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T-3 Energy Services (TTES) Withdraws Public Offering

Posted on January 17, 2006

With the release of today´s bullish news by T-3 Energy Services (TTES), it now becomes understandable why the stock has performed strongly thus far in 2006. It also explains why insiders recently excercised options at about $11.40 per share. Bottom-line: Hold on to TTES thru 2006 and buy on dips. With a tiny share float and exposure to one of the hottest sectors, oilfield services, it should be a wild ride.

Besides announcing a new acquistion today of a drilling rig repair company, T-3 Energy (TTES) also announced the termination of its public offering. This last piece of news is very bullish, since the prospect of a public offering was weighing on the stock. I, for one, was hesitant to buy more of the stock, until the public offering was completed. With the public offering now cancelled, TTES can trade based on earnings prospects, which should be fantastic in the coming 1 - 2 years.

In addition to the offering termination, T-3 Energy´s (TTES) largest shareholder, First Reserve, provided a bullish outlook for their holdings in TTES, as you can read in the quotes below. I still believe that First Reserve will sell TTES in the future, but I suspect that given the bullish scenario for oilfield services stocks, First Reserve is content to let TTES stock soar in the meantime (thru 2006).  I was always perplexed why First Reserve did not "manipulate" TTES higher based on the low float and excellent earnings prospects, but I guess they are finally coming to their senses.

Here are the relevant quotes from today´s release:

Gus D. Halas, T-3’s Chairman, President and Chief Executive Officer commented, “We will continue with the planned expansion of our facilities and increase in manufacturing capacity that were to be funded by our portion of the proceeds from the offering. We will fund these activities using either cash generated from operations or amounts available under our senior credit facility.'’

First Reserve Fund VIII, L.P. has informed T-3 that, depending upon a variety of factors, including T-3’s financial condition and results of operations, as well as conditions in the equity and financial markets, it may in the future consider (i) holding its position in T-3 for a prolonged period of time, (ii) one or more sales of T-3 shares, either in the open market or otherwise, (iii) one or more purchases of T-3 shares, either in the open market or otherwise or (iv) participating in a strategic transaction involving T-3.

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