National Automation Completes 3rd Acquisition A Fast Growing and Undervalued Company....With $43 million in new revenue, The Case for $15 Per Share July 21, 2014 This morning the Company announced the signing of a Purchase & Sale Agreement (“PSA”) with MonDak Tank Inc. in Williston, North Dakota, right in the epicenter of the Bakken and Three Forks Shale play. This announcement comes on the heals of the July 8th announcement that a PSA was signed with Devoe Construction in the Denver Basin of Colorado. Adding the earning power of MonDak and Devoe to that of JD Field Services the Company’s first acquisition made earlier this year, portends a high probability for a sharp rise in the price of NASV common stock. With NASV significantly below its former high of $1.00 per share (October 18, 2007), and a business plan that is near perfectly positioned, this stock is severely undervalued, and warrants the immediate attention of any astute investor. This is an opportunity for you and your friends to become very wealthy from the ownership of this stock. There is significant mounting evidence to support this claim. Let me explain. U.S. Leads Production In 2013, the U.S. became the world’s largest producer of natural gas and has recoverable reserves estimated at 2,500 trillion cubic feet. In 2015, the U.S. is projected to produce 9.5 million barrels of oil per day, which will equal Saudi Arabia, the current top producer. However, last month, the U.S. became the world’s largest producer of oil and natural gas liquids (NGLS). According to the International Energy Agency (IEA), the U.S. surpassed Saudi Arabia for the top spot. The surge in production is due to the massive amounts of oil and gas being produced in the various U.S. shale plays, thanks to hydraulic fracturing. According to Bank of America, the U.S. is very likely to continue to hold that spot through this year. The U.S. produced more than 11 million barrels of oil and NGLs per day in the first quarter, making it the worlds top producer. The IEA says U.S. production will hit 13.1 million barrels a day in 2019 before plateauing. And it believes well lose the top spot in 2030. For now, we largely have the oil boom to thank for our economic recovery… Theres a very strong linkage between oil production growth, economic growth, and wage growth across a range of U.S. states, Bank of Americas head of commodities research, Francisco Blanch, told Bloomberg. He said annual investment in oil and gas reached a record $200 billion in 2013 ands is on track for $250 Billion this year. That’s 20% of the countrys total private fixed-structure spending for the first time. Renaissance? Many experts are declaring that the U.S. oil and gas industry is experiencing a renaissance. But oil & gas industry expert, Dr. Kent Moore has declared that the word renaissance is a gross understatement. What is happening in the U.S oil patch is absolutely unprecedented. The “shale” play is rolling out across 32 states and is creating 2,000 new millionaires in the U.S. every year. I think it’s time for us to join that group, don’t you? And I don’t mean just on paper, we’ve all been there from time to time, I mean liquid assets type millionaire, spendable cash type millionaire. I believe stepping up to acquire a significant position or add to our current position in NASV can make happen. The View From 30,000 Feet Here is why the current O & G boom is unprecedented. In 2009 there were 824,000 producing oil and gas wells in the U.S. The projection for year-end 2014 is 1.2 million and by 2020 1.8 million U.S. producing oil and gas wells according to Energy Global. The average well creates 62 new jobs and $4 Million in economic activity. This works out to 3.6 million new U.S. jobs and $2.6 Trillion in new wealth by 2020. According to the Energy Information Administration (EIA), from 1859 to 2013, the U.S. produced 209 billion barrels of oil from conventional oilfields. And there are an estimated 30 billion barrels of conventional oil in reserves (not yet produced). That means over the past 150 years, the total oil from conventional U.S. fields is about 239 billion barrels. According to Porter Stansberry of Stansberry & Assc. Investment Research, there are 6.1 trillion barrels of oil locked up in shale of which 4-6% is recoverable using the new fracking and other technologies. This means about 300 billion are recoverable. Thats more oil than the U.S. produced in the history of the oil industry AND all the conventional oil reserves we have today. Who Benefits? What makes the new boom so unique is that the new wealth being created is not concentrated in the bank accounts of the big producers such as ExxonMobil, Shell, BP and others. In fact the big producers have systematically abandoned U.S. oil fields in search of new deposits elsewhere around the globe. For the most part, the significant overhead that burdens the big producers has rendered the present level of “conventional” U.S. oil field production uneconomical for the big producers. This has paved the way for thousands of smaller local and regional producers to step in and take advantage of the new recovery technologies. And as we have discussed before, the oil field service companies may be the best way to leverage this play. So who is getting rich? The Jason Jensons and David Gurrs (JD Field Services) of the world, that’s who. The transportation companies that are hauling the oil to major distribution and refining centers, or transporting and setting up rigging equipment in areas of challenging terrain, the water purification companies, the construction companies, the energy storage companies, the tanker companies; these are the “New Breed” of energy companies mostly owned by Mom and Pop operators, who are watching their bank accounts quickly move into the multi 7 figure range. But we can get just as rich by investing in these companies now before they get discovered. That’s what Bob Chance and his team are doing. They are moving as quickly as they possibly can to create a national footprint of complementary oil and gas service companies in as many of those 32 states as possible. And they are trying to do it before the cat is out of the bag so to speak; before these companies become recognized by other suitors and overvalued. And we can get the benefit of Bob’s keen insight, by simply buying into NASV and telling our friends at the same time. Of course these are hard earned dollars we invest, but if you are inclined to invest anyway, I challenge you to show me a better opportunity. The Financial Markets Many of us, and rightly so, are concerned about the state of the financial markets. We’re all talking about diversifying into gold and silver, real estate and other hard assets. We’re concerned about the seemingly impending collapse of the U.S. Dollar. Dr. Steve Sjuggerud of True Wealth takes a contrarian point of view. He does not dispute that we will need monetary reform to avoid a global economic collapse. Clearly the world central banking system must go. What Sjuggerud is saying however, is that the Fed’s current accommodative policy will continue to fuel economic expansion well into the first quarter of 2015. And even after the Fed begins to raise rates, the economy and financial markets will continue for another year based on historical evidence. To quote Sjuggerud, “The greatest asset bubble in American history is possible between now and April, 2015. Stocks and real estate could absolutely soar in the next couple years”. As an example and he cites many, the last time the Fed raised rates was from 2004 to 2006. The stock market proceeded to increase in value by 50% until the Fed lowered rates in 2008. And he further cites that the stock market won’t peak until valuations get crazy, and we are not there yet. I am sure you have your own market experts you like to follow and your own measures of value you like to apply to bring some sense of sanity to your investment portfolio. For me, I have been through several business cycles over the years and I am inclined to agree with Sjuggerud, that we are relatively safe committing capital to well-chosen U.S. stocks for the next couple of years. NASV So, let’s get down to the nuts and bolts of NASV’s current business plan. Let’s see if we can figure out what it is worth today and where it may lead. In the concluding paragraphs of his May 6, 2014 initial Company Report on NASV, Ken Kerr of Stock Market Media Group pronounced, “….. with the companys outstanding share count of 755,429,014, NASV should be currently priced at around $0.264 (high end) – 0.192 (low end) per share.” You may want to review Ken’s report again just to see how reasonable it is for Ken to reach this conclusion. Here’s a link to the report, (stockmarketmediagroup/wp-content/uploads/2014/05/NAS-Inc.-Research-Report.pdf). So there you have a professional opinion of where the stock price should be, without adding Devoe Construction and MonDak Tank earnings to the mix. And clearly existing shareholders of NASV would be ecstatic to see even the lower end of that range right now. In fact, at a sustained level of $.19 per share, the Company would likely move to do the much-needed reverse split to achieve the AMEX threshold share price of $3.00. For example, a 1 for 20 reverse split at a current share price of about $.19, would give us a share price of $3.80, an authorization of 50 million shares, an issued and outstanding of 37.7 million and a float of 13 million, all of which should serve the purpose of up-listing. But $.19 per share still falls far short of the real inherent value of NASV, considering its current potential earning power. We really need to look at what the addition of Devoe and MonDak’s earnings can do for bringing up the price of NASV stock. Using Ken’s analysis in the above report, he predicated his price projection on JD Field Services bringing in a stabilized $6.1 Million in EBITDA taking into account the new expansion program. According to the Company’s initial unaudited review of Devoe and MonDak’s books, they are reporting 2013 revenues of $15 million and $7.1 Million and EBITDA of $2.2 Million and $2.2 Million respectively. That’s a 72.1% increase in EBITDA for a total of $10.5 Million for the three companies combined. Applying that 72.1% increase to Ken’s figures above would yield a high stock price of $.454 and a low stock price of $.327. But there’s more to the story. According to today’s press release, “… we continue to cultivate a pipeline of additional acquisition candidates in the oil and gas sector, some of which could more than double the combined earnings of JD Services, Devoe Construction and MonDak Tank.” Let’s speculate that the Company is successful in wooing one of the bigger companies into the NASV family and let’s assume that this fourth acquisition has 2X the $10.5 Million combined EBITDA of JD, Devoe and MonDak., which works out to $21 Million. In this hypothetical scenario, the NASV stock price would compute to a high price of $.90 and a low price of $.654 per share. However, none of the above pricing forecast’s takes into account the added revenues and EBITDA that will be generated by the synergies that will come out of these mergers. Each company will be able to offer to their customers the unique services of the other companies, thus generating new revenues and EBITDA. And let’s not forget the projected organic growth as each acquired company gets its fair share of the projected growth in the booming drilling activity talked about earlier. I think it would be reasonable to project that these synergies and organic growth could increase the stabilized earnings potential of NASV by say 10% and thus move the share price valuation to a high of $.99 (its been there before) and a low of $.719. Applying the 20 to 1 reverse split would give us an equivalent post up-list high price of $19.80 and equivalent low price of $14.38 per share. Does a price range of $14.38 to $19.80 per share for NASV sound far fetched? Not really when you look at what similar listed companies are trading for on the NASDAQ and NYSE/AMEX. We looked at some comparable listed companies in the Oil & Gas Field Services Sector that are similar to NASV in terms of services performed, revenues and earnings, operating locations and other factors. The list of six companies together with various measures of valuation parameters is presented in the table below: click on the link: images.investorshub.advfn/images/uploads/2014/7/21/nffxwNasv_Table.png As you can see, the stability and predictability of traditional measures of value are much different in the professional and more highly regulated world of listed stocks versus the manipulative and unscrupulous market makers who virtually control the price of stocks in the penny world. What’s even more astounding is that three of these companies have negative earnings, yet still have a healthy price per share. For example, Nuverra Environmental Solutions is losing $8.88 per share yet trading at a recent price of $20.21! Obviously investors in these companies are not so much focused on the current earnings of these companies but rather at their long term earnings potential as a player in the new U.S. oil and gas boom market. Also, take a look at Arc Logistics generating a positive EPS of $.33 and trading at $25.12 per share. That’s a multiplier of 76X! And, Blueknight Energy and Enservco are selling at 30.7 and 21.3 multipliers respectively. Let’s say we applied a reasonable multiplier at the lower end of that range, say 25X NASV’s projected post up-list earnings per share. Post up-list earnings would be calculated as follows: NASV’s current shares issued and outstanding is 751,987,293, which would be reduced to 37,599,364 after the reverse split The projected combined earnings of the four acquisitions of $21 Million plus the 10% increase stemming from organic and synergistic growth works out to stabilized earnings of $23,100,000 Earnings per share computes to $.61 per share Applying the 25X multiplier, we’ve got ourselves a $15.25 share price. We’ll stop our analysis here. You can look at the rest of the comps and draw your own conclusions. You can slice and dice these numbers any way you want and you are bound to come somewhere close to our calculations. What is most important here is that the Comparative Analysis underscores the need to up-list NASV to the NYSE:AMEX. And we must do everything we can to support the Company by building public awareness by telling our remarkable story to as many investors as possible and getting to that $.19 threshold price for up-listing post haste. And who knows once trading on the NYSE:AMEX and with a couple more of the acquisition pipeline targets brought into the fold, it may be reasonable to expect that a buyout from the likes of Halliburton or Shlumberger couldn’t be too far behind. The above information is from my own Due Diligence and is my own opinion. I am Long in NASV. I did not receive compensation for posting this opinion. This is not a solisitation for investment. This is only an awareness statement of my opinion of a company I feel is undervalued. Please do your own Due Diligence before investing. SAFE HARBOR AND INFORMATIONAL STATEMENT This document may contain forward-looking information within the meaning of Section 21E of the Security Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statement of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the companys financing plans; (ii) trends affecting the companys financial conditions or results of operations; (iii): the companys growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words may, would, will, expect, estimate, anticipate, believe, intend, and similar expressions and variations thereof are intend to identify forward-looking statements. Investors are cautioned that any such forward-looking statement are not a guarantee of future performance and involve risks and uncertainties, many of which are beyond the companys ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the companys registration statement and reports filed with the SEC. The Company claims the safe harbor provided by Section 21E(c) of the Exchange Act for all forward-looking statements.
Posted on: Tue, 22 Jul 2014 05:26:15 +0000
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