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Thread: Ensign Energy Services (ESI)

  1. #11
    Senior Member humble_pie's Avatar
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    me i think it's ok for far-forward-looking deep pockets to buy drillers & well service companies at today's firesale prices. The crucial issue is debt levels. How are these companies going to meet their bank covenants without any significant revenues?

    a company that owns producing wells still has something to sell, albeit at a loss, to forestall the bankers. But the drillers' rigs are all sitting at home. IDK, possibly some of the ocean-going deep water rigs are even being broken up for parts.

    tri-can has managed to skate, skate, skate, skate through the downturn so far. TCW has a good long-term history & its bankers are carefully overlooking a number of short-term motes in their eyes. I haven't studied ESI, wondering how is its debt position?


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  2. #12
    Senior Member Argonaut's Avatar
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    If we look at the overall rig counts: http://www.caodc.ca/rig-counts-drilling-dr-quarter

    There's only 22% utilization for the first quarter of this year, compared to 64% in the first quarter of 2014. About 100 rigs have disappeared altogether, maybe the older ones sold for scrap.

    This is a terrible industry to invest in, I wouldn't even do it on a gamble. When I went there for work in late 2011, they were complaining about $80 oil and how they couldn't use all their rigs at that level. The oil drilling companies are still setup like it's the commodity boom leading into 2008. There needs to be some shakeout of some of these players to consolidate the industry. When you go to Nisku, Alberta there are 10 or 12 operational headquarters for these drillers. That's way too many at $45 oil.

    Wait for the shakeout, or better yet, buy a pipeline!

  3. #13
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by Argonaut View Post
    This is a terrible industry to invest in ... Wait for the shakeout, or better yet, buy a pipeline!

    yes, that's what i was saying, except more indirectly. Drillers & well service companies are only for far-forward-looking deep pockets, i mentioned.

    the thing is, another member had just said he'd bought Ensign this am. He's a nice longtime member whom we all know well, so although i believe the timing is not good at the present moment, i didn't want to hurt his feelings.

    assuming ESI can squeak through its bank covenant dates & debt doesn't dissolve it, a worst case scenario could be frozen capital for the next few years. C'est pas la fin du monde. A skilful investor could even collect some revenue from options.

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  5. #14
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    I don't know ESI's numbers, but if you're going to be in this space, go with a driller that has zero debt and can operate as close as possible to break even (or even slightly profitable). They exist, and while most of them haven't fallen as much as the leveraged drillers, some of them have started acquiring targetted assets as cheap as 15 to 20 cents on the dollar and will be the winner in any type of major M&A spree.
    Last edited by doctrine; 2016-09-28 at 04:58 PM.

  6. #15
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by doctrine View Post
    I don't know ESI's numbers, but if you're going to be in this space, go with a driller that has zero debt and can operate as close as possible to break even (or even slightly profitable). They exist, and while most of them haven't fallen as much as the leveraged drillers, some of them have started acquiring assets as cheap as 15 to 20 cents on the dollar and will be the winner in any type of major M&A spree.

    yes, exactly. The far-forward-looking deep pockets.

    doctrine are you sharing the suddenly-acquiring-15-cent-assets drillers you've been able to identify?

    probably not, the markets for these would be so thin that only an astute researcher like doctrine plus a few dedicated institutions would know how to play in such exotic fields .

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  7. #16
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    It's not a secret

    http://business.financialpost.com/ne..._lsa=f7ee-00f9

    "“I’m extremely pleased with the assets that we bought,” said High Arctic interim president and CEO Thomas Alford, adding that factoring out other items included in the deal — like a fleet of rental equipment including mobile trailers and offices — his company bought the service rigs for less than 15 per cent of their replacement cost."

  8. #17
    Senior Member humble_pie's Avatar
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    wow. Are they in the high arctic? that's really looking out to the future. The northwest passage as a warmer post-ice international shipping thoroughfare.

    it's going to happen. Just like mining & energy extraction in the himalayas. The Silk Road railway. Sooner than we think.

    canada must keep hegemony over her arctic lands & waters.



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  9. #18
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    Good discussion guys, keep it going....High Arctic is another one that I like

  10. #19
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    Been on a nice little run......

  11. #20
    From the relationship between price and moving averages; we can see that: This stock is BULLISH in short-term; and BULLISH in mid-long term. Looking for breakout at 8.55 with a short term target of 9.99.


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