I'm writing an equity research report on a small cap oilfield services company that sells top drives and other equipment. I have two main issues with it for now: I have no gauge whatsoever on how its products stack up against those of its competitors and on how experienced its management team is. Do you know how I can get a better idea? I can interpret a few things about management from the company's financial statements and strategic moves, and Bloomberg might help me, but I'm still not sure where to go. I especially need a way to determine what customers think of its products and how they're different from those of competitors.. it's not like I can just find a bunch of customer reviews through Google like with some consumer product.
Thank you for any help
If its not an NOV or Aker top drive then its probably crap. H&P flexrigs are supplied with NOV TDS almost exclusively. What company is it? Seems like a very hard gig to break into, there are the established names that have contracts with all the drilling contractor and once a top drive is on a rig its there for life pretty much.
It's Tesco. I would REALLY appreciate it if you could fill me in more via inbox. It's the only part I'm having trouble with. I'll probably be making phone calls to IR and other companies this week, but I'd appreciate your extra input too.
I would call around to likely end users and get their thoughts on it.
Welcome to the quandry of management access. Enjoy it, the rest of your research life will deal with this.
For management and directors, you can go through bios in the original offering documents etc. You're in Canada so use SEDI to the fullest and verify where they came from.
Since you're a prospective monkey, I'll assume you're a student and this is either for school or an application. If it's for school, call an associate that works for an analyst covering the sector, see what they'll offer you.
If you dress up well and can speak like an adult, there's a chance you can get a meeting with someone from management, depending on the size of the firm, even C-Suite. Might have to sign an NDA, or bring a letter from your professor, and sign that you will not call their clients.
Last choice, find people in the industry side, cold call some field ops or engineers that would use this service, straight up ask them their thoughts. This one also hinges on looking good, because you are wasting their time, so you need to make them feel good about doing you a favour.
Thanks a lot, this is very helpful!
Rigzone has some good research, including HP's flexrigs
If nothing else you can always look at their inventory turnover and whatnot... If it's a good product, they'll be having a pretty hard time keeping the TD's in stock, regardless of size of company. Also related would be any kind of warranty/repairs & maintenance/field calls information you can find. If you're in the area, take a drive by some local rig sites and see if you can't make out what the rig's using. Just don't actually drive onto the lease.....bring binoculars.
I guess I'll ask here while I'm in the thread... Are oilfield services generally separated from the E&P's with regards to analyst coverage? I mean, if the posting is "Research Associate, Energy E&P", how likely would it be that that position would be covering at least one services firm? I've seen loads of those postings, but not one for an oilfield services analyst...which is all I know.
It's usually separate coverage.
Every now and then you might get some overlap, ala Poseidon/Open Range, but the models are fundamentally different. Services are driven off utilization rate and day rates, often dcf type stuff, E&Ps are driven by reserves, production, and commodity price, through any number of NAV, Risked NAV, DCF, or EV/DACF multiples.
I'm told, and I haven't really looked deep into it, but modeling for integrated E&P's apparently focuses on effiiciencies of facility turn arounds and unexpected downtime.
Thanks overpaid... you'd be surprised how many times I've looked for a solid answer to that question and come up with nothing. Mostly confirms what I thought I should be paying attention to in my current role if I ever want to leverage it into an ER offer.
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