PHX Energy Services
Last Updated On: January 1, 2019
Share Price On This Date: $2.36
Oil and gas services. Provides directional drilling, motor rentals and electronic data recording solutions.
PHX Energy Services is a contract driller with a nicely diversified geographic base. 60% of revenues are coming out of the US right now where the frackers are on fire, along with another 7% or so from Russia. The remainder is back in Canada. PHX has been working on a number of proprietary technologies which could give a strong boost to future growth and profitability if they can drive adoption. To my understanding, these new technologies mostly center around the automation of the drilling process, meaning fewer oil hands needed. With a shortage of skilled oilfield workers and a relentless focus in the industry on cutting expenses to the bone, I could see potentially big demand going forward for these kinds of solutions.
The latest third quarter results were encouraging as the company moved to profitability after a long string of losses. The company is reporting strong demand for its new rigs and continues to invest in new equipment, most recently announcing the establishment of a high-performance drilling motor division. Their balance sheet is strong and they are trading for less than their tangible book value. While the price of oil has taken a deep slide since the third quarter results were released, if they can deliver on the promise of their new drilling systems, they could still turn out to be a big winner.