Oil States International’s comig Spin-off
It’s called Civeo, and it’s
coming soon. Literally a one-stop shop from lodging, house-keeping, site preparation,
wastewater treatment, and logistics for mining and drilling sites far, far away
from urbanization. EBITDA, as you can see below, is very impressive. The thesis
is straight-forward too – The Co is going to seek REIT status and hopefully
trade like one eventually. With REIT-like multiples of 12-16x, Civeo can sport
a $6-7.5 Bn EV, or ~$5.5-7 Bn Market Cap with ~$500 mm net debt post spin. This
potential valuation covers the current OIS market cap alone and you get the
rest of the business (Well-site servicing + offshort products) for free.
http://files.shareholder.com/downloads/ABEA-4M2TKH/3112478470x0x736284/C45A0CE0-AB01-4B19-8F3F-7F3AAF36DBC1/OISPresentation_140324_HW.pdf
I don’t profess to know anything about the rest of these
parts. But simply aggregating the oil-servicing peers @ 7-10x, I get ~$3-4 Bn
EV valuation on this end or $60-80 / share pro forma. This is really
back-of-the-envelope math here, but it seems like a really clear way to get to
$150 + per share – almost too easy.
ITALIAN FOOD FOR THE
MASSES: In case you can reach companies trading in Japan, it’s good work w/
the company @ 4.5x EV/EBITDA vs. peers of 8x+…Source: http://always-invert.com/?p=4
3 comments:
Hi - I've been looking into OIS as well recently, curious about your thoughts on the best way to play the spinoff? Are you long OIS? Waiting until after the spin to add either/or? Or do you think picking up some call options pre-spin might be the way to go?
Hi Anon, I will be very curious as to where the when-issued trades. No position so far but might long some into the spin. I have the OIS RemainCo @ 6.5x 2015FY EBITDA and Civeo at around 7.0x my 2015 number. I think the sell-side might have extrapolated too much on that ~35% EBITDA margin management alludes to. I seriously doubt Civeo trade anywhere below 6x. If it does I might actually buy some. Will speak to more folks and see what they think. Also still digging through the financials. The longevity of Civeo still concerns me though.
Atlantic Investment Management thesis on potenial spin from last summer -http://atlantic25thsymposium.net/pdfs/Value_Investor.pdf
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