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What you need to know:
• 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
WCSB pressure pumping supply and demand is poised to benefit from an increase in stages per well and proppant per well. We believe this could cause supply and demand to tighten more quickly than anticipated in an activity recovery. Higher service intensity has been particularly evident in the Montney and Duvernay, where stages per well have generated a 2012-1Q16 CAGR of 23% and 44%, respectively, and a proppant per well CAGR of 39% and 62%. Our investment bias is towards Trican given it is the l
Companies: CFW FRC TCW
Trican announced an equity issuance on June 1st totaling $69 mm (including the over-allotment), which resulted in the issuance of ~43.1 mm shares, or 28% of the outstanding share count as at March 31, 2016. The offering price was $1.60/share or an 8.6% discount to the halt price on June 1st. The Company concurrently announced the sale of its Completion Tools business to National Oilwell Varco Ltd. (NOV-N, not covered). The sale price was $53.5 mm, which was comprised of $30 mm cash and C$23.5 m
Companies: Trican Well Service Ltd.
Trican reported negative adjusted 1Q16 EBITDAS of $16 mm and EBITDAS of negative $26 mm. Comparisons to our estimates are not meaningful given the discontinuation of U.S. operations in the quarter. Canadian operating margins of negative 8.6% were much lower than our expectation of negative 1.4%. We believe this is important when considering the turnaround in profitability needed in 3Q16e for Trican to remain in compliance with its covenants. The risk of the Company having to use its equity cure
Trican's results were marred by one-time costs related to severance and professional fees ($10.6 mm) as well as the U.S. pressure pumping business being moved to discontinued operations. We believe the most important data for investors is the performance of the Canadian operations as that is what Trican will largely consist of moving forward. Consolidated results can be found at the end of this document. We believe the primary focus on the conference call tomorrow will be on the Company's abilit
Trican has announced that Mr. Don Luft, President and COO will be retiring from his role effective May 3, 2016. Additionally, Mr. Luft will not stand for reelection as a Director of the Company at the upcoming AGM. Recall, Mr. Luft was one of the early instrumental players in transforming Trican from a private entity into a successful public company in 1996, and in the success and growth of the company since that time.
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
Until we learn otherwise, we still expect Trican to close the sale of its U.S. business to Keane. However, the expected closing date for this transaction of March 15, 2016 or earlier has passed, yet there has been no formal announcement that the sale has been completed.
The outlook for Canadian profitability has deteriorated materially from our prior forecast due to continued price discounting in 1Q16e. We have lowered our 2016e EBITDAS to $5 mm from $20 mm and 2017e EBITDAS to $50 mm from $64 mm. Our 2016e exit net debt forecast has increased to $249 mm from $140 mm, as we had been far too aggressive in modelling working capital draws throughout 2016e. The risk of the Company having to use its equity cure provision has increased materially due to potential cov
Impact: negative due to weaker than expected Canadian operating income margins in 4Q15 and a weaker than anticipated Canadian outlook.
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).
Trican has announced the sale of its U.S. Pressure Pumping business for US$200 mm (C$285 mm) plus a 10% equity investment, to Keane Group, a privately held U.S. Services company, and concurrently announced newly amended covenant relief with lenders. Total estimated transaction value is $352 to $405 mm. We estimate the EV/Replacement value metric at 32% after adjustments for working capital and EV/HP at $474. Both of these are respectable metrics. We are increasing our 12-month target price to $2
Impact: We expect the stock to trade higher on the news that there is a new large investor in Trican that has a prior history in pressure pumping.
Impact: neutral as there is no guarantee of a transaction being completed. Trican has announced that it is in negotiations for the sale of its U.S. pressure pumping business to Keane Group., a privately-held, U.S. based well completion company. Trican's management believes the price being offered represents fair value and that it would be in the best interest of shareholders, but significant terms and conditions are still under negotiation. No other details were released.
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.
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Invinity has followed the first sale of its Mistral flow battery with the news that the US Department of Energy will make funding available for 84 MWh of these larger units at six sites. This is major potential business in its own right but will also create a portfolio of reference sites, effectively seeding the US market for Invinity. The move gives us confidence in our long-term forecasts. We have factored in a gross margin gain for FY 24 and FY 25 as Mistral gains relative to the older VS3 pr
Longspur Clean Energy
Strix has announced interim results for the six months to June showing revenue up 28.6% to £65.2m. The strong top line growth, driven by its 2022 acquisition of Billi, has resulted in gross profits rising 22.6% to £23.9m. Excluding Billi, revenue was down c. 14% yoy. Following updated guidance in today’s announcement, along with its Capital Markets Day, we adjust our forecasts to reflect the slower than anticipated economic recovery along with the impact rising interest rates have had on profita
Companies: Strix Group PLC
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Companies: Up Global Sourcing Holdings PLC
YUG announced its finacial results for H1 2023 with revised Adj. EBITDA expectations for the year of over £33m, from ~£19m currently.
Judges Scientific is a group focused on acquiring and developing companies in the scientific instrument sector. Judges has delivered an excellent first half with order books reaching a new mid-year record of 22.4 weeks. H1 revenue increased by 32% (organic +16.5%) to £61.3m (H1-22: £46.4m) which helped yield an adjusted pre-tax profit of £12.8m (H1-22 £9.6m), a 33% YoY increase (organic: +12%), with EBITA margin climbing to 23.2% (H1-22: 21.8%). Adjusted fully diluted EPS increased 22% to 150.3p
Companies: Judges Scientific plc
11th September 2023
Status of this Note and Disclaimer
This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment ob
Companies: PEN BIRD INSE JNEO BARK IUG WATR BMN RBW
Avingtrans has reported a robust set of FY23 results with EBITDA growth of 10.6%, marginally ahead of expectations. The Group entered the current year with good momentum and a strengthened order book that now provides over 90% visibility for FY24 and over 45% for FY25. Post year-end the Group acquired the assets of Slack & Parr, a specialist pump manufacturer, and also recently completed the acquisition of Adaptix, a manufacturer of compact 3D X-ray machines, as well as investing further in Magn
Companies: Avingtrans plc
Singer Capital Markets
Companies: Safestyle UK Plc
Ultimate Products has announced the opening a new showroom in Paris and appointed a new sales team, also based in the capital. UPGS generates c.30% of its revenue in Europe, with Germany accounting for 30% of European sales. These announcements should act as the springboard to achieve a similar level of penetration in France. A launch event was held on Thursday 21 September, where the ribbon was cut by Hajir Hajji, the CEO of Action. The stock is -29% YTD, driven by concerns over the cost-of-liv