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Research Tree provides access to ongoing research coverage, media content and regulatory news on WESTERN ENERGY SERVICES CORP. We currently have 18 research reports from 1 professional analysts.
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WESTERN ENERGY SERVICES CORP
WESTERN ENERGY SERVICES CORP
28 Jul 16
Western reported a 2Q16 EBITDAS loss of $2 mm, slightly better than our forecasted loss of $3 mm. Western’s current Canadian drilling rig utilization is 29%, above industry average of 20% with five rigs currently on take or pay contracts. Day rates are likely to be weak in upcoming quarters, but equipment has to go back to work before pricing improves. As such, we view current utilization as a step in the right direction. The outlook for Contract Drilling is unchanged from our prior views. We have decreased our 2016e EBITDAS by $3 mm to $9 mm and 2017e by $7 mm to $41 mm, respectively, with the primary reason being tied to a weaker profitability outlook in the Production Services division.
The Swing Provider of Drilling Rigs to Key Canadian Resource Plays
31 May 16
We are of the view a recovery in the WCSB rig count is forthcoming; Western is one of the key drillers to own given its leverage to the spot market. Based on our analysis, we view Western as one of the key swing suppliers of drilling rigs for key Canadian resource plays (Montney and Deep Basin). The Company has been one of the most efficient drillers in the Montney (196 m/day vs coverage universe average of 189 m/day) and has drilled the deepest wells on average in the Deep Basin in our coverage universe. We estimate Western’s mid-cycle and “peak” EBITDAS of $85 mm and $134 mm. Applying the Company’s 2011 to 2014 average EV/EBITDAS multiple of 6.0x, we arrive at implied share prices (implied returns) of $4.49 (69%) and $8.86 (234%). There have been no changes to our estimates with this update.
1Q16 Results and Revised Credit Facility
02 May 16
Western reported 1Q16 EBITDAS of $3 mm, which was in line with our estimate.The Company’s credit facility and covenant package has been amended. This is a positive development as Western now has access to $50 mm of borrowing capacity, while also saving an estimated $1.5 mm of costs annually. The Company’s view on 2H16e has improved, and while we are not yet modelling this, it could result in positive revisions to our estimates.
1Q16 RESULTS AND REVISED CREDIT FACILITY
28 Apr 16
We expect the stock to trade lower tomorrow as results were modestly behind consensus and the reduced credit facility ($195 mm to $50 mm) is likely to take some investors by surprise. However, we believe the reduction of the facility should be viewed positively in the context that Western now has access to its facility due to relaxed covenants (which it did not before), will save $1.5 mm annually due to reduced costs and is unlikely to require borrowings for the duration of our forecast. We would be buyers of the stock on any weakness.
1Q16e Preview and Commodity Update – All Is Quiet on the Western Front
13 Apr 16
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, and we have lowered our estimates across our coverage universe accordingly. We are currently below 1Q16 consensus for 15 of 18 companies in our coverage universe, but the percentages are misleading given the absolute size of EBITDAS being earned this quarter.
01 Nov 16
Since our last outlook note, Quadrise has begun to supply MSAR for extended LONO sea trials, paving the way for commercial adoption from calendar H217 onwards. In August it signed a memorandum of understanding with clients in the Kingdom of Saudi Arabia (KSA), which is a key enabler for progressing the production-to-combustion pilot there. In October it completed a placing and open offer raising a total of £5.25m (gross). This should enable it to transition comfortably to the commercial phase on successful completion of the LONO and KSA trials.
30 Nov 16
Abzena (ABZA): Interim results indicate happy customers (BUY) | Horizonte Minerals* (HZM): Fund raise completed (CORP) | SacOil* (SAC): Half-year trading statement (CORP) | Revolution Bars (RBG): New openings (BUY) | Amino Technologies* (AMO): Multi operator FUSION roll out (CORP)
GTL transaction not going ahead
01 Dec 16
Intelligent Energy (IEH) has announced that the deal to acquire the Energy Management Business of GTL will not now be consummated. The move leaves management free to concentrate on driving sales of commercially ready B2B products, which is a key element of its strategy. We adjust our FY17e revenue estimate while leaving our pre-exceptional losses and cash-flow forecasts unchanged.
24 Nov 16
Quixant* (QXT): Gaming gains (CORP) | SCISYS* (SSY): Bringing good news from Germany (CORP) | Hayward Tyler Group*: Contract wins (CORP) | Sound Energy (SOU): TE-7 flow rate and fund raise (BUY) | Water Intelligence* (WATR): Growth and improving returns in a defensive market (CORP) | Imaginatik* (IMTK): Interim trading update (CORP)
Operating profits and net cash position – restored; market outlook – precarious
01 Dec 16
The turnaround was noticeable Lonmin’s full-year (September-ending) results were ahead of consensus and AV’s estimates. Sales came in at $1.1bn (-14% yoy) as the average realised (USD-denominated) PGM prices and sales volumes were down yoy 12% and 2%, respectively. However, platinum sales (736koz) were much ahead of earlier guidance (700koz) – thanks to certain smelting/processing efficiencies, which helped more than offset the impact of reorganisation-related disruptions. After two consecutive years (FY14-15) of hefty operating losses, Lonmin finally reported an adjusted operating profit (even though feeble) of $7m. This was facilitated by the record weakness in the South African rand (down from ZAR12/$ in FY15 to ZAR14.77/$ in FY16) and ZAR1.3bn of cost savings – 86% higher than the earlier target. Disappointingly, Lonmin recognised $335m of asset impairments (vs. $1.8bn in FY2015), which resulted in a full-year net loss of $400m. But the turnaround in reported OCFs – inflow of $58m vs. an outflow of $12m – was a much-needed improvement, which, along with conservative capex (-35% yoy) of $87m, resulted in a net cash position of $173m (with no short-term repayments) vs. a net debt position of $185m (at end-FY15). But the guidance spells caution For FY17, management targets conservative platinum sales of 650-680koz, while unit costs are expected to remain under pressure – ZAR10,800-11,300/oz vs. ZAR10,748/oz achieved in FY16. On the other hand, capex plans would be aggressive – ZAR1.8bn (which includes ZAR400m for the tailings project – already delayed by almost two years) vs. ZAR1.3bn spent in FY16.
Raising Target Price to 2,500p per share
01 Nov 16
Royal Dutch reported clean EPS of US$0.35, nearly 50% ahead of consensus. More importantly, cash flow jumped QoQ to US$8.5bn which should go a long way to confirming Shell’s capacity to maintain the current dividend, despite the increase in gearing to 29.2%. Upstream returned to profitability on an underlying basis for the first time since 1Q15. We believe these results confirm our view that Shell’s dividend can and will be maintained at US$0.47 per quarter and we increase our Target Price to 2,500p per share, given further sterling weakness.