PHX Energy Services

PHX Energy Services

PHX

Last Updated On: October 12, 2018

Share Price On This Date: $2.94

Oil and gas services. Provides directional drilling, motor rentals and electronic data recording solutions.

Summary

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.

Unfortunately, while the company reports 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, these developments haven't translated into any profits yet. The company's balance sheet is strong, though, it is cash flow positive and is trading for less than its tangible book value. If they can deliver on the promise of their new drilling systems they could still turn out to be a big winner.

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