Boots & Coots International revenue down, has this drilling company shafted itself?

Oil and gas well pressure control company Boots & Coots International Well Control, Inc. (ASE: WEL) is trying to climb out of its own hole. Revenue was up slightly in 3rd Quarter 2007, but costs increased much more. Thus, net income for 3Q was way down, to $1.3 million, less than half of 3Q 2006 net income. YTD net income is down by 65% to $2.1 million. A slow down in business in the Gulf of Mexico, as well as in the Rockies, combined with weakening demand in Venezuela, means that Boots & Coots has had to redeploy its hydraulic rigs to the Middle East and North Africa. The company is also beginning operations in Bangladesh. Each move means a loss of revenue while the rigs are idle, as well as significant start-up costs at each new location.

In order to counter continuing weak demand for its rigging and digging services, Boots & Coots launched a rental service for well pressure control tools. While it won't be a significant contributor to the company's bottom line until well into 2008, CEO Jerry Winchester believes such a new business unit will add value to the company's already existing lines of well pressure control services.

In the good news/bad news category is the fact that revenue for Well Emergency Responses is down by 50%, indicating there are a lot fewer accidents and blow ups than in the past. The stock currently trades at $1.28 and may be an acceptable investment for someone looking for a few stray microcaps to toss into the portfolio.