Analysts split over $45-million drilling partner consolidation by Ensign Energy

Must Read

Two new COVID-19 cases confirmed in Grande Prairie

GRANDE PRAIRIE, A.B. - Alberta health Services is reporting two new cases of COVID-19 in the City of Grande...

Fort St. John RCMP search for missing man

FORT ST. JOHN, B.C. - The Fort St. John RCMP are requesting the public’s help in locating a missing...

Candace Buchamer talks BC SPCA food bank on Moose Talks

FORT ST. JOHN, B.C. - Candace Buchamer was on Moose Talks Friday morning to discuss the...

CALGARY — Analysts are split on the wisdom of Ensign Energy Services Inc.’s US$33.4-million move to buy out partner Halliburton Co.’s stake in an international drilling joint venture.

The Calgary-based drilling company announced Friday after markets closed that it would buy the 40 per cent it doesn’t already own in Trinidad Drilling International from its American oilfield services partner.

The joint venture operates five drilling rigs — two under long-term contracts in Kuwait, another under contract in Bahrain and two “cold-stacked” (idle) rigs in Mexico.

- Advertisement -

Community Interviews with Moose FM


Ensign inherited its 60 per cent stake in the partnership when it bought Calgary rival Trinidad Drilling Ltd. in 2018, but Canadian drillers have been loath to spend capital this year as oilfield activity slows due to the economic affect of the COVID-19 pandemic.

Analyst Ian Gillies of Stifel FirstEnergy says in a report the purchase creates balance sheet risk, noting that Ensign also warns it may be in violation of a debt covenant later this year.

But RBC analysts say in report the “counter-cyclical” manoeuvre ahead of its bank line renewal and covenant relief discussions signals Ensign’s confidence.

Ensign’s shares fell by as much as four cents on Monday morning to 69 cents before recovering to 73 cents. A year ago, they were trading for $4.40 each.

This report by The Canadian Press was first published July 20, 2020.

Companies in this story: (TSX:ESI)

The Canadian Press

Advertisement


More Articles Like This