Of all the companies on the TSX which have been hit hard of late given the low-price commodity environment which has hampered the North American oil production scene, few have been hit as hard as Precision Drilling Corporation (TSX:PD).
Precision Drilling is in the business of drilling and providing oil well services for large oil operations in Canada and the U.S., companies which have experienced declines in the number of new wells drilled amid a low commodity price environment which has permeated the industry in recent years.
With the price of oil rebounding in recent weeks due to expectations of extended supply cuts and reduced inventories amid robust global demand for oil, positive sentiment has begun to creep into the ancillary services sector of the broader oil & gas industry, providing investors with a breath of fresh air amid share price declines for companies like Precision Drilling which have approximated 50% since the beginning of the year.
While it may be too soon to officially call the bottom for oil drilling companies such as Precision Drilling, the value proposition such companies provide at current levels may be simply too good to ignore for long-term investors willing to “wait it out,” with expectations that oil prices will continue to rise and the industry as a whole will return to its once-former glory.
Precision Drilling’s equity can be picked up at a dirt cheap valuation at current levels, and while real long-term risks remain with this value play, investors willing to scrape the bottom of the barrel (pardon the pun) should take a look.
Invest Wisely, my friends.
