Seeking Alpha: Should This KEG Be Tapped?

If you believe that the ugly conditions today in the U.S. onshore energy market are just a part of the ups and downs that the market has seen over decades, you probably see several values in the space. Whether Key Energy Services (NYSE:KEG) belongs on that list is an interesting question to me. This wasn't always a particularly well-run company before the widespread downturn, and I believe it is going to be difficult to generate attractive economic returns in coiled tubing and fluid services due to the low barriers to entry.

On the other hand, Key has the largest well services fleet in the U.S. onshore market and the steep decline rates of new unconventional wells, not to mention their high drilling cost, should make for a worthwhile long-term opportunity. In addition, a refinancing last month should significantly reduce the company's liquidity risks (albeit at a cost). Looking at the long-term FCF potential, EV/EBITDA, and ROE-TBV, I believe that $2.50 to $3.50 is a credible range for valuation, but this is a very high-risk proposition in a market where residual asset value means little and E&P companies are more than willing to use service companie

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Should This KEG Be Tapped?

Seeking Alpha: Whither Onshore Drilling Activity Goest, Basic Energy Services Will Follow

If large energy service companies like Weatherford (NYSE:WFT) are right about the second quarter of 2015 marking the trough of land rig activity in North America, investors may have already missed their chance to buy service names like Basic Energy Services (NYSE:BAS), Key Energy Services (NYSE:KEG), Superior Energy Services (NYSE:SPN), and C&J Energy Services (NYSE:CJES) at the point of maximum pain.

On the other hand, Basic Energy's exposure to competitive and largely commoditized services (the name "Basic Energy Services" really is a fair representation) in the oil fields means that this stock is highly sensitive to any changes in sentiment around North American onshore activity. As more than one analyst has described it, Basic Energy is the "tip of the whip" and however sentiment goes, Basic Energy's stock will react strongly.

As things sit today, with the shares up almost 75% over the past three months and having doubled off the low in mid-March, I'm not hugely interested in owning the shares. I think there are better bargains in the offshore services space (which admittedly has a very different set of fundamentals and drivers) and perhaps even on the onshore space. That said, sustained evidence of a bottoming/turnaround in the North American market could lead analysts to boost their estimates almost as quickly as they cut them and Basic Energy's stock would likely react dramatically. This isn't my kind of investment/speculation, but more aggressive or short-term oriented investors may see a better opportunity here.

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Whither Onshore Drilling Activity Goest, Basic Energy Services Will Follow

Seeking Alpha: Key Energy Services Needs To Get Its Act Together

Many energy service stocks have had a tough time since early July, but Key Energy Services (NYSE:KEG) has had it worse. This is not wholly undeserved, as the company has been struggling to overcome weak international results, delays from customers in California, and a concerning lack of momentum in key basins like the Permian. Although Key is one of the biggest players in well servicing, fluid management, coiled tubing, and frac stacks (all vital offerings in the onshore market), I have to question whether the company has been seeing market share losses. Key Energy Services does look undervalued today, but so do Basic Energy Services (NYSE:BAS) and Superior Energy Services (NYSE:SPN), and management needs to be on point and drive better execution in the remainder of 2014.

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Key Energy Services Needs To Get Its Act Together