After FES & BAS, check out ARCHER Archer, The Well Company, also belongs to the oilfield service sector and is currently doing what TID is also doing. Archer operate in North and South America, including Brazil and Argentina.
In my previous post, I noted that there are additional companies (excluding FES and BAS) with worse Net-Debt to EBITDA ratio than TID, but they trade with much higher PBV than TID. To confirm this, I pass you this information. Archer is one of them.
With EBITDA for 2013 at ~$130 million, and net debt at ~$750 million, Archer has Net Debt to EBITDA ratio at 5.77 times!
Despite this extremely high ratio, Archer trades at PBV=0.5 as shown at the bottom of this email (in bold).
If TID traded at PBV=0.5 times, it should be at ~C$0.37 today.
TID's intrinsic value (pro forma) is ~C$0.74.
The respective links are at the bottom of this email. I quote from the Q3 2013 report:
"Summary Outlook
Excluding exceptional effects for both the second and the third quarter 2013, we have seen a sequential improvement in revenue and in margins as a result of improved drilling activity in Argentina, continued growth of product sales and services in offshore markets and a solid performance of the modular rig. The North America land based market remains challenging, which is reflected in the financial performance of all North American land based Divisions.
We expect that overall normalized margins will continue to slowly improve, although muted from short term seasonal effects. While we foresee the activity in the North American land market to remain high, we believe that the market remains oversupplied in the next year, as efficiency gains in the drilling and completion of shale wells offset equipment attrition.
In order to accelerate the margin improvements and to adapt to a highly competitive North American land market, the Company has decided to implement a restructuring plan, which will include staff reductions mainly in management and support functions, rationalization of offices and operational bases, closure of businesses or locations with negative margins and a reduction in other costs.
In combination with this restructuring plan, we expect net charges of approximately $12 to $15 million, with $10 to $12 million in the Fourth Quarter 2013 and $2 to $3 million in the First Quarter 2014. The charges include severance costs for approximately 200 employees, lease termination costs as well as other charges. The restructuring actions are expected to be substantially complete by the end of the First Quarter 2014 and we expect a return of less than one year.
Following the approval of the above mentioned restructuring plan the Company will prepare its annual impairment test in the fourth quarter, which will incorporate the financial effects in the valuation of the business. Depending on the expected impact in each Division, we may impair goodwill and additionally certain assets in one or more reporting segments.
Following the Company’s strategy to simplify its portfolio and reduce its debt, we expect to close the sale of all North American assets related to its Underbalanced business in the fourth quarter.
Net interest bearing debt at the beginning of the year was at $1.2 billion and following the above mentioned divestiture we expect to end the year 2013 below the level reported at the end of September 2013.
Total shareholder equity at the end of September 2013 levelled at $1.2 billion and market capitalization was at approximately $550 million.
The Board of Directors welcomes the improvement in results and the implementation of the strategic plan and expects that the restructuring plan will accelerate the improvements demonstrated over the last quarters".