Our firm previously held a position in GASFRAC (GSFVF.PK), the innovative well-fracturing company which has developed a patented waterless Liquid Petroleum Gas gel. The gel not only yields higher reservoir production, it eliminates concerns over water use in fracturing. Because we are mindful of the environment as well as concerned about rising prices for oil and natural gas, GASFRAC’s LPG gel is appealing as an alternative to the water-based hydraulic fracturing (fracking) process that Nabors (NBR), Calfrac (CFWFF.PK) and Trican (TOLWF.PK) use.
We had sold our position months ago because we saw that the company’s shares were volatile and that even though the shares were off its unsustainably high all-time high of $15.05, we felt that there were near term challenges that the firm needed to work through. We remain impressed that GASFRAC has seen rapid growth as an organization and achieved its revenue growth without the aid of acquisitions. Although we expect that GASFRAC will be able to maintain strong revenue growth during this period, the company really needs to buckle down on its operational execution in order to start generating positive economies of scale.
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