We encountered bullish papers on Petroleum National International Corporation (OIS) (OIS) replaced by unemployment value Degen. In this article, we will summarize Bulls’ paper on OIS. Oil State International, Inc. (OIS) share as of April 28, trading at $3.61Th.
An oil and gas engineer aspiring to produce trees inspects their pressure control equipment.
Oil State International (OIS) represents a compelling but insufficient opportunity in the oilfield service sector, especially as investor sentiment towards energy stocks is shaking. Despite the weak dollar, oil prices fell below $65 a barrel, and the macro background feels counterintuitive - cheap dollar cheap oil. However, such misalignment often presents attractive entry points. The method of low prices is low prices, and as production drops naturally (especially in shale, 20% north of the annual depletion rate), it will eventually limit, thus creating upward pressure on prices. Matador Resources' recent reduction in the number of rigs achieved through flexible service contracts, indicating that callbacks are already in motion. Meanwhile, the International Energy Agency still hopes to increase oil consumption by 2025 even if it has a record of underestimating demand. In this periodic setup, oilfield services benefit the ultimate rebalancing of supply and demand.
Instead of betting on fast-depleting shale producers with volatile cash flows, OIS offers a more durable industrial perspective. Although OIS may not initially be attractive due to net GAAP losses driven by non-cash expenses such as asset barriers and good faith writing, a closer look reveals solid cash generation. The company has released positive cash flows in each of the last three years, despite a challenging operating environment, for $32 million in 2022, $56 million in 2023 and $45 million in 2024. The cash funded debt reduction and stock buybacks, with approximately $18 million being used to buy back shares and another $10 million being used to reduce debt. OIS has a market capitalization of approximately $216 million and does not influx in cash, but it is self-raised and returns capital to shareholders, a rare feat for a cyclical small industry.
OIS is a hybrid operator with contacts in both offshore and onshore markets. More than half of its revenue comes from offshore services, including engineering components such as flexible bearings, connecting systems and submarine pipeline parts. Offshore operations that still recover from the 2014 oil price collapse are likely to grow significantly if large upstream investments recover. Although Supermajors remain conservative in terms of offshore capital expenditures, demand for crude oil and relatively low marginal costs (usually $55 per barrel) means that investments will recover when prices stabilize. OIS is onshore, using specialized equipment for coronal valves, downhole gas separators and perforation systems to serve shale patches. As shale development matures, operators are increasing their use of complex engineering products. The perforation costs and gun numbers per well have more than tripled over the past decade, creating a barrier to demand for OIS’s Razor-Blade business model, even if the number of rigs remains the same.
There is some uncertainty about the long-term competitiveness of OIS, especially when older patents expire recently. Although many of its products are proprietary, a lack of transparency into the R&D pipeline can raise questions about ongoing technology leadership. Still, the company may be the main acquisition target, especially when the broader energy services sector merges. Trade policy and tariff uncertainty remain headwinds, but these may be temporary. The segments that OIS touches through subsea products may offer more upside, although economics is still worth discussing, and management may be too optimistic about projecting super loops. However, if the industry rebounds, OIS will benefit.
Financially speaking, the company is in a reasonable state, with only $120 million in long-term debt, with net debt approaching $45 million after considering cash. Management prioritizes shareholder returns over aggressive deleveraging, which demonstrates confidence in its financial flexibility. Despite weaker activity relative to 2022 and 2023, especially with rigs and FRAC fleets, 2024 was a tough year, but OIS still showed 2020-2021 levels, which could accelerate growth if the oil cycle becomes favorable.
If the periodic tailwind regresses, historical valuation indicators may be reevaluated. From 2013 to 2019, OIS transactions ranged from 1.0 to 3.0 times. The rate of return is only $1 billion in revenue and a modest 1.0x sales, which means there is a lot of room for upside compared to current levels.
Oil International Corporation (OIS) is not on our list The 30 Most Popular Stocks in Hedge Funds. According to our database, 21 hedge fund portfolio held OIS at the end of the fourth quarter, with the last quarter being 20. Although we acknowledge the risks and potential of OIS as an investment, our belief lies in the belief that certain AI stocks have greater hope to provide higher returns and do so in a shorter time frame. If you are looking for AI stocks that are more promising than OI but have less than 5 times their earnings, check out our report Cheapest AI stocks.
Read the next article: Buy 8 Best Moat Stocks Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article was originally published in Insider Monkey.