PFIE competitors?

http://www.ibtimes.com/energy-companies-seek-ways-capture-na…

To what extent are these guys competitors?

NG capture from fracking wells on the front page today.

http://www.cnbc.com/id/101934384

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Herman,

As per your article:

“NOW REGULATORS ARE CRACKING DOWN. North Dakota passed new flaring standards, with the goal of capturing more natural gas. Energy companies are scrambling to meet the rules and curb flaring—some with creative technologies.”

This is exactly who I’m bullish on PFIE. In order to obtain the NG a lot of decontamination must take effect through burning off impurities of water, wax, etc. This technology must be updated to give workers greater assurance of safety and to meet what I perceive to be a growing regulatory environment. This will also lessen the need for flaring if the decontamination process is not slowed down through the inefficiencies of manual relighting. Auto relighting through computerized sensors is the only practical solution. This is exactly what PFIE is doing…as well as developing other technologies to deal with the “burning” issues of NG exploration.

PFIE is perfectly positioned to help meet these safety and regulatory concerns IMO.

Jim

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That makes me want to bring up PSIX again. It makes a whole lot more sense to use the gas right at the wellhead than to flare it off.

Saul has mentioned that the PE ratio is high and that is certainly true. But the insiders own a large stake and that gives me confidence that they’re going to invest for the future. I think the future of the company is good if not great.

Thanks, Jim, for your response.

When I see a large company like GE involved, I worry about the greater resources they can apply. I guess it would take a lot of technical know-how to tell the difference between the procedures of PFIE vs. the GE group, and I probably couldn’t understand it even it was explained to me in fairly simple terms, :slight_smile:

For now, I’m content with a small position in this worthy company.
Thanks again, John (Herman is my middle name and I am actually a potter, by profession)

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John,

Wow…a potter by profession. Good for you! What a wonderful creative way to make a living. I’m envious.

Your concern about GE is understandable. My guess is that this tiny specialized niche occupied by PFIE is small potatoes to a giant like GE.

PFIE has enjoyed a nice run up this week probably due mostly to an upgrade by The Street Ratings from Hold to Buy.

http://www.thestreet.com/story/12850148/1/profire-energy-inc…

Highlights from the ratings report include:

-PFIE’s very impressive revenue growth greatly exceeded the industry average of 20.8%. Since the same quarter one year prior, revenues leaped by 83.0%. This growth in revenue appears to have trickled down to the company’s bottom line, improving the earnings per share.

-PFIE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.26, which clearly demonstrates the ability to cover short-term cash needs.

-The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Energy Equipment & Services industry and the overall market, PROFIRE ENERGY INC’s return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.

-PROFIRE ENERGY INC has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, PROFIRE ENERGY INC increased its bottom line by earning $0.12 versus $0.02 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus $0.12).

-The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 37.6% when compared to the same quarter one year prior, rising from $1.61 million to $2.22 million.

Jim

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Can someone please help me out here as I’m having trouble making the connection. Profire does burner management systems, which I believe are used throughout the entire production process, not just flaring. The process that is getting talked about in the article is the capturing of burn off and utilizing it for other purposes (which is actually something PSIX already does with some of their engines). How are these guys a competitor to Profire? I’m admittedly a little unfamiliar with the oil patch so any help would be appreciated. Thanks!

Jason
Long PFIE

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Can someone please help me out here as I’m having trouble making the connection. Profire does burner management systems

It seems to me Jason, and this is just my interpretation, Is that GE has come up with a process that might be better than Profire’s. Instead of flaring the gas they would take it and process it. I think that HermanPotter came up with an important article that we need to watch. Because this could impact the flaring operations of PFIE, but of course they would still have the portion where they heat the oil to remove impurities. Thanks Herman, +1 rec.

Andy

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Thanks Andy!

Your welcome Jason but that is my interpretation.

Andy

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Another similar article:

http://finance.yahoo.com/news/inside-north-dakotas-latest-fr…

I thought the run up this week was because I considered buying on Monday but held off until I read up on it a bit more…

-srslydude

Jason,

Let me take a stab at helping you. Understand that I am not in the oil and gas industry despite my moniker of drillerjim101. I am an old practicing dentist 64 years old that will soon retire. However, I have a special interest in oil and gas since we live here in the middle of the oil patch. We are in the middle of the largest craziest boom I’ve ever seen in my lifetime. And it looks to continue for at least the foreseeable future.

First of all, ProFire installs and manages burner management systems DOWNSTREAM. ProFire does not care how the oil and gas is extracted. They are essentially a high tech thermostat that regulates the flame for the oil and gas burners. When the flame is adjusted properly, the natural gas is then ready and purified enough for transportation through pipes. As I heard the CFO explain it, think of it as relighting your backyard barbecue grill. It can be dangerous. Many lives have been lost in the oil patch attempting to manually relight with rags… the huge volumes of explosive gases are coming out under very high pressures. PFIE relights in an efficient and safe way. No one does it better than this clear industry leader. Not only is it safer but they save energy and greatly lessen the size of the flare by significantly reducing the amount of natural gas that is flared into the atmosphere. And of course reducing the amount of greenhouse gas emissions at the same time. Canada has already passed laws requiring such technology. The belief and hope is that the legislative picture looks promising here in the US to also require companies to install this high tech proprietary type of device.

As we have shown in previous posts, the numbers have been extraordinary with net income increasing 470% in the 3rd quarter to $1.2 million.

Will the numbers continue? That is the $64,000 question. The correct answer is perhaps. Primarily due to the legislative landscape and the growing increase in demand for this kind of technology. The opportunity is definitely there. These units need routine optimizing, cleaning, and testing. ProFire is currently testing maintenance agreements in South Texas.

Why is PFIE superior to competitors? When asked, the CFO answered that there is broad appeal from the very cold northern Alberta area (where the technology was developed) to the heat of South Texas. As he put it: “The secret sauce is really the software”. Also he mentioned that obtaining NASDAQ status was HUGE. It gives them credibility and depth with the large multinational companies that need this technology. The CFO: “Now we have access to more investors which we need for our own growth plans. We’re going to need some capital to grow into North Dakota, Colorado, and the Northeast.”

Bottom line: If you are looking for a growth company without any debt in an expanding niche, this one may prove to be highly profitable as a long term investment. I personally am very comfortable with a full position and may add even more on dips.

Hope this helps.

Jim

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Jim,

Thanks - this is very helpful!

Jason

Not only is it safer but they save energy and greatly lessen the size of the flare by significantly reducing the amount of natural gas that is flared into the atmosphere.

Jim,

From what I have been reading the use of flaring will decline dramatically as new regulations kick in that require increasing amounts of CH4 to be captured and not burned off as is do e by flaring. To what extent are PFIE’s burner management systems used for flaring versus other uses (e.g. Boiling off impurities)? If burners for flaring are a large part of the sales and expected sales the. We have a problem. Does anyone know the revenue split for faring versus other applications?

Chris

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Chris,

My unprofessional understanding of the burning systems is as follows:

Think of your automobile (unless it is total electric) and all of the emissions that come out of our tailpipes. Over the years, our auto exhaust has become cleaner due to better technology before it is blown out of the tailpipe.

Profire is making the “exhaust” of NG wells cleaner as well as safer as well as saving more of the purified NG for transporting. Hence, as a consequence, the flares will be smaller and cleaner as PFIE comes up with better and better technologies to more efficiently burn impurities away. Obviously this is an energy bonus to the energy company and the exhaust is much “greener”. Of course, as wells become more regulated ProFire benefits. This is a highly specialized niche because this tiny company is reported to have around 65 to 70% of the market today and the % is still growing.

I know PFIE has other applications…for example, about 30% of their revenue is reported to be from valves and regulators. About 25% of sales are from complete systems that are installed at the well site. About 25% of sales are from retrofitting existing systems.

A quick glance at their website will show 5 different product categories with various products within each category. One of the five is labeled a “Flares: Profire’s line of flare ignition systems.” So obviously Profire has a computerized “thermostat” to aid in flaring. I do not know what percentage of their business is totally dedicated to flaring. But in some ways it seems that everything Profire does with their systems is indirectly/directly geared toward a cleaner, smaller, more efficient and safer burn which directly affects flaring.

The more I study this company the more aware I’m becoming that they are remarkably diversified in new product development even within this small niche…with burning being the common denominator.

Jim

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More very useful information taken from their investor presentation. I can see why its use is spreading in the US, even without being legally mandated yet. It’s economically in the oil company’s interest to use it.

Saul

The Profire BMS operates like a high-tech, highly-specialized oilfield thermostat. It ignites (and re-ignites, if needed) the burner flame in oilfield vessels. (The BMS senses when a burner has extinguished, and reignites it within seconds)

Q. What is an “oilfield vessel”?
A. The production and transportation of oil & natural gas requires various vessels (e.g. tanks, line heaters, separators, dehydrators, amine reboilers). These vessels vary in function (e.g. storing oil, removing chemicals or hydrates from gas, etc), but all require a burner flame to function properly.

The BMS monitors and manages the temperature of the vessel. (It manages fuel flow to adjust burner intensity, which in turn adjusts the vessel’s temperature)

The BMS can be monitored and maintained remotely.

To Summarize

•BMS quickly reignites the failed flame, and keeps the application within a set temperature range

•Application can be monitored remotely

•Production can continue with minimal interruption

•BMS assumes the risk of reigniting, reducing employee accident-risk

•BMS can help reduce gas emissions by quickly reigniting a failed flame

Without the BMS

•A worker must discover and reignite the extinguished burner flame, then restart the application manually

•All application monitoring is done directly, on-site

•Production can be interrupted for longer periods of time

•A worker assumes risk of reigniting flame, which can lead to burns and explosions

•Raw gas is sometimes needlessly vented into the atmosphere when flame fails

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PFIE products appear to light and relight the flames under various heat separators and other vessels that would be used to separate NG from contaminants like water wax oil etc and therefore would benefit from less flaring. Because NG as it comes out of the ground ,especially in a fracked well where all sorts of chemicals have been pumped into the formation, can’t go into a pipeline unless it is cleaned up.

http://www.profireenergy.com/role-of-bms/

Government regulations take a long time to be implemented . Many of these Bakken wells are drilled from one platform, the well heads are close together, making NG recovery easier. However FIE products are very niche,and ignitors are only a quarter ? of the business.

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