One-glance verdict
Undervalued
$5.20 our estimate vs market $2.61
50% below our estimate, below the bear case
Fundamentals snapshot
Ensign Energy Services Inc.
ESVIF · PNK · Energy · Oil & Gas Drilling
Current price
$2.61
52-week range
$1.65 - $3.96
Market cap
$481.10M
Balance sheet
Distressed
0.55x Concerning
Net debt $671.51M. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
2 Risks
1 rewards · 2 risks
- Reward Free cash flow was positive in 4/10 years.
- Risk Operating margin compressed from 4.6% to -0.9% over 3 years.
- Risk Return on equity was -3.0% last year — the company lost money on shareholders' equity.
What this company does
Ensign Energy Services Inc.
Ensign Energy Services acts like a specialized construction crew for the oil and gas industry, providing the drilling rigs and services needed to get oil and gas out of the ground. The company makes its money by renting out equipment and charging oil producers for services like drilling, well maintenance, and transportation. This means Ensign's success is closely tied to how much drilling and exploration oil and gas companies are willing to pay for at any given time.
How the company got here
Ensign Energy Services started in 1987 in Canada with just a few drilling rigs. It grew by buying other companies and expanding its services, first entering the United States in 1994 and then going international in 2002. A key moment was the 2018 acquisition of Trinidad Drilling, which significantly expanded its fleet and geographic reach. The company has focused on developing its own drilling technology to improve efficiency and safety. Like many in the energy sector, its business is cyclical, meaning it does well when oil and gas prices are high and faces challenges when they are low.
What it actually does
Think of Ensign as a specialized construction and maintenance company for the oil and gas industry. When an energy company wants to find and extract oil or natural gas from the ground, they hire Ensign to do the heavy lifting. Ensign provides the large drilling rigs (the tall towers you might see in a field), the crews to operate them, and related services to get the well started and keep it running. They don't own the oil or gas; they are a service provider that gets paid by energy companies for their equipment and expertise.
United States Oilfield Services
This is Ensign's largest business area, making up about half of its total sales. In the U.S., the company provides land-based drilling rigs and well servicing (maintenance for existing wells) to energy companies exploring for oil and natural gas. Customers pay Ensign on a contract basis to drill new wells or to provide other services like directional drilling, which is a technique to drill at an angle to reach oil and gas deposits that aren't straight down. The performance of this segment is closely tied to the health of the U.S. energy industry.
Canadian Oilfield Services
This is the company's original and second-largest business, representing roughly a third of its revenue. Similar to its U.S. operations, Ensign provides drilling and well servicing to energy companies in Canada. A specialized service here is oil sands coring, which involves taking samples from the ground in areas where oil is mixed with sand. This segment's activity is influenced by Canadian energy prices and government policies.
International Oilfield Services
This is a smaller, but still significant, part of Ensign's business, operating in places like Latin America, the Middle East, and Australia. It provides the same core services of contract drilling and well maintenance to energy companies in those regions. This geographic diversification (spreading business across different parts of the world) helps the company balance out slowdowns in any single country. However, this segment can be affected by geopolitical tensions and global economic uncertainty.
What management is betting on now
The company's current focus is on strengthening its financial health by paying down debt. Management is also investing in technology, such as automated drilling systems, to make their operations more efficient and appealing to customers. They are expanding their operations where they see strong demand, like increasing the number of active rigs in Canada. By managing costs and debt, while also advancing their technology, they aim to be more resilient through the ups and downs of the energy market.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $5.20 vs current price $2.61
Our most-likely fair value is $5.20 a share — about 99.3% above today's price of $2.61, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $671.5M. Interest coverage 0.6x.
Net debt
$671.51M
Interest coverage
0.55x
Ensign Energy Services Inc.'s profit covers its interest bill about 0.6 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
ESVIF
BASELINE
Ensign Energy Services Inc.
Total debt $682.29M Interest coverage 0.55x This is the baseline the peer rows are being compared against.
Total debt $1.29B Interest coverage -0.56x -100% vs ESVIF This peer has almost no interest-payment cushion compared with ESVIF.
Total debt $1.86B Interest coverage 2.15x +290% vs ESVIF Carries about 3.9x more debt cushion than ESVIF.
Total debt $2.13B Interest coverage 1.22x +121% vs ESVIF Carries about 2.2x more debt cushion than ESVIF.
Total debt $496.49M Interest coverage 1.83x +231% vs ESVIF Carries about 3.3x more debt cushion than ESVIF.
Total debt $1.61B Interest coverage 2.24x +305% vs ESVIF Carries about 4.1x more debt cushion than ESVIF.
What you should know
The case for and against ESVIF
1 Reward
2 Risks
Rewards
-
Free cash flow was positive in 4/10 years.
Risks
-
Operating margin compressed from 4.6% to -0.9% over 3 years.
-
Return on equity was -3.0% last year — the company lost money on shareholders' equity.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
—
P/B
0.51x
P/S
0.29x
EV/EBITDA
3.96x
PEG ratio
—
Profitability
How much profit each dollar creates
Gross margin
26.9%
Operating margin
-0.9%
Net margin
-2.4%
ROE
-3.0%
ROA
0.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.74x
Current ratio
1.24x
Quick ratio
1.07x
Total debt
$682.29M
Total cash
$10.78M
Growth
How the business has been compounding
Revenue TTM
$1.17B
Revenue 5Y CAGR
1.3%
EPS TTM
-0.16
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$235.05M
Free CF TTM
$96.60M
FCF margin
8.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2020-03-19