Michael DecterCanadian Energy Services & TechnologyCEU.TOSTRONG BUYAug 06, 2014

He is not enamored by the service fluid space. He feels there is not a strong negotiation position with customers, so he does not think they are benefiting from higher commodity prices.

They are in the services side of the energy picture. Last quarter its margins came down because of rising input costs that they have not been able to pass off. They took market share from competitors. If you look at the inflection point with OPEC, their production could go up and prices would go up as their reserves go down. (Analysts’ target: $8.14).

This sells drilling fluids and specialty chemicals. Gets about two thirds of revenue from the US, where they are expanding in the Permian play in Texas. Expects they will continue to ramp up. It has had a good run up over the last year, but is down from its highs of around $8.60 or so. He is expecting tremendous upside. Has a price target of $11. He sees continued growth from this sector in the US, and if we get a rebound in Canada as well, this company will be well positioned. (Analysts’ price target is $9.50.)

Secure Energy Services (SES-T) or Canadian Energy Services & Technology (CEU-T)? He is not really into the service names. This cut its dividend earlier this year and is only paying about .05%. Secure Energy has a 2.5% dividend yield. If you are looking for dividend exposure, Secure would be the one. Service companies are going to struggle for an extended period, particularly if oil starts to come up like he thinks it might. The balance sheet on both companies are very well positioned, but you might just have to wait on this, and right now is not the time to be buying it.

Really likes management and the company. With the commodity price coming off this much, it is probably down 60% or so. They supply the fluids to the companies that are drilling. Longer-term, this is one of the higher-quality names in terms of management and operations.

A name in a portfolio that makes a lot of sense. Make sure it is part of a basket of such stocks.

Probably one of the best managed of the services companies. Tends to be one of the higher ROE companies. He doesn’t own a lot of oil/gas today, but he would guess that by June/15, he will. This would be one of those names that he would be taking a hard look at.

They are all making multi-year lows. He thinks there is value here, but he does not know the company. He likes the group overall. People are being very short sighted in their selling.

He does not want to own any service stocks at all. With the oil price and profitability so low production companies will have very little capital to spend on drilling. Oil services companies get hit first with low oil prices. The CEO has been selling the last couple of weeks. The guest owns less of this than he did a week and half ago.

Energy services company that helps with fluid handling. Looking at a long-term chart the company has done very well, but has come off quite a bit in the last 6 months. Have come out with very good earnings every quarter, but thinks it is getting caught up with oil prices coming down. If you are a long-term believer in management, which he is, you should continue to hold. It is also a pretty good buying opportunity.

This is quite a remarkable company. They make the custom fluids for fracing, so they will be affected somewhat by the price of oil. The reality is that if you are going to do wells and you are going to frac them, you want to put the right stuff down that well. This is exactly the company that will benefit from people trying to save some money in terms of drilling by having better outcomes.

He noticed that after the energy stocks started tanking when they shouldn't have been, they should have been strong through the end of July into October, and we have done nothing, but break down since July. It is not just a supply issue in oil and gas, but it is actually a demand issue. Support seems to be at around $7. This is across the area.

This is more of a technology company than an energy company. They spend a great deal of time and effort on trying to enhance the drilling techniques and the completion techniques for drilling companies. Because they are light on their assets, they get some amazing returns on capital. Stock does trade sometimes at a pretty high valuation, but the earnings acceleration is quite robust, especially now they are starting to win some significant market share in the US.