Research from Atrium Research, Atrium Research Corporation

Atrium Research

Research from Atrium Research

Atrium Research Corporation

Atrium Research provides institutional quality issuer paid research on public equities in North America. Our investment philosophy takes a 3-5 year view on equities currently being overlooked by the market. Our research process emphasizes understanding the key performance metrics for each specific company, trustworthy management teams, unit economics, and an in-depth valuation analysis. 

Our research product includes in-depth initiation reports, research notes, thematic research pieces, and company fact sheets.

Thematic (Sector/Industry)

<ul>
<li>We anticipate oil prices to remain within the US$80-$90 range, which will sustain the current uptick in E&amp;P capital expenditure and foster a strong environment for oilfield services firms.</li>
<li>Our peer group continues to trade at deep-value multiples; currently at 4.5x/4.0x 2024E/2025E EBITDA.</li>
<li>We highlight a few of our favourite small-cap names that we believe have significant upside as we move into H2/24.</li>
</ul>


We anticipate oil prices to remain within the US$80-$90 range, which will sustain the current uptick in E&amp;P capital expenditure and foster a strong environment for oilfield services firms.
Our peer group continues to trade at deep-value multiples; currently at 4.5x/4.0x 2024E/2025E EBITDA.
We highlight a few of our favourite small-cap names that we believe have significant upside as we move into H2/24.


<ul><li>We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&amp;Ps, and pricing power leading to margin expansion </li><li>Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples In order to end the oil supply deficit, additional rigs are required to be deployed; providing organic growth and pricing power for oilfield service names.</li><li>This will create another year of margin expansion for oilfield service stocks as they take advantage of operating leverage.</li></ul>

We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels amongst E&amp;Ps, and pricing power leading to margin expansion Despite the sector’s strong fundamental tailwinds and the probability for a multi-year commodity supercycle, oilfield service companies are still trading at trough-level multiples In order to end the oil supply deficit, additional rigs are required to be deployed; providing organic growth and pricing power for oilfield service names.This will create another year of margin expansion for oilfield service stocks as they take advantage of operating leverage.

Oilfield Services: Another Great Year Ahead

Canada

Mullen Group Limited owns asset based oilfield services and trucking businesses. The Company's oilfield services division provides specialized transportation equipment and trained operating personnel to the oil and gas industry in western Canada.  Mullen's trucking division provides bulk hauling, truckload, and other services to shippers in Canada and the United States.

Pason Systems Inc. provides rental oilfield instrumentation systems that are designed and manufactured for use on land-based drilling and service rigs. The Company offers both wellsite rental services and Internet data management services.

Mattr Corp. is an energy and infrastructure technology company. The Company specializes in product, services, and solutions utilized in oil and gas, water and wastewater, fuel, transportation, and industrial applications, as well as designs, builds, protects, and manages critical assets. Mattr serves customers worldwide.

Enerflex Ltd. provides oilfield services for natural gas and petroleum producers. The Company markets its services for natural gas compression, oil and gas processing, refrigeration systems, and power generation equipment to customers worldwide.

Trican Well Service Ltd. is pressure pumping company. The Company provides specialized, engineered and integrated solutions to its customers involved in the exploration and development of oil and natural gas reserves. Trican services include fracturing, coiled tubing, cementing, acidizing, nitrogen and industrial services.

Secure Energy Services Inc., is an energy services company that focuses on providing specialized services to upstream oil and natural gas companies operating in the Western Canadian Sedimentary Basin. The Company treats and sells crude oil and the handling of by-products associated with oil and natural gas development and production.

Ensign Energy Services Inc provides oilfield services in Canada, the United States and internationally.  The Company offers land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Additional services include directional drilling, rental equipment, managed pressure drilling, and production flow back units.

Total Energy Services Inc. provides rental equipment and gas compression services to the oil and gas industry.  The Company offers portable compression systems, tanks, sumps, shale bins, loaders, rig mats, sour separation emission control units, and a fleet of trucks.  Total Energy provides its services to customers located in northwestern Alberta, Canada.

STEP Energy Services Ltd. operates as an oilfield service company. The Company offers coiled tubing and hydraulic fracturing, chemical laboratory, and fluid pumping solutions. STEP Energy Services serves customers in Western Canada and South Texas.

Parex Resources Inc. is an oil and gas exploration and production company. The Company owns interests in Colombia and Trinidad & Tobago.

MODEC, INC. manufactures petroleum and natural gas production machinery.  The Company specializes in extraction machinery for marine use, including semi-submersible and fixed platform types, and also machinery as on-board equipment on ships.

U.S. Silica Holdings, Inc. is a  producer of industrial silica and sand proppants. Then Company produces a variety of industrial minerals including sand proppants, whole grain silica, ground silica, fine ground silica, calcined kaolin clay and aplite clay. U.S. Silica offers its products to the oil and gas, glass, chemical, and building products industries.

RPC, Inc. provides specialized oilfield services and equipment to independent and major oilfield companies.  The Company's services include snubbing services, coiled tubing services, pressure pumping services, marine services, firefighting and well control, and rental of drill pipe and other equipment.

Sinopec Oilfield Service Corporation provides oilfield services. The services include geophysics, drilling engineering, logging and mud logging, special downhole operations, engineering construction, oil field service and offshore oil projects.

Precision Drilling Corporation is an integrated oilfield drilling and energy service company providing services to the oil and gas industry.  The Company provides oilfield rentals, well services, catering services, and drilling services through its several business units.

ZhongMan Petroleum And Natural Gas Group Corp., Ltd. offers drilling engineering services. The Company provides petroleum drilling components manufacturing, mud logging, directional drilling, cementing, and construction services. ZhongMan Petroleum and Natural Gas Group offers services in China.

ZhongMan Petroleum and Natural (603619 CH)

Bristow Group Inc. operates as an aviation transportation provider. The Company offers helicopter transportation and aircraft support services to government and civil organizations. Bristow Group serves customers worldwide.

Tecnicas Reunidas SA offers engineering and construction services.  The Company primarily designs and constructs a variety of industrial plants as well as power.

Hunting PLC is an international energy services provider to upstream oil and gas companies. The Company manufactures, supplies and distributes products that enable the extraction of oil and gas through its well construction, well completion and well intervention divisions.

John Wood Group PLC is an international energy service company that provides products and services to the oil and gas and power industries.  The Company designs and manufactures submersible pumping systems, well-head systems, and pressure controls.  John Wood also provides aftermarket services for heavy industrial turbines and aero gas turbines.

CES Energy Solutions Corp. provides oilfield services. The Company offers fracturing, simulation, drilling fluid systems, laboratory testing, and transportation and logistic services. CES Energy Solutions operates in the United States and Canada.

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CES Energy Solutions (CEU CN)

Oilfield Services: Still Way Too Cheap

We anticipate oil prices to remain within the US$80-$90 range, which will sustain the current uptick in E&P capital expenditure and foster a strong...

Atrium Research

Oilfield Services: Another Great Year Ahead

We expect oilfield service stocks to continue to outperform in 2023 and beyond based on supportive oil price fundamentals, rising capex levels...

Atrium Research

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