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Energy Sector Snapshot: Enterprise Group (TSX: $E.TO) Subsidiary Westar #Oilfield had an exceptional summer and we see the trend continuing through 2018

The five biggest oil producers generated about $34-billion of cash from operations in the third quarter

 

October 30, 2017 (Investorideas.com Newswire) Energy sector commentary and snapshot on Enterprise Group, Inc. (TSX: E).


Speaking to George Bergen, General Manager of Fort St. John, BC-based Westar Oilfield Rentals, "All is not lost in the Western Canada Resource market." Westar was acquired by Enterprise Group (E: TSX) in 2014.

"The best indicator of business health is how empty our rental yard is," states Bergen. "Not only is it pretty much empty of our 400-piece fleet of Oil and Gas support equipment, we have a waiting list for equipment once returned. Westar had an exceptional summer and we see the trend continuing through 2018 at the least."

As a result of the 2014-2015 downturn, infrastructure prices fell to maintain competitive. It is unlikely prices will rise to old levels anytime soon, but it has forced companies to either close, sell out or manage their way through.

Even though about the majors, Bloomberg puts the market in perspective:

""The five biggest oil producers generated about $34-billion of cash from operations in the third quarter, according to estimates from Jefferies LLC. That puts each of them at least on a par with tech giant Facebook Inc., a welcome return to the top tier of global business after three years on the skids."

That said, investors may have driven the majors to new heights. The primary Infrastructure ETF (INASDAQ:IGF) is up to $45 from $35 over the past year: The chart is pretty much a steady climb.


Although decisive for the industry as a whole, well-run junior infrastructure companies that have survived and prospered seem to still be under the radar.

If investors look at what is actually happening as the industry adapts and try not to merely fixate on the oil price, they might make more informed decisions. As mentioned before, Enterprise is trading at roughly C$0.33 a share, with a breakup value of approximately C$0.85. All divisions are working flat out and having trouble hiring people to meet demand.

Here are links to the other 3 Enterprise subsidiaries—Hart Oilfield, Calgary Tunnelling, and Artic Therm,  which all tell a similar story to Westar, albeit in different areas of infrastructure.

Companies are adapting to the new reality and instead of making stringent plans to benefit should the market rise, they are ensuring viability with acceptable profit should the oil price weaken.

"Companies that did not use the downturn - or prior - to quickly and strategically plan for survival are now owned by stronger peers and likely for parts," states Enterprise's Des O'Kell, Senior VP. "Our consistent growth in business is due to several factors: cutting management and corporate costs; providing ongoing service to viable clients; continuing with our aggressive program of specialty tool/system development - we are now leaner than pre-2015. Our main challenge now is meeting the ever-growing demand."

O'Kell also noted that the majors had already had a good move. Midrange stocks were performing well so the time for the quality small players such as Enterprise was likely at hand.

The innovation and expertise of the operating companies have distinguished them as "best in class" to their blue-chip client base. Monthly trade volumes for Enterprise almost tripled in September against each of the previous two months.


Salient Points for Enterprise Investors;

  • Aggressive Corporate growth plans for 2018-2019
  • Enterprise Group provides specialized equipment and services in the build out of infrastructure for the energy, utility, pipeline, and transportation industries
  • Strong presence across Western Canada with a concentration in Alberta and Northeastern British Columbia.
  • Total assets of $84.2 million with equipment/property assets at nearly $58 million which includes a fleet of well-site modular/combo equipment, specialized heating units, tunneling equipment, and other heavy equipment pieces.
  • Responding to an uncertain resource environment through proactive cost reductions and a disciplined capital deployment strategy.

Investors get a unique basket of assets with Enterprise. As well, a proprietary technology portfolio adds a competitive advantage over other companies, even larger ones.

Bottom Line

Through aggressive management and by taking strategic sale decisions, the Company now finds itself in better shape than prior to the 2014-2015 ditch. Enterprise management looks forward to maintaining its reputation for innovation, profitability and growth.

Now would be the time for investors to take note.


About Enterprise Group, Inc. (TSX: E)

Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company's focus is primarily construction services and specialized equipment rental. The Company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. Enterprise acquired of Artic Therm International Ltd. in September 2012, Calgary Tunnelling & Horizontal Augering Ltd. in June 2013, Hart Oilfield Rentals in January 2014, and Westar Oilfield Rentals Inc. in October 2014. More information is available at the Company's website, www.enterprisegrp.ca. Also, today's filings can be found on www.sedar.com

Forward Looking Information

Certain statements contained in this news release constitute forward - looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward - looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward - looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

For questions or additional information, please contact:

Leonard Jaroszuk: President & CEO or

Desmond O'Kell: Senior Vice - President

contact@enterprisegrp.ca

780-418-4400

Article source – Baystreet.ca

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