Capstone Turbine inks distribution deal with Tarpon Energy
Capstone Turbine Corp. (Nasdaq: CPST), a producer of low-emission microturbine systems, reported this morning that it signed a distributor agreement with Tarpon Energy Services Ltd. for the oil and gas sector in western Canada.
“The agreement is certainly a positive,” said Walter Nasdeo, head of research at Ardour Capital. “It’s another building block for revenue. Their turbines run on natural gas—intuitively this is a positive area for them to go into.”
Calgary, Alberta-based Tarpon is an energy services company with 25 field locations across western Canada. Its products and services range in such industries as oil and gas, oil sands and mining.
“They’ve been trying to get traction in traditional areas to use those channels for distribution,” said Nasdeo.
Nasdeo says the company is in early stages of a turnaround and is in its third turnover of management. “The stock has traditionally disappointed the Street. The new CEO, Jamison, is working to revitalize prior relationships and is doing so in a pragmatic way,” Nasdeo said. “They’ve had good results in building relationships—that’s where they are now—though revenue has got to snowball to make a difference.”
Capstone's CEO Darren Jamison said the agreement with Tarpon will enable Capstone to distribute products into western Canada’s oil and gas business.
“The [strategic moves] this time around are a more solid fix, as opposed to a quick fix historically seen,” said Nasdeo. He currently has a rating of “accumulate” on the stock with a price target of $1.50.
Shares of Capstone Turbine (CPST) gained $0.01, or 0.87%, to $1.16 in midday trading Monday.
