Essential Energy Services

Essential Energy Services

ESN

Last Updated On: January 1, 2019

Share Price On This Date: $0.30

An oil and gas services company, operating Canada's largest fleet of coiled tubing drilling rigs.

Summary

This company owns and operates a fleet of oil and gas drilling rigs in western Canada. They were hit hard when the price of oil collapsed in 2015 but were making progress towards a recovery in 2018, posting results that were close to breakeven. However, a combination of renewed weakness in the price of oil and a punishing discount for western Canadian crude because of a lack of pipeline capacity to get the oil out of the province has pushed the stock price down to new lows. While the outlook for the Canadian oil and gas industry is looking fairly bleak at the moment, the pessimism in the sector has meant that the stock is now trading at a mere one third of its tangible book value and just a little over 1 times its previous peak earnings. If you ignore the significant depreciation expense of its sizable rig fleet, it is cash flow positive and has a relatively modest debt level. Risk in this investment is high given the uncertain future of the industry but there is substantial turnaround potential if they can survive the storm. I have sold off some of my holdings in this stock and retain only a small position.

Hot and spicy iconAsset play icon