Boots & Coots Well Control -- Small Cap Oil Services Play? (WEL)

Apr.10.06 | About: Boots & (WEL)

Excerpt from The Wall Street Transcript's 4/10/06 interview with Boots & Coots International Well Control, Inc (WEL) CEO Jerry Winchester:

TWST: Would you give us a brief description of Boots & Coots International Well Control?

Mr. Winchester: Historically, Boots & Coots has been best known for its involvement in emergency response for oil and gas well blowouts, rig fires and things of that nature. Certainly, that's where we got our start and built our reputation. Initially, we operated from a business model where you had to sit and wait for the customer to have a problem -- then you went out and dealt with it and came back. That causes a really lumpy revenue stream.

The company began a transition in 1998-1999 by adding technical personnel ' specifically engineers. We asked ourselves at that point what our customers wanted. We knew they were reluctant to call us because that meant they were having a blowout or associated problem, so we started thinking of ways to service wells that don't catch fire and blow out and we were drawn to the risk management side of the business. Because we had a front-row seat for a number of years for all of these events, we felt we had a good understanding of what caused them and what the issues were. We thought we could take that information and put it to good use.

We realized that there were a number of services we could provide to help customers manage the risks they faced, and in some cases, mitigate those risks by having people and/or equipment in a certain area. Then we could very quickly respond to any issues.

So in 1998 we added prevention services to our business model, and in our first year of offering these services, 1999, we made about $200,000. We just finished up 2005 with $14 million in that segment. So you see how we transitioned from being only a response company to being a response, engineering and risk management company.

Today, with our acquisition of Hydraulic Well Control [HWC] in March, we have really become a pressure control company -- which was our vision all along. When customers had pressure issues or pressure control problems, we wanted to be their preferred vendor for dealing with that whole range of issues. We now have the tools, the processes and the people to do that. So the acquisition has played well into the evolution of the Boots & Coots.