RE:RE:Precision drilling buys HWO Well Servicing 1. Labour shortage, high cost inflation are major problems that the services sector is facing. Companies are not really increasing production with oil at $100 because of volatile markets.
2. HWO is not only a market leader in PNG, they are the only game in town. Ready to ride the wave of drilling, services over the next decade.
3. In terms of corporate valuation, HWO with half of its operations in Canada and other half in PNG wasnt a good fit for a potential accquisition for anyone.
Now, HWO looks super attractive for an accquisition by Santos, Total or Exxon who want minimal exposure to Canada and can be pitched as a PNG specialist company. Also, this is a very good time to exit Canada. HWO management has always been conservative, and capable and I think this is a wonderful move to maximize value for shareholders. Even if they distribute $10 mil in dividends in Jan 23, they will still have more than $35 mil in the bank account which they will invariably use to make an accquisition in the oceania region or buy more rigs to meet demand in PNG.