# CFW? Services sector



## Shnoobs (Feb 28, 2012)

Have been watching this sector since they came off the floor and I'm puzzled. They came out with great earnings, shot up like a meteor (I missed the boat), some analyst came out and said Nat gas sector and anybody associated with it is dead money and took the services sector back down. Since then these stocks have been up and down like gold. Any thoughts? I want CFW and TCW as growth and the multiples scream buy, but I'm worried?


Derek


----------



## HaroldCrump (Jun 10, 2009)

Yes, this sector has been taking it in the gut recently.
All players in this sector are down from their highs earlier this year, even the large established players.
I am invested in Ensign which is among the more stable and diversified ones, and a reliable dividend payer.

There are several factors causing this.
Believe it or not, the high commodity prices are actually hurting them more than helping.
Also, the long gestation period of their capital investments and projects combined with the global uncertainity is making the market fearful that in the long term many of their projects will not be profitable or materialize.

You should read this:
http://www.prospectingjournal.com/calfrac-ensign-and-energy-services-investor-uncertainty032112/


----------



## Shnoobs (Feb 28, 2012)

Good article, I bookmarked the website. Not sure if I care about the dividend aspect of the argument considering how inconsequential the yield actually is on most of these stocks, ESI being the exception. Sometime soon there will be an entry point ($90.00 oil?) and with a 2+ beta a quick exit on profit taking. I'll continue to watch.


----------



## PMREdmonton (Apr 6, 2009)

This has been a tricky sector.

I've chosen to put most of my money into a riskier play called Gasfrac. This is a Calgary based company that has developed a means to perform frack jobs without the use of water - they used liquefied propane gel instead. This propane can be recovered in the processing of the extracted hydrocarbons and they are working on a technique to do on-site capture for smaller players who don't have the vertical integration to accomplish the recycling at the refineries.

The reason this company is potentially a big deal is that it can frack without water leaving it the only company that can pursue jobs in NY and most of Europe (recent big deal pending in NY and MOU signed with eCORP to pursue European operations). 

The second reason I am high on it is that it dramatically decreases issues in drought areas which is where much of this oil exists. It calms the environmental concerns down.

The third issue is it increases fracture lengths which seems to markedly increase flow of hydrocarbons (maybe 50%). 

Fourth, it seems to work in some tight shales where all other frack techniques have failed.

Fifth, it may increase recoveries from drill jobs.

Sixth, they own the licence to use LPG in North America from Chevron.

Seventh, they own some patents regarding their processes and they have others pending so it will be hard for others to follow the same path.

Eighth, there is pessimism right now due to an earnings miss. The stock went from about 8.50 to 6.25 and now his been bid back up to 7.50. Market down on earnings but they are in a technology adoption cycle and are proving to the big oil companies the advantages of their technique while demonstrating good safety records and good environmental records. 

I have got 5% of my portfolio here right now and am happy to rest here but I may be tempted to go up to 7.5 to 10% because I like the company's prospects that much.


----------

