New Equipment and Credit Line Send New West Energy Services Stock Flying

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Friday, March 10, 2017

Shares of New West Energy Services Inc. (TSX-Venture:NWE) are running like a scalded dog on Friday morning, blasting ahead a whopping 300 percent on what likely will be a record volume day.  According to data from Yahoo Finance, the stock has a three-month average daily trading volume of only 24,680 shares.  A look back through Stockcharts information shows the best trading volume days in the past decade have been about 2 million shares. 

30 minutes into the trading session today, about 1.9 million shares have already traded.

The catalyst was the Calgary-based oil and gas services company saying that it has entered into agreements with an unnamed “U.S.-based organization” to acquire a fleet of oil and gas fluid transportation equipment, refinance its current debt obligations and obtain a new revolving line of credit.

The lender has already advanced the company’s wholly-owned subsidiary, Bearstone Environmental Solutions, an aggregate of about $6.0 million.  The monies are to repay an amount owned to a note and purchased the equipment, which include transport trailers, tractors and tank trunks for use in fracking applications, drilling and production.

Further, the lender has agreed to provide Bearstone with a $3.0 million revolving line of credit, initially with a three-year term.

NEW president and chief executive Gerry Kerkhoff noted in today’s press release on the deal that although revenue has been increasing, it is been limited by fleet size and credit capacity.  Kerkhoff believes the bigger fleet and access to additional capital brighter the company’s future as the oil and gas industry recovers.

In addition to typical interest rates and repayment terms, the lender also has been issued a warrant to purchase up to six million common shares of NEW at 6 cents per share during a period of three years.

Shares rocketed to 5 cents after closing at a penny each on Thursday before falling back to 4 cents per share in early morning action.

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