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Canadian success story Zedi looks South

Alberta may not be known as a technology hotbed, but firms like Calgary's Zedi may be changing that perception.

In resource rich Canada, technology that improves the way we drill or mine should be a natural fit. Over the past few years, Calgary’s Zedi (TSXV:ZED) has become living proof of this theory.

The company, which owns and licenses technologies designed to optimize oil production, has become a runaway success story of late, spiking its revenue from $29 million in fiscal 2007 to $57.75 million in fiscal 2010.

Zedi’s success in scaling its operations through acquisitions has company management looking to expand its footprint to the United States, where the use of technology in the oil patch is becoming more of a competitive necessity than a luxury. Boston-based research firm IDC expects that in the wake of the BP spill spending on the small subsection of health and safety “could potentially double the growth rate of spending on these applications during the next 2-3 years” because of increasingly thorny State and Federal regulations.

As for larger trends, the wind is clearly at Zedi’s back. Research firm Dahlman Rose estimates that exploration and production spending in the oil and gas sector will top $533 billion this year, a number that rose a full 22% from that firm’s expectations just six months prior.

Zedi’s move into the US market got a running start earlier this year when it acquired gas flow measurement firm Southern Flow, one of the largest independent service and supply companies in the United States. Matthew Heffernan, Zedi’s president and CEO said the move would give the company “access to all the major oil and gas producing regions of the U.S.”.

If Q1 2011 is any indication the acquisition of Southern Flow was seamless. The quarter was the first that incorporated numbers from the acquisition and it was a record. Zedi reported $21.9 million in revenue, which was up 49% from the same quarter in 2010. Southern Flow contributed $5.6 million, or 26%, of overall revenue. The bottom line looked better too, in the Q, the company increased EBITDA by 55%.

While Alberta may not be known as a technology hotbed, Zedi clearly relishes its role as a continuing innovator in the oil and gas space, The company recently debuted Zedi Access Mobile, an application that allows oil and gas companies to monitor well data through a BlackBerry or an iPhone.

At press time shares of Zedi were up a penny, to $.75 cents.



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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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