High Arctic Energy Services Inc T.HWO

Takeout Target?

[Stonksonlyup90]

I wonder what it would take to interest a Trican Well Service ($TCW) or a Precision Drilling ($PD) in a takeover.

TCW trades at about 1.5x Book Value and has a very healthy balance sheet.

PD trades at roughly 0.8x Book Value, however they have a fair bit of debt.

HWO trades at 0.54x Book Value with plenty of upside on PNG as the LNG project continues to progress. Perhaps PNG revenues could get to $200m/yr with 4 rigs operating and with a 20% operating margin would be generating $50M a year! Certainly the risk reward is there. (Assumption is that any takeover would leave existing HWO management in place)

Additionally, HWO has about $130M in tax loss carryforwards in Canada - which you assume would be in high demand as these oil service companies continue to generate substantial income. 

Would be a smart move for TCW to transact on a part stock & part cash basis. Even if they just paid Book Value!

[Stonksonlyup90]

Arguably you should strip the cash out of the BV/share calculation (47.4M net cash per last FS after receipt of remaining $28M) This would then imply a BV/share of 0.27x!! (back of napkin calcs).

[Possibleidiot01]

I don't think Trican would be a purchaser here because this is not their area of business. HWO puts holes in the ground ; Trican deals with completing those holes. Trican Well Service Ltd. is a provider of oilfield services, including acidizing, coiled tubing, fracturing, nitrogen pumping, cementing, microseismic, and industrial services. Precision Drilling would be a far more likely purchaser

[JonathanJSmith]

As a long term shareholder, why would one want them to sell the company? And, especially when they're valued this poorly? It makes sense from an investment perspective to continue to let them meander about and receive that monthly dividend;  eventually, it will be readjusted to what they were paying before COVID (i.e. ~$0.20/yr.). That would be a healthy annual ROI given current pricing

[Stonksonlyup90]

Simple - it would pull forward your return and create opportunities to redeploy capital elsewhere. They obviously wouldn't be selling at current prices - closer to Book Value would create a nice short-term return for shareholders. Time Value of Money!! (Sitting around and waiting for the dividend to eventually hit $0.20/yr would not be a smart allocation of capital when compared to a

[JonathanJSmith]

@stonks: While I understand your point of view, I still believe that holding for the next 3 years (i.e. when all rigs are in play) will yield the best ROI. In comparison, let's consider your point: (1) Sell the company today for BV, which is kind of a miracle considering their track record as of late; notwithstanding, as of Q3, BV was approximately $2.58. At yesterday's closing, this