Koil Energy Solutions Inc. (KLNG)

[xZx]

well, it's certainly something worth pondering. we've done a few valuations in the past, but here's a variation on the theme: if we take the base revenues from DR's calcs, they were 47.4M by EOY 2008 and these numbers don't include mako, from what i understand.

http://finance.yahoo.com/q/ae?s=DPDW.OB

if mako had 6.46M in revenues for 2006:

http://www.rigzone.com/news/article.asp?a_id=46800

let's say DPDW can double that by EOY 2008, $13M.

then let's say they sell 7 proteus winches at 500K each, another $3.5M. remember this is on the low end of the range they quoted in the PR. some could sell for $1M each:

http://biz.yahoo.com/prnews/070927/aqth111.html?.v=18

what if they grabbed another contract with matrix and netted another 3.1M in revenues? this is a catalyst DR hadn't been factoring into their numbers either.

http://biz.yahoo.com/prnews/071003/aqw148.html?.v=18

then what if they were to acquire another company the size of mako in 2008? add another $13M.

let's put it all together: 47.4 + 13 + 3.5 + 3.1 + 13 = 80M combined top line.

then let's use 23% margins due to mako's high EBITDA:

80 X .23 = 18.4M net profits.

let's say the OS goes up from 72M to 80M, to accommodate expansion. remember that the more the pps goes up, the fewer shares are needed in upcoming deals. a very important point..!

18.4/80M = .23 eps. using a 30 multiple we get $6.90/share.

too conservative? let's say they add two acquisitions in 2008 instead of just one, and the second is worth 15M, then we get another specialized product like proteus introduced that yields 7M in revenues. in this scenario we'll say the OS goes up to 85M, just to be conservative:

80M + 15 + 7 = 102M X .23 = 23.5M net profits

23.5/85 = .28 eps X 30 pe ratio = $8.40/share.

imo this is realistic, and may be on the low side, especially if a move to a higher exchange creates access to capital that could leverage some larger deals. given just how much inorganic growth they did in 2007 (which ain't even over yet!), i think 2008 could see their footprint get even larger. as we all know, the bigger a company gets, and the more capital they have behind them, the more they can create exponential growth.

jmho.