# Ensign Energy Services (ESI)



## Dmoney (Apr 28, 2011)

2.6% yield, trading below 10x P/EPS, less than 5x P/CFPS
Significant dividend growth over past 10 years. Increased from $0.04 to $0.38 from 1999 to present.

Couple of analysts are calling for dividend hikes in 2012. 
Lowest analyst price target is $16.50, only 4 out of 15 are below $20.00
6/15 analysts have Hold or Sector/Market perform ratings. The rest are outperform/Buy. 

Big ownership stake owned by N. Murray Edwards (Richer than God, owns the Flames and owns ~500 mil of ESI). If he's in it it's gotta have some value.

Services wells and is a contract driller, so more reliant on action in the oil sands rather than tied to the price directly (obviously higher oil prices means more action, but profits are likely more stable). 

Thoughts?

Alternatives would be about 1/10th the size and maybe more upside, but more downside as well:

SVY-t
PHX-t
CET-t
AKT.A-t


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## FrugalTrader (Oct 13, 2008)

ESI is a member of the Canadian dividend achievers index (cdz covers this) . This essentially means that they have increased their dividend annually for at least the past 5 years. 

disclaimer : I own a small position in ESI


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## maxandrelax (Jul 11, 2012)

Anyone stocking up on ESI at this price level? Seems to be good opportunity, but am wondering if the drilling and service industry is under pressure these days. Anyone from Calgary have any insight?


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## Dmoney (Apr 28, 2011)

Should have been buying it at ~$13 in May of this year, but missed the boat there. I am short 20 January puts at $15 strike price, so I'm hoping it doesn't move much up or down in the next month. Will roll the puts or the covered calls depending where it ends up in January. 

In hindsight would have been great to have bought ~$15 when I started this thread. Ran up past $17 in the next two months.


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## baker3232 (Oct 7, 2011)

This is a hindsight is 20/20 reply. I first bought esi about 15 years ago at $5.00 and sold about $10. Watched it go to high $50's and split 3 for 1, go to the same levels again and again split 3 for 1. I cry here. Oh well, I was a beginner and moved on to other investments and did ok. I did buy it back at $12 a couple years ago and still hold it now. I guess the lesson here is buy and hold if the company continues to be solid. Akt.a was also mentioned above and I have also held that in the past, very solid company, pays a dividend, but is very thinly traded at times. I guess you could say I've always liked the drillers, along with esi, I also hold precision drilling (pd), bought at $3 after the crash in '08, and frc, mainly for the dividend.


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## doctrine (Sep 30, 2011)

This looks like a good company. I'd prefer a slightly higher yield, but looks like there were many opportunities throughout this year to get it as high as 3.3% (now 2.9%). Worth watching.


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## maxandrelax (Jul 11, 2012)

I've got a buy in at 14.6. Share price is currently around 70% of its Graham number, indicating good value. You have to be contrarian in this market. I have wanted to buy some consumer discretionary like Weston and Saputo for a while now but they keeps going up!


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## Grahamfollower (Jan 18, 2015)

Hey all, 
Is anyone looking at purchasing this stock right now? It's trading below book value, but the current liabilities ratio isn't too great. Good earnings over the last ten years. I'm just wondering if anyone thinks this stock is undervalued at the moment. Is there a lot of fear that this company will tank with the low price of oil? Is that why it's so low?

Thanks


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## FrugalTrader (Oct 13, 2008)

Basically all oil and gas drilling companies have been hammered due to low oil prices (ESI, PD, SDRL, RIG etc). If low oil prices are the new reality, then ESI could run into big trouble. However, if you have a long view and believe that oil will bounce back, ESI _should_ bounce with it.


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## thepitchedlinkagain (Jul 4, 2016)

I bought a bit more of this today...anyone else ?


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## humble_pie (Jun 7, 2009)

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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## Argonaut (Dec 7, 2010)

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!


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## humble_pie (Jun 7, 2009)

Argonaut said:


> 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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## doctrine (Sep 30, 2011)

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.


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## humble_pie (Jun 7, 2009)

doctrine said:


> 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 .each:

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## doctrine (Sep 30, 2011)

It's not a secret 

http://business.financialpost.com/n...uring-2-5b-debt-renegotiation?__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."


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## humble_pie (Jun 7, 2009)

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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## thepitchedlinkagain (Jul 4, 2016)

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


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## thepitchedlinkagain (Jul 4, 2016)

Been on a nice little run......


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## hollyhunter (Mar 10, 2016)

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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## thepitchedlinkagain (Jul 4, 2016)

Any thoughts here lately ? I'd like to keep this discussion going....


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