Source Energy Services Ltd (SHLE-T)

Oilfield services company that continues to own. Has been able to consistently generate revenues and profits. Recently announced joint venture with Trican Well Services. Expecting ~$20/share price going forward. LNG will also boost demand for services as well. 

It is one of the largest providers of frack sand in Western Canada and the prices of the contracts have increased. Its priority is to pay down debt. There are lots of catalysts and at expected $4 per share earnings next year, it is still trading at a good valuation.

He got his double and is still looking for a triple. It is buying back debt. Not well known with an 80 million market cap. It continues to operate very well and is the largest frac service in Western Canada. With LNG coming on this year, it should help.

Highly volatile stock.
Good to buy when out of favor.
Service style business is the first to be cut when energy prices fall.
Good if bullish on energy(risky).
Better names for investors (Trican/Precision).

Dominant in frac sand supply/distribution with over 50% market share in Canada. Profits are spiking this year because they renewed contracts earlier this year at much higher prices. Also, they have a lot of cash flow so are paying off debt. Should $500 million revenue this year, $100 million EBITDA and $40-50 million of free cash. Trades at 2x earnings. At $8-10 by end of 2024 as long as oil stays above $70.

(Analysts’ price target is $8.25)

Small oilfield services company.
Large supplier of frac sand to energy business.
Long term contracts that have recently rolled over at higher price.
High debt levels are coming down.
Cash flow being used to increase balance sheet strength.

(A Top Pick January 5/18 Down 68%) He sold out of this around $8-$9 per share. The frac sector has been devastated and he admits this was a bad call, although he thought Canada would be insulted from the crash. A badly timed acquisition further hurt the position – he has lost confidence with management.

(A Top Pick November 15/17 Down 54%) He was disappointed with this company did an acquisition, which eliminated the free cash flow position. He would prefer other names today.

(A Top Pick Nov 15/17, Down 47%) Management was a little optimistic when they did their financing and last acquisition. None of the forecasts were close to the mark from 9 months ago.

This is a Canadian fracking sand company. He believes it’s a name that will be stuck in the penalty box for a while. They set expectations too high when they came to market, and then suffered from rail congestion and severe weather. There’s probably no good news coming until the Fall. There will probably be another couple of poor quarters.