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A Gusher In Russia?


Inside Wall Street

A GUSHER IN RUSSIA?

The decline in oil production in Russia has been powering the ascent of the stock of a small Canadian-based company, Beta Well Service, a provider of comprehensive oil and gas services. Beta's shares have spurted from 11 1/2 a share in early February to 24 7/8 by Apr. 28. In view of that big move, it might seem at first blush that Beta has hit its peak. Bulls on Beta insist, however, that the stock is destined to go even higher, perhaps to 40 in 12 months.

What's the scoop? The long neglect of oil wells in Russia has been a blessing to Beta Well, insists Bill Block, who heads a research group at Greenway Capital in New York. Beta has been providing services to Canadian oil companies and, starting last May, to Russia, where it now operates six rigs. Four more rigs are scheduled to be in operation in Russia by next May. Through a 75%-owned subsidiary, Beta has won a contract to service 268 wells in Western Siberia. Beta President and CEO William Gordica announced on Mar. 15 that he signed two more contracts to service an additional 654 oil and gas wells, also in Siberia.

"The financial implications for Beta are significant," says analyst Pete Castellanos at Prudential Securities. He counts about 29,000 abandoned oil wells in Siberia, and "Beta has just scratched the surface of this opportunity," he says.

Andrew Racz, director of research at the New York securities firm A. J. Michaels says Beta is considering other options in Russia, including setting up an oil-equipment-manufacturing plant and a joint venture to trade oil as well as develop existing oil reserves in that nation. Beta's revenues and earnings from its Russian operations surged in the first quarter, and Racz figures Beta could earn $3 a share in the year ending Sept. 30, 1993, vs. 14 in 1992, and $5 to $7 in 1994, when Beta is expected to have 15 rigs operating in Russia.GENE G. MARCIAL


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