If you are looking for an otherwise promising company that is definitely down on its luck due to the current downturn in global gas and energy stocks, look no further than Ion Geophysical Corporation (NYSE:IO). This company provides seismic and ocean bottom surveying and seismic data analysis for oil and gas producers and explorers. Just as the overall fortunes of the gas and energy market has been rocked by the Saudi-led initiative to drive down global oil prices to crush increasing supply competition from North American shale oil producers, Ion’s shares have been hit quite hard. It’s stock is now hovering 50 cents-a far cry from the premiums it used to command as recently as two years ago.
To cope with the current market realities and the fact that demand for its services continue to soften as drillers and oil explorers continue to reduce rig counts, the company has recently announced staff reductions to lower its costs. While this capital saving moving is definitely in keeping with similar moves by industry players across the board, considering the niche the company occupies in the greater oil and gas exploration, drilling, and production ecosystem, it remains to be seen whether the company’s cost reduction initiatives will be enough. The company has to weather a completely different market landscape that shows no signs of changing for the better anytime soon. According to analysts, the company is expected to post a .92 EPS for the year.
While the company is too small, in terms of market cap, for a quick ‘bump’ play for short-term upward spikes in the price of global crude, it might not be a bad play in terms of acquisition speculation. At less than 50 cents a share, it is definitely a cheap moonshot.
