Companies: RHEP   

Australian-directed chemical and engineering services group Rheochem is poised for sparkling interim results and studying acquisition targets.

Rheochem supplies chemicals and engineering services to companies looking for and developing oil and gas projects and is benefiting from the present energy boom. After making £545,000 pre-tax on £5.5 million revenues in the full year to June, the company is expected to report a hefty profits surge to around £1.5 million pre-tax for the six months to December.

Rheochem has won useful onshore and offshore contracts with Santos, Australia's second largest oil and gas concern. The company is working on an 'environmentally friendly' biotech project with the Australian group as well.

Rheochem currently derives nearly two thirds of its revenues from Santos, but chief executive Haydn Gardner is pursuing business in India, New Zealand and further afield. He is also looking for acquisitions 'among the smaller technological companies' in the oil and gas services sector.

With 18 per cent of Rheochem, Gardner's stake is second only to Ocean Resources Capital's 35 per cent holding. Floated at 16p in December 2004 by broker Williams de Broe, Rheochem's shares have since then fluctuated between 26.5p and 8.5p.

They now stand at 11.5p, down 0.5p this morning, valuing the company at £10.4 million. Though clearly in a cyclical business, they have scope to rally further.