10 Ways to Play the Hot Energy Services Sector

by: FP Trading Desk

As companies search for riches in unconventional resource plays such as the Monteny, Bakken and Horn River, oilfield service companies will be in demand. These hot plays should “result in operators directing additional capital to their development.”

Calgary’s Peters & Co. Ltd. recently detailed who could be the big winners: pressure pumpers and directional drillers should come out on top, with drilling contractors and drilling fluids companies also riding the coattails of excitement in these resource plays.

Top picks? Calfrac Well Services Ltd. (OTCPK:CFWFF), Phoenix Technology Income  Fund [PH.UN/TSX], Mullen Group Income Fund (OTC:MTLJF), and Savanna Energy Services Corp. (OTC:SVGYF). Peters notes that other oilfield service companies also look “compelling due to the strength of their financial position, operational diversity, and management team.” 

Investors should pick up “core positions” in Ensign Energy Services Inc. (OTCPK:ESVIF), Enerflex Systems Income Fund (OTC:EFXFF), Horizon North Logistics Inc. (OTC:HZNOF), Pason Systems Inc. (OTCPK:PSYTF), Precision Drilling Trust (NYSE:PDS), Pure Energy Services Ltd. (OTC:PUEYF), and Xtreme Coil Drilling Corp. (OTC:XTMCF).

Peters forecasts drill, case and complete expenditures in the Western Canadian sedimentary basin of about C$19.5-billion, thereby resulting in a well count of 20,500 and a 48% rig utilization.

Peters wrote:

The emergence and development of unconventional resource plays, including the Monteny, Bakken, and Horn River, with significant scope should result in operators direction additional capital to their development.  We expect that there will be incremental improvements in completion technology, thereby lowering operators’ totall well costs, and that the success associated with horizontal wells in resource plays will increase the number of horizontal wells drilled in other reservoirs throughout the basin.