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  • 4 Oil & Gas Stocks Pumping Out Big Profits With Strong Mutual Fund Interest [View article]
    Complete Production Services had approximately 315,000 horsepower of pressure pumping capacity when Superior Energy Services announced buyout on Oct 10, 2011. Now that the merger is complete and Complete Production Services reported year end results we can compare them with RPC, Inc and C & J Energy Services.

    Complete Production Services
    $590.2 million adjusted EBITDA for year end 2011
    $2.7 billion announced buyout
    4.6x 2011 EBITDA

    RPC Inc
    $666.2 miliion adjusted EBITDA for year end 2011
    $2.2 billion market cap
    3.3x 2011 EBITDA

    CJES
    285.0 million adjusted EBITDA for year end 2011
    $950 million market cap
    3.3x 2011 EBITDA
    2012 Forecasted EBITDA of $410 million
    2.3x 2012 Forecasted EBITDA

    Randall Rollins and his brother Gary Rollins own almost 50% of the company. They will likely not sell the company at these depressed levels. Electing to hold on a few more years when the market values oil and gas service companies at higher prices.
    Mar 15 10:20 AM | Likes Like |Link to Comment
  • 4 Oil & Gas Stocks Pumping Out Big Profits With Strong Mutual Fund Interest [View article]
    Here is a quick comparison of C & J Energy Services (CJES) and Basic Energy Services (http://bit.ly/wIdRmS):

    First, many service companies sell their services at a discount in order to open the door to their more profitable products (Pressure Pumping, Hydraulic Fracturing, and Coiled Tubing). This decreases the overall profitability of the business which is why I find CJES so appealing. CJES focuses on the highest margin part of the Oil and Gas Services industry (Hydraulic Fracturing).

    All information provided below is directly from both the CJES and BAS 2011 annual report filed with the SEC.

    Basic Energy Services (http://bit.ly/wIdRmS)
    “In 2011, our completion and remedial services segment represented 43% of our revenues. Our completion and remedial services segment includes pumping services, rental and fishing tool operations, coiled tubing services, nitrogen services, water treatment, cased-hole wireline services, snubbing and underbalanced drilling.”
    “Our pumping services business focuses primarily on lower horsepower cementing, acidizing and fracturing services markets. Currently, there are several pressure pumping companies that provide their services on a national basis. For the most part, these companies have concentrated their assets in markets characterized by complex work with higher horsepower requirements. This has created an opportunity in the markets for pressure pumping services in mature areas with less complex characteristics and lower horsepower requirements. We, along with a number of smaller, regional companies, have concentrated our efforts on these markets. One of our major well servicing competitors also participates in the pressure pumping business, but primarily outside our core areas of operations for pumping services.”

    Basic Energy Services does not service high profile wells. They are implying that they service vertical wells which is a profitable business but does not deserve to trade at a premium. They also have $749 million in long term debt as of 12/31/2011.

    C & J Energy Services (http://bit.ly/y3V0JR)
    States their competitors of fracturing services as: Halliburton, Schlumberger, Baker Hughes, Weatherford International, RPC, Inc., Superior Energy Services, and Frac Tech. They receive 81.7% of total revenue from hydraulic fracturing services which I believe which have the most growth potential. They have no long term debt with a $200 million revolving credit facility of which none has been withdrawn. All expenditures will be able to be financed through cash flow with no need to tap credit facility or issue debt. C and J Energy Services is a very attractive buyout opportunity due to the low debt and industry leading margins.

    I can’t tell you when a company will break out of its trading range but I can suggest focusing on the margin of safety. C & J Energy Services superior reputation, strong balance sheet, and significantly undervalued stock price will equal Superior Profits for CJES shareholders. CJES deserves to trade at a premium for the above mentioned reasons.
    Mar 15 12:28 AM | 2 Likes Like |Link to Comment
  • 4 Oil & Gas Stocks Pumping Out Big Profits With Strong Mutual Fund Interest [View article]
    We are currently in an environment that is extremely pessimistic about any company that has anything to do with dry gas not to mention hydraulic fracturing. Gas prices are likely to remain low for the foreseeable future and environmentalists will never let their concerns about fracking subside so I expect the pessimism to last for a while. But, the discounted valuations of all oil and gas service companies cannot be ignored. I believe that this sector is the most appealing value and growth story for the next decade despite low dry gas prices. Fracking is here to stay because it creates jobs and more importantly creates large tax revenues. Throughout time environmentalists complain about one thing or another when it comes to energy companies but fossil fuel extraction continues. Not too long ago diesel fuel was used in fracturing operations which is now replaced with water. Many don’t know this fact. Density is what is important when fracking and I stress people to not invest in companies that use Liquefied Petroleum Gas in fracking despite their claims of success.

    My favorite Energy Service investments in order of most upside potential are: C and J Energy Services (CJES), RPC Inc (RES), and Halliburton (http://bit.ly/y3xq5A).

    I select investments based upon fundamentals with a long horizon and manage a focus portfolio. I am not a trader and do not attempt to speculate. I identify undervalued companies selling at a discount to my calculated intrinsic value and hold until they reach my intrinsic price.
    Mar 15 12:06 AM | 1 Like Like |Link to Comment
  • 4 Oil & Gas Stocks Pumping Out Big Profits With Strong Mutual Fund Interest [View article]
    CJES is a leader for specialized fracking jobs. On the ground, CJES has a very good reputation and has attracted talented workers. They are known to provide a superior service at a premium unlike competitors such as Key Energy Services, Basic Energy Services, and Platinum Energy who charge the lowest rates possible. In the services industry, E&P’s trust their highest potential wells to companies like C & J, Halliburton, Baker Hughes, and Schlumberger who always deliver results. They will continue to attain long term contracts for their current and future fleets. Oil production will continue to dramatically increase and more than offset the falling dry gas prices. It takes on average around 40 days to drill a well in the Haynesville. But, in the Permain Basin and the Eagle Ford it takes on average 27 days and 16 days which equates to more service revenues and a large backlog of wells for pressure pumping. Not to mention, now E&P companies are drilling twice as many wells on each pad site. Then take a visit to Odessa, TX and be blown away by the amount of current oil production and future drill sites. But, natural gas prices are dictating the direction of all service companies’ stock prices. The market continues to overlook that fact that there is an oil boom in TX, OK, and KS. CNBC only mentions the Bakken Shale while they focus on unprofitable business with unsustainable business models. After CJES releases info on the contacts of Fleet 1 and 2 which are set to expire at mid-year this will be the catalyst that will take CJES out of its current trading range of $18-$22. All the oil and gas services companies are extremely cheap but there is no telling when the market will realize their value.
    Mar 14 02:12 PM | 3 Likes Like |Link to Comment
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