constructed used natural gas. While these new homes being built are generally increasing in size, the increasing efficiency of natural gas furnaces used to heat them compensates for the increased square footage to be heated. In general, however, the increase in the number of new homes using natural gas for heat over the next 20 years is expected to provide a strong driver for residential natural gas demand.

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Buzz Stock of the Day – Providence Service Corp. (PRSC)

Monday, April 20th, 2009

The Providence Service Corp. (Nasdaq: PRSC) stated today that it expects first quarter earnings per share of at least $0.35, a dime higher than the First Call consensus of $0.25. The social services management company stated it expects revenue or between $180 million and $185 million, higher than the $179.7 million analyst consensus.

Earlier this month, the Tuscon-based company announced that its Logisticare subsidiary won a $300 million contract from the New Jersey Department of Human Services to provide non-emergency transportation services for the fee-for-service in selected counties in New Jersey. The contract is expected to take effect on July 1, 2009, and has an initial term of three years with two, one-year renewal options that run through 2014.

Shortly before the contract was announced, SunTrust Robinson Humphrey analyst, Mark Hughes upgraded his rating on the stock to ‘buy,’ from ‘neutral. Hughes has a $12.00 price target on PRSC.

We like PRSC because the company generates cash from operations, has a small float and has year-over-year revenue growth of about 80 percent. The Providence Service Corp.’s 2008 revenue increased 143 percent to $691.7 million from $285.2 million a year earlier. Excluding a $169.9 million and an expense related to accelerated vesting, the company generated EBITDA of $39.1 million from $30.7 million a year earlier.

Shares of PRSC are up almost 500% since the onset of 2009.

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Buzz Stock of the Day – DryShips, Inc. (DRYS)

Friday, April 17th, 2009


Greek dry bulk carrier, and our Buzz Stock of the Day — DryShips, Inc. (Nasdaq: DRYS) recently completed its at-the-market equity offering of $500 million, which should strengthen the company’s balance sheet and reduce its debt.

The company now has about 184.8 million common shares outstanding, and a market cap of slightly more than $1 billion.

CEO George Economou said in a statement that the “primary equity that we have raised has significantly improved our balance sheet and liquidity, and will enable us to continue reducing our debt obligations.”

Oppenheimer & Co. just upgraded DryShips to “outperform” from “perform” primarily because of the equity offering.

“We see upside potential based on the end of the company’s $500 million ATM offering, which removes consistent overhead supply that has been one of the causes of the stock price underperformance year-to-date,” analyst Scott Burk wrote in a note to clients. Oppenheimer established an $8 price target on DryShips, which has shed more than half its value since the end of January.

Earlier this week DryShips announced that its wholly owned subsidiary Ocean Rig ASA signed a three-year, $630 million contract with Petrobras for exploration drilling in the Black Sea.

The contract is for use of Ocean Rig’s semi-submersible rig, the Leiv Eiriksson, and is expected to commence in direct continuation from DryShips’ current contract with Royal Dutch Shell and includes about 60 days of mobilization, disassembly and reassembly of the derrick structure, and an incentive bonus of 8 percent.

DryShips’ stock has been hammered over the last 12-months, falling roughly 92 percent. The company has about $3 billion in debt, but generated about $540 million of operating cash flow in the trailing 12 month period.

Settling debt may take time, though. Although some analysts believe that the company will ultimately get teh waivers on loan covenants from its lenders, the process is slow-going, especially since DryShips has to negotiate with 20 to 25 banks, not just one or two, like many of the company’s competitors.

Jeffries analyst Doug Mavrinac said realistically banks are not going to want to foreclose on DryShips’ 40-lus vessels. The company, which has $1 billion of cash on hand, and should generate $1.7 billion in EBITDA over the next three years, should have it debt-free in that same time period.

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