Essential Energy Services Ltd. (ESN.TO)
A few weeks after the acquisition and ESN has emerged with a general consensus that the addition of Technicoil will set Essential on a strong path of profitability. The oil industry has heated up over the last 6 -8 months, with oil prices reaching around $115 at the end of April. Many new drilling companies, production companies, and exploration companies realize that $100 oil is likely to be the new norm. With this knowledge capital expenditures to improve efficiency, safety, environmental controls will be on every CEO mind. The mid to small cap oil companies that are using the latest in equipment will not only realize immediate operational efficiency gains but also lasting goodwill in the form of adhering to a strict environmental standard. This environmental aspect of the oil industry is even more important in the
Canadian Oil Sands in Alberta.
The EuroZone has been active it seeking cleaner energy, with targets set on the
oil sands in Canada. The companies that have stellar performance in the triple bottom line (financial, social, environmental) will secure drilling and production rights much easier as environmental concerns will be part of their culture.
Essential Energy Services is likely to capitalize on this inflow of "new" money as investment continues to pour into the energy and other commodities space.
From the latest move up, from 0.75 to 2.50, the price has come down 38.2% touching the 50 week moving average.
The downward sloping trendline once broken will likely start forming a base for another leg up as long as Oil prices remain stable. Earnings will be what makes a stock like this move, as actual sales will outstrip expectations with money flowing into this industry. I expect the 200 MA to hold, however, if ESN breaks to a new low expect slight further downside.
