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11 Oct | Getech Group

Getech Group is a company that flew onto our radar via a recommendation in our favourite small-cap tip-sheet, Small Company Share Watch (SCSW).

We took up 2,480 shares in Getech Group on 2nd October at a price of 44.99 pence a share. As I type they’re trading around the 50 pence mark – showing a lovely little 10% paper profit in less than two weeks.

So what do Getech do? Here’s a little paraphrased company rundown from the Getech website:

Getech Group plc is a leading consultancy providing geological and geophysical services to the oil, gas and mining industry. The client base comprises all the major (including BP, ExxonMobil and Shell) and many smaller oil companies, as well as a number of major mining companies.

The Company is based in Leeds, England, where it has more than 55 staff. It also has a subsidiary in Houston, Texas which operates primarily as a marketing entity. The Company originated as a spin-out from the University of Leeds, and since it started trading in 1986 has acquired the largest commercially available library of global gravity and magnetic data.

In 2004 it established the Petroleum Systems Group and has built a multidisciplinary geoscience team which includes experts in: geophysics, structural and tectonic analysis, geochemistry, palaeogeographic mapping, petroleum geology and paleoclimatology.

So think of Getech as owning a giant x-ray of the world called Globe. It’s a ridiculously simplistic analogy, but with my understanding of all things geophysical, that’s the level I’m operating on here.

Getech has a number of specialists that produce higher resolution regional reports and client commissions that employ the core components of Globe. These reports highlight key exploration opportunities, from continental to sub-basin scales. And the beauty of the Getech business model is that the knowledge acquired from these regional reports (commissions are exclusively produced for clients) is then fed back into Globe to enhance the framework for subsequent reports. Talk about doubling your quantity of win.

I like a company that’s in the business of support. Especially when that support is for industries that are so speculative by nature – such as oil and gas. Oil and Gas producers come, grow and some go but the companies that support them tend to hang around a little longer.

The fact that their product has been built and refined over a 25 year period throws up some pretty daunting barriers to entry for their particular niche too. So no Johnny-come-latelys to worry about for Getech.

I’ve been prattling on about my new investment philosophy for weeks, so did Getech tick all our screening boxes? Well 10 out of 11, which is close enough for my liking. We missed out on a market to book ratio of 3 (we screen for less than 2). All totally acceptable.

And for those who like a little momentum investing, check out the one year Getech chart above (from our good friends at SharePrice.co.uk) and take note of the sublime spike in volume over the past few months. Coupled with the price hike, that makes me smile.

Thanks again for dropping by.