Q: Could you give an update on this company and how it fits into Strathcona's plans?
5i Research Answer:
Strathcona (SCR) is mostly owned by the private equity fund, Waterous Energy Fund (WEF), and WEF also has a majority stake in GFR. Waterous is likely attempting to improve the operations and margins of GFR before an eventual exit down the line, and it could be in the same 'mould' as what WEF did with SCR.
GFR is a small ($492M market cap) name with good free cash flows, relatively low levels of debt, and it trades at a decent valuation of 10X forward earnings. It does not pay a dividend, but margins are improving, and if it can reinvest internally for growth, we think this name could eventually rebound if the price of oil also recovers.