'Man-camp' providers emerge strong picks on LNG potential

Mon Nov 17, 2014 11:13am EST
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By Ashutosh Pandey and Sayantani Ghosh

Nov 17 (Reuters) - Oilfield camp providers banking on the long-term prospects of liquid natural gas export terminals in British Columbia are emerging as hot stock picks as their shares slump.

Shares of Civeo Corp, Horizon North Logistics Inc and Black Diamond Group Ltd, which provide temporary lodging - "man camps" - for oilmen, have tanked in the past two months, as a sharp drop in crude prices compounds short-term problems at the companies.

This offers investors an attractive long-term opportunity, as more than a dozen Canadian LNG terminals are expected to clear regulatory and tax hurdles in a few years, setting up the camp providers for potential windfalls.

Canada's National Energy Board has so far approved nine LNG export projects in British Columbia and more companies are negotiating with regulators.

Analysts expect this will fuel demand for an additional 40,000 beds over the next four to five years.

"Our belief is that we will see at least one, likely two, LNG projects proceed. In that eventuality, these companies all the way (through) 2016, 2017 and 2018 are likely going to be fairly busy," Raymond James analyst Andrew Bradford said.

Black Diamond shares, which ended Friday at C$19.13, should be trading nearly 63 percent higher, according to StarMine's Intrinsic Valuation model, which projects how much a stock should be worth based on expected earnings growth over the next five years.

Horizon North should be trading at more than double its Friday close of C$3.23 a share.   Continued...