Questor Technology

Questor Technology

QST

Last Updated On: January 1, 2019

Share Price On This Date: $3.34

Waste gas incineration primarily for the oil and gas sector.

Summary

An oil and gas services company with a technological twist. Questor rents out a fleet of waste gas incinerator units that it developed itself to oil and gas companies to reduce their methane emissions. They have done extraordinarily well in the past year in Colorado where the state legislature passed tough environmental standard laws mandating the use of technologies like Questor's. They continue to expand their rental fleet and say that other states are now considering adopting similar environmental legislation which would help drive continued growth and expansion.

In a surprising upset to their well-laid plans though, an environmental group managed to get a new initiative onto the ballot for the November 6th elections, proposing what essentially amounted to a ban on all new drilling in the state of Colorado. This proposal was ultimately voted down and the stock price has since partially recovered but it highlights the need for the company to search out expansion opportunities outside the state of Colorado. Recent developments are encouraging in this regard. They are mobilising 10% of their fleet into North Dakota in 2019 and have also been getting enquiries from operators in the Permian basin in Texas. The share price is a reasonable 12 times trailing earnings given the potential for continued growth as environmental standards in other states are toughened and they expand their rental fleet. However, they were heavily reliant on a single customer in 2018 and in 2019, they face the expiration of some of their major patents, so the stock is not without its risks. A recent slide in the price of oil could have additional negative ramifications. It is worth keeping a close eye on future developments.

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