Stock price when the opinion was issued
Modest multiple. Trades today at 22-23% free cashflow yield at modest activity levels; forward free cashflow yield of 26%. Offers strong optionality for better activity levels in 2025, predicated on higher nat gas price. No interest in services right now, so that's one of the best value propositions. No dividend.
(Analysts’ price target is $127.38)Consolidating, as are a lot of stocks in the sector. Attempting to break out, wrestling with the older highs of $120. Longer term, likes oil. Hard to say if this one will break out. If you're patient, you'll probably be rewarded. But also a chance could tumble back into the trading tunnel. It's a flip of the coin.
Remember to buy a sector when it looks terrible, not when it's up 80-90% ;)
Still likes it but not as much, as drilling is weaker than thought. Selloff in oil, drop in rig count. More efficient drilling ultimately means less work. Continues to de-lever. Everyone's excited about natural gas. Massive exposure to nat gas in Canada, which has better dynamics than US. About a 3.7% weight for him.
More drilling 'should' result in more activity for the service sector, of course. PD is very cheap and seeing fundamental improvement. We would be comfortable in the $76 to $77 range.
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We need fewer gas drilling rigs for the number of holes because of horizontal drilling. They can produce far more per well than on the conventional vertical. However, on the whole natural gas picture, there is a lot of supply. We are coming into winter right now and storage currently is 20% less than last year. We’ll see better pricing on natural gas and more exploration. However, you get through the winter and you are into the 1st year of LNG exporting. Because of this, she thinks we are in a bottoming phase for natural gas prices over the next few years.