NASDAQ: ESES: Argentina oil service play: Top Analyst in Sector has Buy Rating with $9.00 Price Target

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Eco-Stim Energy Solutions (“ESES”, “Eco-Stim”, or “Company”) is an environmentally focused oilfield service and technology company providing proprietary field management technologies, well stimulation, and completion services to oil and gas producers drilling in the rapidly expanding international unconventional shale markets. Eco-Stim’s proprietary methodology and technology offers the potential to decrease the number of stages stimulated in shale plays through a unique process that predicts high-probability production zones while confirming those production zones using the latest generation down-hole diagnostic tools. In addition, Eco-Stim offers its clients completion techniques that can dramatically reduce horsepower requirements, emissions, surface footprint, and water usage. Eco-Stim seeks to deliver well completion services with better technology, better ecology, and significantly improved economics for unconventional oil and gas producers worldwide.

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Investment HighlightsValue Proposition
Company Name Eco-Stim Energy Solutions
Market/Symbol NASDAQ: ESES
Recent Price
Market Cap $25.92M
Avg. Daily Vol. (3m) 31,371
Price/Book N/A
Price/Cash Flow N/A
As of Oct. 27, 2016
*Source: QuoteMedia

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Eco-Stim Energy Solutions Presentation at RedChip's Oct 2016 Conference

Oct. 24, 2016

Eco-Stim Energy Solutions (NASDAQ: ESES) is an environmentally focused oilfield service and technology company providing proprietary field management ...

Investment Highlights

  • Management has issued revenue guidance of $18-22 million for FY15
  • Projected to have two new crews in the field (tight gas unit in 4Q15, unconventional fleet in 2Q16), giving the potential to triple annual revenue run rate

  • Argentina government supports oil prices at $77/barrel and gas prices at $7.50/mcf
  • YPF (Argentinian state-owned enterprise) is largest customer; YPF is expected to spend $37 billion in oil and gas exploration in Argentina over the next five years
  • Argentina has added 20 new shale drilling rigs in the last 18 months

  • This enables the Company to generate higher revenue and EBITDA versus other regions, such as the U.S.
  • Projected gross margins of 40%

ESES’s proprietary technology gives operators a higher probability of drilling successful wells, at a lower overall cost

$33.5 million total investment from Albright Capital Management (chaired by former U.S. Secretary of State Madeline Albright)

Value Proposition

ESES is currently providing well stimulation and completion services to oil and gas operators in Argentina, a country which contains one of the world’s largest shale oil and gas resources. The government of Argentina has determined that the development of these vast resources is of highest national priority and has established oil and gas prices that are well above current international pricing to attract continued investment. The Company currently has one frac spread operating in the country, and recent capital raises have given the Company the cash needed to aggressively expand its workforce, with three crews expected to be deployed by 2Q16. The Company has issued revenue guidance of $18-$22 million for FY15, and the addition of two more crews by 2Q16 has the potential to triple annual revenue. Three analysts have buy/outperform ratings on ESES, including Evercore ISI, FBR Capital, and Roth Capital Partners, Inc. with target prices of $9.00, $7.00, and $7.00, respectively.

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