Will Reorganization of Trico Marine Services Bring Investors New Opportunities or has Offshore-Energy-Services Provider Hit the Ocean Floor

Over the past years Trico Marine Services Inc. (PinkSheets: TRMAQ) shares have been taking on water and just last week the provider of support vessels for offshore oil and natural-gas drillers became submerged, voluntarily filing petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Included in the petitions were Trico’s U.S. companies as well as its Cayman Islands holding company but its other foreign subsidiaries will remain afloat.
While the company has said its U.S. and worldwide operations are expected to continue without interruption they will be going through a restructuring process in hopes of restoring viability and regaining investor trust. That may be a difficult task for Trico as their company stock was suspended on Wednesday after failing to meet NASDAQ listing qualifications and they have said they have no plans to appeal the decision. Since the delisting Trico has been trading on the Pink Sheets under the symbol TRMAQ. Now the question arises, what does Trico have to offer?
It was last October that the stock was trading at a 52-week high of 9.47 but a dismal first quarter was followed by additional troubles into the second, eventually sinking the stock to a low of 0.18 on August 26; a day after the bankruptcy announcement. According to Richard Bachmann, chairman and chief executive, the decision to reorganize was based on “The combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due.” These factors led Trico “to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders.”
That leveraged balance sheet included a tough to swallow $353.6 million of debt compared to listed assets of $30.6 million according to their bankruptcy filing. Sealing TRMAQ’s bankruptcy fate was a June loan agreement established with Tennenbaum Capital Partners that required the company to file for Chapter 11 no later than September 8, 2010.
While that June agreement included $50 million in debtor-in-possession financing it has since been revised to $35 million for bankruptcy financing.
As Bachmann has pointed out, TRMAQ’s collapse has been the result of a number of factors and many of those were seemingly out of the company’s control. In 2009 there were plenty of signs that there could be trouble for TRMAQ as the oil industry began cutting expenses on oil and natural gas projects, an obvious indicator that things could become tight for a company that provides support services for the offshore and subsea services market.
Those services are wrapped in Trico’s three operating companies: DeepOcean, specializing in subsea installation and construction support, survey, inspection, maintenance and repair services as well as subsea decommissioning. CTC Marine, specializing in trenching, cable-lay, life of field seismic, and subsea installation, and Trico Offshore, specializing in offshore towing and supply services.
As the demand for oil began to shore up, the need for Trico’s services became less and less, eventually leading to a situation where their cash intake was insufficient to meet debt obligations.
Provided Trico can restructure and get its financial feet on firmer ground there stands a chance they could return to positive days. Much of that will depend on the global economy and demand for oil but with their operations in the North Sea, West Africa, Mexico, Brazil, the Middle East and Southeast Asia there remain opportunities.
Those opportunities may arise from the number of subsidiaries operating under Trico as their foreign subsidiaries were not included in the recent bankruptcy filing and are not subject to the requirements of the U.S. Bankruptcy Code.
With all that said, shares in TRMAQ have continued to tumble since the bankruptcy filing and subsequent delisting on the NASDAQ exchange. On Thursday the stock dropped to a low of 0.13, well below its 5-day moving average of 0.21 as well as its 50-day and 200-day moving average of 0.48 and 2.45 respectively.
Whether Trico can emerge out of the bankruptcy filing and find smoother waters to sail remains to be seen but with investors dumping shares of TRMAQ as quick as they can it appears doubtful.
TRMAQ Chart:

Trico Marine TRMAQ Chart

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Oil Demand in China Sparking Boon for Longwei Petroleum Investment Holding Limited, Can Energy Company Sustain Growth?

With the spike in demand for oil in China few energy companies have benefited more than Longwei Petroleum Investment Holding (NYSE AMEX: LPH) and this has paid off for shareholders who have seen their stock climb steadily over the past week accompanied by its above average trading volume.
A distinct advantage for LPH has been its efforts to concentrate their oil and gas operations exclusively in China. These operations, which include transporting, storing, and selling finished petroleum products, have established LPH as one of the largest oil and gas operations in China and put them on track for what could be significant growth.
That growth is being projected in large part because of China’s growing demand for oil and as CFO Michael Toups stated “As one of the largest oil and gas distributors in China, Longwei is a direct beneficiary of the long-term upward trend in oil consumption and vehicle use in China. Last year China became the largest new automobile market in the world, and a recent International Energy Agency report suggests that China may now also be the top global energy consumer as well. These immense outside developments, taken in conjunction with our strong internal growth, continue to substantiate our business model and underscore the attractiveness of our industry.”
The attractiveness of LPH appeared to be underscored by their announcement of select operating data earlier this week. In that announcement reported revenues of $39 million for the month of June, a 130% increase from the same month in 2009. For the fiscal year ending June 30, 2010 LPH reported total revenues of $339.4 million, a 72% spike from the $196.8 million in 2009 fiscal revenues and a 9.2% improvement upon the company’s earlier guidance that suggested revenues would hit $310.8 million for the year.
Accompanying their improved revenues LPH reported impressive gross profit numbers as well, generating $8.1 million for the month of June, a 138% increase from the same month last year. For their fiscal year LPH saw profits of $68.5 million, a 119% jump from their 2009 fiscal year profits.
As for the upcoming year LPH has been nothing but optimistic as they project sales to top $500 million for their fiscal year 2011, an optimism expressed by Longwei’s President and CEO Cai Yongjun who forecasted the growth saying “The outlook for our industry and economic environment is promising, as China’s rapid economic growth recently propelled it past Japan as the world’s second largest economy in terms of GDP. Coupled with China’s growing dominance in the automobile market and strong industrial growth in our operating region, Longwei is in an ideal position to capitalize on the boom in oil demand.”
Much of that optimism has been based on LPH’s new Gujiao storage facility in Shanxi Province, a storage facility that has a capacity of 70,000 metric tons. Because LPH is the sole licensed intermediary in Gujiao it enjoys a relative monopoly in the area, making it the only option for local wholesalers, fuel pump operators and the mining industry. Along with their Gujiao storage facility LPH has a storage facility in Taiyuan City, also in Shanxi Province, that is capable of storing 50,000 metric tons.
Of significant importance to LPH is the increase in industrial activity in Shanxi Province, suggesting the company is on solid ground as consumer needs continue to improve their financial standing. In addition to its dominant presence in Shanxi Province LPH also have the necessary licenses to operate and sell products throughout China, opening the door for further expansion in a growing market.
On Friday the International Energy Agency suggested that global oil demand would continue to climb this year, noting China’s demand remained strong.
While all signs point to LPH growth there are those investors who have opted to wait until the company files its 10K so that they can get a clearer picture. Getting that clear picture and forecasting predictions can be difficult for company’s operating in China as their sales prices and cost basis are largely dependent on regulations and price control measures instituted and controlled by the PRC government. LPH is also subject to uncertainty surrounding the price of crude oil, a factor that directly influences the company’s operations.
Having a clear advantage in one of China’s fastest growing provinces makes LPH an attractive company and while there are several factors that remain out of their control the company has, up to this point, followed a solid business plan that could soon make quite a few investors very happy.
LPH has a 50 day moving average of 2.11 and a 200 day moving average of 2.33 which can be seen in the chart below:

Technical Chart of LPH

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Hemispherx Biopharma’s Lengthy Struggle to Bring Chronic Fatigue Syndrome Drug Ampligen to Market Leaving Investors Weary, Where is HEB Heading Next?

It has been nearly a year since Hemispherx Biopharma, Inc. (NYSE AMEX: HEB) received the news that Ampligen, the Chronic Fatigue Syndrome (CFS) drug they have been working on for more than three decades, was not being approved by the FDA. While the FDA said it wanted HEB to conduct additional studies to demonstrate Ampligen’s effectiveness time may be running out for the company when it comes to investors as many have grown tired of waiting.
While HEB has long stated that Ampligen could target diseases that included Hepatitis B and Hepatitis C as well as kidney cancer and metastatic malignant melanoma what has attracted investors most has been the potential surrounding CFS. With more than four million Americans suffering from CFS it appeared HEB had the inside track on the treatment drug but the FDA has derailed those beliefs and despite CEO William Carter’s insistence that the rejection “provided us with a clear path to approval and commercialization” the stock has continued to tumble.
Last September the stock was trading at its 52-week high of $2.24 and when news from the FDA hit in November shares began to dip, eventually sinking below the $1.00 mark in December and they haven’t seen that level since. HEB actually hit its 52-week low of 0.43 in June but has since established a five day moving average of 0.52, a .0.02 improvement over its 50-day moving average but still a significant drop from its 200-day moving average of 0.64.
HEB certainly wasn’t helped by their August agreement to settle all pending securities class actions against them. Allegations leveled against the biotechnology firm asserted the company, along with certain officers, misrepresented the status of their drug application for Ampligen. Details of the settlement, which still requires court approval, have not been disclosed. While the company stated the settlement “expressly is not an admission of any culpability by Hemispherx or its officers” it hasn’t won them any favor among investors who have seen it as yet another blow to their credibility.
With the difficulties in getting Ampligen approved by the FDA the company has been touting its Alferon N Injection, an FDA approved intralesional treatment of genital warts. While there has certainly been success in gaining FDA approval for Alferon N Injection it’s the company’s declaration, published on their own site, that “Alferon N Injection may also have activity against other viral infections such as Multiple Sclerosis, Hepatitis C, HIV, West Nile Virus, and SARS.” HEB does note that Alferon N Injection has not been approved for that use but it seems like the treatment is a broad stroke for a variety of serious viruses, infections and diseases.
Skeptics of HEB have pointed to this broad stroke as one reason for their concern as it appears to be the same approach the company has taken with Ampligen as they announced in their recent quarterly report the completion of a “three-year research program funded by the National Institute of Infectious Disease of Japan indicating that a nasally delivered flu vaccine, when coupled with Ampligen®, yielded positive results in providing a more robust and longer lasting immune response in non-human primates.”
That same report also highlighted that “In connection with Max Neeman International, a leading clinical research organization in India, the Company obtained approval to begin a Phase II b study from the Indian Drugs Controller General as it works to enroll subjects for the current monsoon season to treat seriously ill hospitalized flu patients evaluating Alferon N Injection.”
So if Ampligen never receives approval as a treatment for CFS it could still find its way as a flu and influenza vaccine enhancer.
This is something that shouldn’t be overlooked as any type of treatment or treatment enhancer for an influenza outbreak or respiratory disorder could prove tremendously beneficial to a shareholder. In noting that Ampligen, as well as Alferon N Injection, have reportedly shown promise in that area and if they continue to show more promise in that arena then HEB could shift their focus to marketing them as such.
See below for a chart on Hemispherx Biopharma:

Technical Chart on HEB

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