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Boots & Coots International Well, Inc. (AMEX: WEL) shares are trading lower after the company reported lower net income in the first quarter, but some investors see the drop as a tremendous buying opportunity for the long-term. 

Boots & Coots International Well, Inc. shares are trading lower after first quarter net income came in lower than expected, but some value investors see a great buying opportunity. The provider of pressure control, well intervention and equipment services, suffered a series of one-time set-backs from which it could quickly recover and post strong growth in 2009.

Boots & Coots reported a strong 21.4% increase in revenues, but higher expenses led to a sharp 57.1% drop in net income. The decrease in net income is largely the result of higher expenses associated with the company’s pressure control division. In its 10-Q filing with the SEC, the increase was attributed to higher third party costs and a decrease in response activity.

Boots & Coots has also experienced problems in Venezuela, where the regulatory environment remains uncertain. During the first quarter, the company generated 12.6% of its revenues from this region, but chose to halt its operations until it receives payment on certain outstanding receivables from the country’s national oil companies. Management is closely monitoring this situation, and plans to re-enter the market as soon as payments are made.

Fortunately, many of these factors appear to be temporary and should not hamper the Boots & Coots financial condition over the long-term. In fact, the company’s long-term prospects appear to be improving as the company positions itself as an international player in the oil services market. Meanwhile, many economists are predicting a rise in oil prices to further spur demand.

As shares have dropped, Boots & Coots stock has grown more attractive. Currently, the stock trades at just 4.65x forecasted earnings and just 10.6x assuming the worst case scenario. Meanwhile, the company has maintained a robust balance sheet with $1.85 million in cash and a quick ratio (acid test) of approximately 1.5, which means that it remains well-capitalized in this economic environment.

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