Peter Hodson High Arctic Energy Services Inc HWO-T COMMENT Jul 29, 2014

She does not tend to look at PE ratios in oil services companies. They have assets in New Guinea and Canada. They are looking at an LNG project. There may be some downside risk on contract negotiations. It is generally a well run business.

The key question is if the energy market turns around. If it did, this would be on the top of his list for stocks to own. They are in great shape on the balance sheet. It scores in the top 1% of valuation. This company will be a survivor. The problem is, he wants a stock that isn’t continually going lower every day.

(A Past Top Pick Jan 18/17, Down 24%) They have a big drill program in New Guinea. They look very good from a financial point of view. You can’t fight the tape in the energy sector. They have no debt.

He hasn't looked at this in years and it's a forgotten name. But he expects demand for oil to rise so there will be demand for energy services.

Splitting the company into two to separate the PNG business makes sense to us. The return of capital could be as much as 76c per share. This all sounds attractive...BUT....it is already a very small company. With less capital, and a split, shareholders will be left with two tiny market cap companies, and it is very possible that they will struggle to get investor attention. Valuations are cheap, but owning two sub ~$30M market cap companies may prove to be very frustrating, unless small caps stage a big rally. Adding in cyclical risks, and we think the 36% YTD gain already reflects some of the possible potential. Thus, we are less enthusiastic at this time on this split. 
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