What we think about Tetra Technologies (TTI)
Tetra Technologies in Three Words: Energy Completion Fluids
Discuss Tetra Technologies in our Community Forum
Background
Tetra provides services and chemicals for the oil and gas industry. But what the market doesn’t recognize is that it has a lot more going on besides oil & gas and fracking services. It also provides chemicals for CO2 carbon capture and proprietary zinc bromide electrolytes for non-lithium battery storage systems. Once investors give respect to these new business lines, it will reclassify the company as an ESG-friendly growth operation and the stock price should follow.
Tetra has a contract to provide up to 75% of Eos Energy’s zinc-bromide electrolyte solution. Since production is only now beginning, this part of the thesis is just getting started, literally. And if Eos becomes a much bigger producer, Tetra’s revenue will likewise increase sizeable. If that were all, I might recommend just buying Eos directly. But I see a lot more that’s promising at Tetra, including servicing new oil production fields in the Paleogene layer in the Gulf of Mexico as well as leveraging its brine resources to extract lithium for electric vehicle batteries for the continued shift to EVs. Because the oil and gas industry is cyclical, so are the base revenues for Tetra. And recently, we hit some lows in production, which are set to rebound in the coming quarters.
Right now the company is at a $457 million market cap, selling at a 0.7 P/S ratio, about 30% cheaper than 2023 numbers. It appears to me like a valuation to own a steady business with many growth edges ahead of it.
Conviction Rating Changes:
Join 7investing to get access to this section
Recent Company Updates:
Join 7investing to get access to this section