Cathedral Energy Services Ltd T.CET

Auburn2 / Adonis1411

[Notgnu]

Thank you for the informative discussion here. I have accumulated a small CET position, hold quite a bit of both HWO and TOT along with medium position in WRG

You both seem pretty well informed. What are your thoughts on TOT these days. I am liking the balance sheet and insider support. It seems to me they have some assets that are "moth balled" that could come back into use as the cylcle runs its course (rental stuff and heavy trucks for equipment moves)

Cheers, 
Notgnu

[auburn2]

I had a look over TOT's fiancials, and you can't go wrong there if you have a patient time frame, but I see better value in the lower liquidity names. For your own DD, take shareholders' equity divided by market cap and compare the various names, and then do a subjective comparison after thinking about the balance sheet and cash flow statements. When money flows back to this sector

[Adonis1411]

lol... I love the passion. I, however, do not share the optimism for CET. Will they be around post-COVID, certainly. Can they get to $2 a share? No chance. That'd be a $100 mil market cap, and a $120ish Enterprise Value. At a 5x multiple, that's mid-twenties of EBITDA and CET wasn't even able to generate that during 2017 or 2018 when North America had 35,000+ wells being drilled by 1

[auburn2]

First, total current assets takes care of almost all company liabilities, and a big portion of those liabilities are lease liabilities: $17 million. Therefore, I differ on your enterprise value computation though I'm aware all different people have different ways of calculating that metric. Second, and more importantly, see this release: https://cathedralenergyservices.mediaroom.com/index.php

[auburn2]

Correction: the enterprise value would still be under $140 million at $2.80 because of the surplus of current assets against company liabilities, so even $2.80 would not be high enough per your metric if they can simply consistently generate the EBITDAS they acheived in the financials ending March 31 of 2017. Short poisition at October 15, just 8,279 shares short, meaning just 0.02%.

[auburn2]

Another thing to notice on the press release linked is that shareholders' equity has gone down less than half. It was $103 million three months ended March 31, 2018, $101 million three months ended March 31, 2017, and with all the impairments since it's still $54 million. However, the share price has been decimated from early 2018 levels.

[Possibleidiot01]

Adonis1411  I sent you a message off the board asking you if you had an opinion on McCoy Global . You seem to have a good feel on the OGS area. Thanks PI