Poseidon Concepts shares plunge on weak outlook
(Reuters) - Shares of Poseidon Concepts Corp PSN.TO touched a life low after the energy services company said it would spend 42 percent less this year.
At least five brokerages, including National Bank Financial, Canaccord Genuity and RBC Capital Markets, cut their ratings on the company's stock.
Poseidon also cut its earnings before interest, taxes, depreciation and amortization (EBITDA) outlook after posting a lower third-quarter profit.
Shares of Poseidon, which was spun out of Open Range Corp last November, were down 55 percent at C$5.99 in morning trading. The stock was the top percentage loser on the Toronto Stock Exchange.
Global Hunter analyst Brian Purdy, who suspended his price target on the shares, said the reduction in guidance implies the market for large-format fracturing fluid storage has become saturated and customers are abandoning contracts.
The company's storage tanks are deployed in unconventional energy regions, stretching from Eagle Ford in south Texas to Montney in northeast British Columbia.
Poseidon, which has a market value of about C$1 billion ($997 million) as of Wednesday, cut its capital spending forecast by 42 percent to C$35 million.
"We believe the decline in activity levels, combined with new entrants to the market, will continue to put pressure on day rates, utilization and margins through first half of 2013," RBC Capital Markets analyst Dan MacDonald wrote in a client note. ($1 = 1.0028 Canadian dollars) (Reporting by Ankur Banerjee in Bangalore; Editing by Maju Samuel)
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