C&J ENERGY SRV LTD COM USD0.01 (OTCMKTS:CJESQ) is another leftover hulk excreted by the worst part of the commodities bear market process as a Chapter 11 reorganization project. As we have covered quite frequently of late, the oil and gas space has the historical potential to revive bankruptcy cases in a manner not seen in other sectors, with the exception of potentially the industrial metals producers.
The reason is because the valuation of assets below liabilities is the essence of a balance sheet bankruptcy situation. And, in the commodities arena, the value of the liabilities is rarely volatile. But the value of assets changes with action in the commodities futures markets. However, in this case, it doesn’t appear as though the common equity will receive any love. The Bankruptcy-Exit plan was apparently approved by the Bankruptcy court judge this past week in a plan that calls for lenders to swap out roughly $1.4 billion in debt in exchange for control of the company. You can see by the action in the stock that common holders aren’t going to happy when all the details are released.
C&J ENERGY SRV LTD COM USD0.01 (OTCMKTS:CJESQ) trumpets itself as a completion and production services play in the oil and gas industry primarily in North America.
The company provides well construction, well completions, well support, and other oilfield services to oil and gas exploration and production companies. It operates in three segments: Completion Services, Well Support Services, and Other Services.
The Completion Services segment provides hydraulic fracturing, coiled tubing, cased-hole wireline, and other well stimulation services, including nitrogen, pressure pumping, and thru-tubing services.
The Well Support segment offers rig services, such as providing workover and well servicing rigs that are involved in repair and maintenance, completions, re-drilling, and plug and abandonment operations; fluid management services comprising manufacturing, transportation, storage, and disposal services for fluids used in the drilling, completion, and workover of oil and gas wells; and other well site services.
The Other Services segment provides cementing, directional drilling, equipment manufacturing, specialty chemical supply, and research and technology.
The company operates in oil and natural gas producing regions of the continental United States and Western Canada. C&J Energy Services, Ltd. was founded in 1997 and is headquartered in Houston, Texas. C&J Energy Services, Ltd. is a subsidiary of Nabors Industries Ltd.
As noted above, on July 20, 2016, C&J Energy Services, Ltd. filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. It is in joint administration with Nabors Industries Ltd.
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When we covered the name last time around, we were skeptical. Since then, the stock has moved -67.5% to the downside, and we remain skeptical, but for different reasons. Last time around, we were cautious on the name because it was looking unlikely at the time that OPEC would be able to get together a convincing deal, presenting a risk of oil returning to a 30-handle price.
However, as it is, oil is in the $50’s, but the CJESQ common looks likely destined for worthlessness. We do not know this for sure at this point. We will wait to get confirmation when the company releases the details. But the action suggests this is not going in the right direction for the equity side.
Traders will note -30% dragged out of shares over the last month. Moreover, the listing has seen interest climb, with an increase in recent trading volume approaching 240% beyond what we have been seeing over the larger time frame as traders look to get out of the way.
Now commanding a market cap of $28.2M, CJESQ continues to trace out the final stages of a contentious Chapter 11 process. C&J Energy Services is making real money, with trailing 12-month revenues coming in at 1.14B. We will update the story again soon as further details emerge. For continuing coverage on shares of $CJESQ stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!