Eco-Stim Energy Solutions shares gush higher on Argentina contract news

Shares in oil well engineering specialist Eco-Stim Energy Solutions Inc (NASDAQ: ESES) surged almost 57% to $1.63 on Wednesday as it revealed it has been awarded a “big win” two-year contract with the largest operator in Argentina.

The group will work on the operator’s tight gas well completions program.

“This contract will provide a guaranteed minimum level of compensation to EcoStim (roughly 40% of the contract value) although the operator expects the completion program to generate over $50 million in completions work over the contract’s term,” said the US firm.

“As tight gas drilling expands over the next several years in Argentina with the benefit of government supported natural gas prices, this relationship should provide the company with a unique opportunity to participate in further growth opportunities.”

J. Chris Boswell, the firm’s chief executive, said the contract was a “big win”.

“After just two years of building our reputation and establishing our credibility in the Argentina market, we have now secured the largest backlog in company history and one that should allow our company to generate positive EBITDA.

“This contract, together with the recently announced contract in Oklahoma, should give the company a solid foundation and provide strong revenue growth and positive cash flow.”

He added: “With operations in Argentina and the improved market in Oklahoma, we believe the company is now very well positioned.”

Story by ProactiveInvestors