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Pioneer Energy Services Goes Under, But Leaves Shareholders Something


  • The management team at Pioneer Energy Services filed for Chapter 11 bankruptcy protection for the firm.
  • This move has been a long time coming, but the pain cannot be adequately stated for those affected.
  • In this rare case, common shareholders can actually walk home with some value, but it's still a bittersweet moment.
  • Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Get started today »

March 2nd brought what appears to have been some much-anticipated news for shareholders of Pioneer Energy Services (PES). The moderately-diversified energy services firm announced that it had decided to file for bankruptcy protection. Generally speaking, this kind of move results in a compete wipe-out for common shareholders, but management was able to strike a deal that keeps existing stockholders of the company with at least a small stake in the firm. It's not much and will more likely than not serve more as a band-aid would a gaping sword wound than it would an alleviation for past pain. Even so, this bittersweet development for shareholders does warrant proper consideration.

The pain has been building

A first look at Pioneer's financials over the past few years illustrates a company that has been struggling, but not necessarily one that was definitively on the way out. The market, though, was especially perceptive. For months, the market has been expecting a bad outcome for the firm. In fact, shares of the firm were trading at less than $0.10 apiece since late September of 2019. That's never a positive sign.

Taken from Pioneer Energy Services

The reason why, from an initial fundamental glance, this looks odd is because the company's financials, while not ever really good, did not show a continued and consistent deterioration over time. In the image above, for instance, you can see that the company's revenue tanked from 2014 through 2016. But its financial condition did improve nicely after that at the top line. Net losses persisted through 2018, but operating cash flow was mostly positive.

Taken from Pioneer Energy Services

Even heading through 2019, the picture in some ways was looking up. As the image above illustrates, revenue had mostly stabilized in the first three quarters of the firm's 2019 fiscal year. Its net loss

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This article was written by

Daniel Jones profile picture
Robust cash flow analyses of oil and gas companies

Daniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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