TETRA Technologies: Looks Like A Turnaround Candidate

I have taken a long look at this company before deciding to add it to my 20 Stock Portfolio. TETRA (TTI) is in the oil services industry and the different technologies and terminologies concerning their business are confusing to someone not familiar with the business. From reading their literature to company specializes is a couple of areas:

• Fluids: They are the largest producer of calcium chloride.
• Well Abandonment and Decommissioning
• Production Testing
• Wellhead Compression Services through their subsidiary Compressco, Inc.

2007 has turned out to be a very rough year for TETRA and profits have fallen about 25% after several years of excellent growth. The stock price has, of course, been battered, falling from a high of $30 in July to below $16 now. At this point I like the company for two reasons:

1. The fall in profits appears to be a limited time occurrence. The stock is now trading at 11 times 2008 projected earnings and any positive quarterly earnings reports should have a very positive stock price impact. From reading the company reports, it appears the management has figured out the causes of their loss of earnings growth and are taking positive steps to remedy the situation.
2. The company has plans to spin off Compressco, Inc. as a MLP. They are doing this to “unlock” shareholder value. I like the idea of getting an additional dividend paying stock out of the company, and I believe the spin off could only be positive to total investment value.

The biggest issues for me are: Can management really do what they promise? And when will the MLP spin off actually take place?

At this time I think the future looks positive for TTI and am adding it to my hypothetical 20 Stock Portfolio.