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• We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&Ps, and pricing power leading to margin expansion
• Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples
Supportive Oil Prices
While we will not go in-depth on oil price funda
Companies: CFW CFW CET CEU CMG ESI MCB PHX PD SES MATR STEP TCW WRG PD TOT ESN
Ensign reported 2Q16 revenue of $176 mm and EBITDAS of $31 mm, both of which were in line with our estimates. The Company has announced Mr. Michael Gray will become CFO in 4Q16e, replacing Mr. Timothy Lemke. Mr. Gray joined Ensign in early 2015 as Corporate Controller after several years at CanElson Drilling Inc. The Company is continually reevaluating retrofits and new rig build opportunities. Ensign anticipates putting two new upgraded U.S. rigs into the field during 3Q16e or 4Q16e. Ensign sug
Companies: Ensign Energy Services Inc.
Impact: Neutral. Ensign reported 2Q16 revenue of $176 mm which was in line with our estimate of $171 mm, but below consensus of $186 mm. EBITDAS of $31 mm was in line with our estimate and consensus which were $31 mm and $32 mm, respectively. The loss per share was $0.23, above our forecasted loss of $0.28 (which was the same as consensus). Ensign has lowered its 2016e capital program to $42.5 mm at the midpoint from $60 mm previously.
Ensign released 1Q16 results that were above our expectations. EBITDAS totaled $60 mm, whereas our forecast was $47 mm. Margins outperformed for the second quarter in a row.
positive as results were above consensus.
We are updating our oilfield industry forecasts post the release of FirstEnergy’s new commodity price forecast for crude oil and natural gas on March 24, 2016. We have updated our 2016e Canadian well count/drilling days forecast to 3,209/37,335 from 3,800/43,325. In 2017e, we have left our forecast unchanged at 6,200 wells/70,200 days. In the U.S., our 2016e rig count forecast is now 482 (prior: 610) and 2017e is 675 (prior: 775). Data for 1Q16e came in weaker than our prior forecast anticipated
Companies: BDI CWC CFW FRC CET CEU ESI MTL PHX PSI PD SVY SES 0S9F TCW TDG WRG
Ensign reported 4Q15 EBITDAS of $72 mm, well ahead of our forecast of $55 mm, despite revenue coming in line with our es mate. The Company suggested on its conference call that there was no early termination revenue, but that cost cutting initiatives are starting to manifest themselves in financial results. The Company has 23 contract drilling rigs on take-or-pay contracts for various durations. This represents 10% of Ensign’s corporate drilling fleet. In 1Q16e, an additional 10 rigs have been
In conjunction with the new oil price forecast released by FirstEnergy on February 8, 2016, we have updated our 2016e Canadian well count/drilling days forecast to 3,800/43,325 from 4,950/54,853. In 2017e, we are now forecasting wells/drilling days of 6,200/70,200 from 7,900/86,600. In the U.S., our 2016e rig count forecast is now 610 (prior: 763) and 2017e is 775 (prior: 1,063).
We have updated our 2016e WCSB drilling days forecast to ~54,900 days, which is 18% below our prior forecast and a 16% decline y/y. We are also rolling out our 2017e drilling days forecast, which is 86,600 days, or a 58% improvement from 2016e. In the context of the last 25 years, our 2017e forecast ranks 19th for active drilling days. Our 2016e U.S. rig count forecast has been reduced to 763 rigs from 888 rigs. In 2017e, we are forecasting a U.S. rig count of 1,063 rigs.
Ensign has announced a 2016e capital program of $60 mm, modestly lower than our current forecast of $65. We expect the funds will be focused on maintenance activities. There is potential for the capital program to move higher if activity improves. Moreover, the Company has a number of partially constructed ADR rigs that were part of the 2015 program. In 2016e, we estimate Ensign will generate $163 mm in FCF prior to dividends and changes in working capital.
Canadian Natural Resources Limited (CNQ) Royalty Sale | PrairieSky Royalty Ltd. (PSK) Buying CNQ’s Royalty Assets and 3Q15 Results | Seven Generations Energy Ltd. (VII) Reports 3Q15 Financial Results Ahead of Expectations, Outlines 2016e Capital Budget of $1.10-$1.15 billion | Vermilion Energy Inc. (VET) Reports Third Quarter Results, Provides Preliminary 2016e Capital
Spending Guidance | Yangarra Resources Ltd. (YGR) Announces 3Q15 Results In Line With Recently Revised Expectations | Tullow Oi
Companies: AOI CNQ ENF ESI PSK VET YGR TLW
Impact: Negative. We expect the stock to trade lower as 3Q15 EBITDAS (actual: $67 mm, Street: $73 mm) was below consensus and the International outlook was worse than anticipated.
Ensign reported 2Q15 EBITDAS of $70 mm, well above our forecast of $48 mm due to lower R&M spending and a one-time payment of $5
mm related to an International contract cancellation. We have increased our 2015e EBITDAS by 13% to $342 mm due to the incorporation of 2Q15 results and modestly increased margin assumptions for 2H15e. In 2016e, our EBITDAS forecast has been increased by 6% to $384 mm due to higher margin assumptions.
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Last week, JOG successfully secured its second GBA farmout, locking in a path to delivering zero-capex barrels. The surprisingly muted share price response to the farm-out leaves JOG trading at an unjustifiably large discount to our valuation. With a material fully funded development project under its belt and a clean balance sheet, JOG presents a very low-cost way to access high quality development barrels for investors and potential acquirers alike. If the threat of M&A does not narrow JOG’s v
Companies: Jersey Oil & Gas PLC
• 3Q23 production was 2,518 boe/d, near our forecast of 2,674 boe/d.
• Arrow held US$12.9 mm in cash at the end of September. This is ahead of our expectations of US$6.6 mm on lower capex and opex.
• Four new wells are expected to be on stream by YE23 including RCE 7, RCE-8 and two wells at Oso Pardo.
• Following interpretation of the recently shot 3D seismic at Tapir, Arrow plans to drill a total of 15 wells in 2024 including five exploration wells targeting 3 material and low risk exploration
Companies: Arrow Exploration Corp.
Plexus FY23 revenue and losses were in line with expectations. As well as the further development of its licensee relationship with SLB (Schlumberger), Plexus is focussed on its re-entry into the rental of exploration wellheads from Jack-up rigs, the sale of surface production wellheads and the provision of specialised solutions and applications to operators, particularly for Plug & Abandonment (P&A) work. Plexus won a substantial c£5m special project contract during the year, which was expanded
Companies: Plexus Holdings
Companies: CPH2 TIDE MRL BRCK JNEO
Alien and the Iron Ore Company of Australia (IOCA), continue to lay the foundations for operations at Hancock, one of its direct shipping iron ore (DSO) projects in Western Australia. Progress made to date ensures that, should a positive investment decision be made following the conclusion of Definitive Feasibility Studies (DFS), Hancock will be in operation and generating cashflow soon after capital is invested.
Companies: Alien Metals Ltd
• With the acquisition of interests in Sygna and Statfjord Øst expected to complete in January, the process to establish a stable well-funded producing business in Norway is almost complete. FY23 production at Sygna and Statfjord Øst net to Longboat Norge is ~250 boe/d.
• The acquisition of 49.9% of Longboat Norge by JAPEX in 2023 provides low cost capital and access to a strong balance sheet to develop further the Kveikje area and make acquisitions at no further dilution to Longboat plc.
Companies: Longboat Energy Plc
Companies: 88E GENI BMS CRU POS
CPH2 and ATOME have reached a mutual agreement to cease the previous production order made by ATOME. The CPH2 Board of Directors considers it is in the Company’s best of interests to focus its engineering and installation resources in ensuring roll out Membrane Free Electrolysers with current partners Fabrum Solutions Limited, KCA Deutag and, Northern Ireland Water. As part of the agreement, Molecular Energies has requested, and CPH2 has agreed to, a non-binding framework agreement with G-Mobili
Companies: Clean Power Hydrogen PLC
Jersey Oil & Gas, Serica Energy, Trinity Exploration & Production, Longboat Energy, Ithaca Energy, Neptune Energy, Pantheon Resources, Nostrum Oil & Gas, Kufpec, ORLEN.
Companies: TRIN LBE JOG
Companies: Good Energy Group PLC
Companies: Trident Royalties Plc
The front of this note takes a look at the UK oil and gas sector, why domestic production is advantageous, what the main political parties think, and what could happen going forward. The latter part contains a review of the companies in our coverage – some that are UK centric, which give exposure to the note’s wider theme, and others that are focused elsewhere.
Companies: TLOU PTAL HTG ENW ITM BLVN RKH HBR UJO GMS JOG MATD CEG GENL AXL
Companies: HZM BMN ATM CMCL THX EST GROC PRU
A summary of our hypothetical “Car Crash” commodity price scenario analysis is outlined in Table 1, which provides increased confidence, we believe, in i3 Energy's capacity to fund its dividend under adverse conditions. Notably, the dividend yield is an attractive 10.3%. Effectively, our analysis reinforces our view that i3 Energy is mispriced. Details for our “Car Crash” commodity price scenario are provided in Tables 2, 3, 4 and 5. We reiterate our 20.9p fair value estimate, which is premised
Companies: i3 Energy Plc
Serabi Gold (AIM: SRB, TSX: SBI), the Brazilian-focused gold producer and developer released an update on its Greenfield Exploration activities in its Palito Complex. The exploration activity has been undertaken as part of the Exploration JV with Vale SA.
The update from the announcement today reflects the high prospectivity of the Palito complex. During the year, the company ran a programme of collecting 5,5k soil samples which have increased their first-pass surface geochemistry coverage
Companies: Serabi Gold PLC (SRB:LON)Serabi Gold PLC (SBI:TSE)