 Dear Investor, As oil global oil reserves become depleted at a record clip, prospectors are now being forced to explore further offshore and deeper down into the ocean than ever before. One company benefiting greatly from the push towards increased deep sea oil exploration activity is Deep Down Inc. (OTCBB: DPDW).
DPDW's first quarter revenues ($6.M) increased almost 200% over Q1 '07 while the company's thriving sub-sea segment grew by 105%. In addition, the emerging service and custom product provider's news ticker has been highlighted in recent weeks by nearly $15M in potential deep water-related business.
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Digging Deep For Oil and Sales Dollars  With gasoline prices now approaching $5 per gallon in many parts of the country, onshore oil output has leveled off and oil industry focus is frantically shifting towards the offshore sector.
According to Dr. Rafael Sandrea, president of IPC Petroleum Consultants Inc: “Offshore fields have been the main source of growth for world oil production in recent years, as onshore oil output has been essentially flat during the last two decades. But less than a fourth of the world's ultimate recoverable reserves in offshore fields have been produced to date".
That is changing rapidly. According to a recent article published by Hwee Hwee Tan in Energy Current News: "Subsea installation activity continues to thrive as operators, backed by high commodity prices, seek to bring more deepwater oil and gas resources on stream. To date, 107 projects are known to be underway for 2008, with 99 penciled in for 2009, and another 56 expected to take place in 2010. Northwest Europe is the busiest region in terms of subsea installation projects, followed by West Africa and the Australasia/New Zealand region".
Deep Down Inc. has made a name for itself in the sub-sea industry and already boasts a growing client base that includes the likes of: Amerada Hess Corporation, BHP Billiton Limited; BP PLC, Chevron Corporation, ExxonMobil Corporation, Marathon Oil Corporation, Royal Dutch Shell PLC; Schlumberger Limited, United States Coast Guard; and United States Navy.
"Subsea boom underway" |
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Record Financial Results Reflect Penetration of Sub-Sea Sector Deep Down Inc. appears to be capitalizing quite nicely on the recent increase in subsea installation project activity. The company recently reported record financial results for the first quarter of 2008. A sampling of the highlights includes:
EBITDA for the three months ended March 31, 2008, was $749,958, compared to $186,654, an increase of $563,304, or 302% over the same prior year period;
Operating income was $342,698 for an increase of 179% over the same prior year period;
Net loss was ($89,477) compared to ($109,258) for the same prior period;
Revenues for the three months ended March 31, 2008 were $6,279,465, compared to $2,098,394 for the three months ended March 31, 2007, an increase of $4,181,071 or 199%;
Increased activity from Deep Down's offshore subsea business, accounted for $4,293,820 revenues an increase of $2,195,426, or 105% over the same prior year period;
The recent Mako Technologies and ElectroWave USA acquisitions accounted for $1,985,645 of revenues, an increase of 94% over the same prior year period;
Gross margin for the quarter increased 184% or $1,556,789; and
SG&A was $1,762,247 compared to $659,651 for the same prior year period. The increase was mainly attributed to the aforementioned acquisitions.
"Deep Down Announces Record First Quarter Results" |
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DPDW's CEO Comments On Balance Sheet  In a testament to the company's recent financial growth, Eugene L. Butler, Deep Down's CFO recently stated: "Our balance sheet continues to show improvements. Liquidity is strong with unrestricted cash and equivalents of $3,115,818 and a current ratio of 2.8. Our working capital position is $8,645,592 and we no longer have any shares of preferred stock outstanding. Stockholders' equity has improved dramatically and is now $18,716,186 compared to ($1,800,660) on March 31, 2007,".
According to the company's most recent quarterly filing: "Management believes that the Company has adequate capital resources when combined with its cash position and cash flow from operations to meet current operating requirements.". This is crucial as DPDW likely won't have to dilute any further to fund operations over the next few years.
Deep Down Receives $9.0 Million Order for Buoyancy |
With a PE Ratio of 130 the market appears to be fully aware of Deep Down Inc.'s potential for future growth. The company is on our radar screen now and we will be taking a closer look into its operations over the next few weeks. Initially, DPDW looks like a very compelling emerging growth play on sub-sea oil development.
Thank you for being a loyal Outcast subscriber. We will continue to provide you valuable services.
Sincerely,
--The Team at Outcast
Investors are cautioned that certain statements contained in this document are "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "believes," "anticipates," "intends," "plans," "expects" and similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future , which may be provided by management, are also forward-looking statements as defined by the act. These statements are not guarantees of future performance. Outcast, Inc. was not compensated for profile coverage and holds no position in DPDW. See Disclaimer on website. |
