Wednesday, February 4, 2015

Civeo: When The Going Gets Tough, The Dividend Gets Cut

This article was first published by Seeking Alpha on January 18, 2015.

By Sarfaraz A. Khan. Research Asst. Adnan Mushtaq

The drop in crude prices has shaken the energy markets and Civeo Corporation (NYSE:CVEO), which offers workforce accommodation and other related services to oil and gas companies in Canada and Australia, is no exception. About two weeks ago, the company gave a profit warning and suspended dividends.

For 2015, Civeo said that its first quarter revenues and EBITDA will come in at $160 to $175 million and $45 million to $55 million respectively. Analysts, on the other hand, were expecting EBITDA of $78.2 million from revenues of $228 million. For the full year, the company expects EBITDA of between $135 million and $160 million from revenues of $540 million to $600 million. This was also lower than Wall Street's consensus EBITDA estimate of $262.3 million from revenues of $817.2 million.

Civeo was spun-off from Oil States International (NYSE:OIS) in May-2014 following pressure from activist funds Jana Partners and Greenlight Capital. Jana Partners subsequently became the largest stakeholder of Civeo. Since then, Civeo's shares have fallen from more than $23 in last June to less than $3.50 at the time of this writing due in part to the 52% drop which occurred when the company gave the aforementioned update to investors.

To exacerbate, earlier this month, Jana Partners offloaded its entire 11.5% stake in Civeo, possibly at a loss, according to WSJ. This raised further concerns about Civeo's ability to continue operating as a stand-alone company in a down market.

The company is facing three major headwinds. Oil prices have ….. read full article at Seeking Alpha