it is never fun to arrive at a party to
discover there has already ended excited
investors who've been looking to wager
on a rebound in the US energy sector may
start to feel a little bit deflated when
they check the share prices of the ones
bombed-out oil services companies shares
in Halliburton have almost doubled over
the last 12 months as higher oil has in
the words of halliburton's chief
executive this week meant that the
animal spirits have broken free and they
are running but for those who feel left
behind there is still a bit of hope but
it will require digging around some of
the more obscure parts of the US stock
market a number of smaller American oil
services companies entered into chapter
11 bankruptcy over the last three years
having run up too much debt when the
energy market took a tumble some of
these are now quietly re-emerging from
bankruptcy and relisting on the new york
stock exchange having restructured their
debts they're barely followed by any
Wall Street analyst and they trade at
the discount appears and in some ways
can be seen to offer a way to bet on a
recovery in US domestic drilling whilst
avoiding being swept up in the
irrational exuberance on display in the
wider oil services sector one of these
companies which is the Houston based key
energy entered into Chapter 11 in
October and re-emerge from the process
just over a month ago it was one of the
largest u.s. onshore rig based well
services companies and keys
restructuring involved all but wiping
out its shareholders and slashing its
net debt from a previous 868 million
dollars to now a hundred and forty two
million dollars since getting out of
chapter 11 in mid-december its equity
has traded at a total value of around
700 million dollars giving an enterprise
value of eight hundred and forty million
dollars if key energy services business
recovers to anywhere near where it was
before the oil slump so for example in
2012 it made over 400 million dollars in
earnings before interest tax asian
depreciation amortization then that
would imply the shares trade today on an
implied future enterprise value over a
bit da of just about two times so if you
then assign key a fairly conservative
multiple of five times even
we have to remember that Halliburton a
far-far large appear trades on a
two-year forward multiple of ten times
so more than double then key share price
more than doubles itself a return like
that would certainly help ease any
disappointment at missing out on last
year's recovery