Oil States International, Inc. (OIS): Convincing opportunity but less appreciated?

We met with a bullish thesis In Oil States International, Inc. (Ois) on the substitute for the deten of unemployed value. In this article, we will summarize the thesis of bulls on ois. The fee of Oil States International, Inc. (Ois) quoted $ 3.61 from April 28^th.

An oil and gas engineer looking at a production tree, inspecting its pressure control equipment.

Oil States International (OIS) represents a convincing but not appreciated opportunity in the oil field service sector, especially at a time when the sentiment of investors towards energy actions is fading. With oil prices below $ 65 per barrel despite a North -American dollar weakening, the macro background feels counterinthuitive: a cheaper oil in a cheaper dollar. However, these dislocations often have attractive entry points. Low price care is low prices, and as production decreases naturally (especially in the Shale, which considers that annual exhaustion rates in northern 20%), the supply is eventually restricted, creating upward pressure on prices. The recent reduction in the platform counting of resource, skill for flexible service contracts, says that the shooter is already in motion. In the meantime, the International Energy Agency, even with a history of underestimation of demand, still hopes that oil consumption will increase by 2025. Against this cyclic configuration, petroleum field services are positioned to benefit as a supply and demand eventually rebalance.

Instead of betting on schist producers dedicated quickly with volatile cash flows, OIS offers a more durable industrial angle. Although they may initially seem unattractive due to net loss of GAAP driven by cashless expenses such as assets and good will deficiencies, a closer aspect reveals a solid generation of money. The company has published a positive operating cash flow in each of the last three years: $ 32 million by 2022, $ 56 million by $ 2023 and $ 45 million by 2024, less than the challenging operating environment. This cash has financed the reduction of debt and the repurchase of shares, with approximately $ 18 million used to buy shares and another $ 10 million aimed at reducing debt. With a market lid of about $ 216 million, OIS does not occur in cash, but it is a self -financing capital and returning to shareholders, a rare feat for an industrial industrialist in a cyclic trough.

The OIS is a hybrid operator with exposure to both out -of -sea and ground markets. More than half of their income comes from out -of -sea services, including components designed such as flexible pads, connection systems and subsequent pipes. The offshore business, which is still recovered from the collapse of the 2014 oil price, has the potential to grow significantly if the investment is resumed upstream. Although supermajors have remained conservative at the expense of capital out of the sea, their heavier crude need and relatively low marginal cost (often $ $ 55 per barrel) means that when prices are stabil, investment will return. Onshore, OIS serves the schist patch with specialized equipment such as crown valves, low gas separators and drilling systems. As the development of schists matures, operators increase the use of complex designed products. The number of drilling loads and well cannons has tripled more than over the last decade, even when the platform counts are subjected to, creating a queue demand for the OIS razoring leaves business model.