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Superior Energy Services, Inc. Message Board

  • fewdolmo fewdolmo Jan 26, 2005 9:24 AM Flag

    New Price target $25--

    http://www.thestreet.com/pf/funds/jondmarkman/10205335.html

    IMO $25 is doable in 2005. What say you?

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    • My understanding is that there are two main competitors in Resources business. One mostly on shore. But SPN has an advantage because of the breath of their inhouse services.

    • sounds right to me.
      The big question is why haven't other service cos done this?

    • Dob't ;think there is a conflict. Everyone wins.As I recall/understand Terry Hall's explaination of the benefits to SPN:

      SPN uses underutilized crews and equipment during slow periods. Resources pays normal price for these services from there revenues including from producing properties or payments they receive from the sellers fo taking over the P&A responsibility. This is a significant benefit to SPN. Turns a cost into a profit. Big leverage. As you say as the owner of several properties SPN can schedule the work when it is convenient to them saving mob and demob costs. Result is they can do the work more economical for themselves then for a third party. SPN wins.

      SPN obtains properties that are close to end of life but many still producing oil/gas and gets these revenues. SPN wins

      The sellers of the properties to SPN are shedding there responsiblity for P&A. They remove this liability from their balance sheets. They are either paying SPN to take the properties and P&A responsibility or SPN covers the P&A cost from the producion revenues,or a combination The sellers win and if SPN estimates the P&A costs accurately they at least break even.

      Sorry for the long explaination, but this is how I see it.

    • But there's the catch / conflict of interest. If SPN services pays charges full price to SPN resources, who's the winner? The real benefit from the relationship comes during downturns when SPN services is just sitting around, gathering dust and depreciation.

    • One point, other companies are in the same business as SPN Resources. TTI is the biggest I believe. But SPN has the most integrated operations to take advantage of doing service work to keep its assets working during the slow seasons. Because of its vertical integration it needs to subcontract less work thus keeping work and profits for itself. By the way it gets full price for this work.

    • I say that $25 is pushing it. Companies like OIS and RES are better investments, with cheaper valuations, more consistent earnings, and better growth.


      well.....you did ask.

      • 1 Reply to JWBOilT
      • You said: <"Companies like OIS and RES are better investments, with cheaper valuations, more consistent earnings, and better growth.">

        Let's review the data to assess such claims...

        From 1996 to today, quarterly sales for RES grew from about $54MM to $88MM. Meanwhile, SPN quarterly sales grew from $10MM to over $150MM. Growth winner: SPN

        During the last 7 quarters in this current cycle, SPN EPS have ranged from .05 to .15, while RES hasa ranged from .01 to .35. Consistency winner: SPN

        SPN trades at a forward multiple of 16.0 while RES trades at a forward multiple of 17.8. Valuation winner: slight edge to SPN

        SPN has a better management team and more upside from SPN Resources. I'll take SPN over RES, thanks.

 
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