#LNG Development 2.0 Could
be Generational; Enterprise Group (TSX: $E.TO)
July 19, 2018 - (Investorideas.com
Newswire) The following article/commentary is released on Enterprise Group,
Inc. (TSX: E)
Not
long ago, in a land not far from here or there, the Canadian Resource sector
took two near fatal mortar rounds to the chest. The first was the oil price decline
that left the sector neutered in 2015 with many casualties. In the midst of
that recovery, the jubilation for LNG exports to Asia – perceived saviour of
the industry—was derailed as major partners went to ground.
One
theory that might be more prudent this time is to put early investment dollars
into equipment and infrastructure companies that are gearing up.
As
a proxy for this growth, Enterprise Group (TSX: E), the premier
industrial rental company in Western Canada comes into this burgeoning market aggressively
and debt free: The Company appears to be
a substantial proxy and winner as several huge potential developments unfold in
its target area. As well, the Company has significant access to funds for
buying equipment, complementary companies or both. Enterprises history is to
buy accretive assets, utilized them for several years to generate significant
revenue and then sell at a profit.
As
the LNG 2.0 growth commences, Enterprise is known as a one stop shop very well
known by the industry as having exceptional equipment coupled with wide ranging
custom solutions. Not to mention the plaudits it gained by working with clients
to help in the downtimes. Not everything is about money.
And at C$0.45 trades at less than ½ book
value of C$1.01.
Why
Own Enterprise? Salient Points:
·
Refocus
to grow the lucrative industrial/resource rental business
·
Cash
flow positive since the beginning of 2015 downturn
·
Profitable
trend seems intact last three quarters
·
Trades
at less than half book value (C$1.01)
·
Development
of StarChain, a revolutionary monitoring and asset management software
·
15
proprietary patents for specialized equipment and processes
·
Cost
effective custom solutions
·
Significant
acquisition and capital expenditure
·
Significant
domestic growth plans
Third
Time the Charm
Due
to the vagaries of the sector, these products and services are always needed.
If it all comes together at once—LNG Canada commences and oil stays reasonable
the renaissance of multiple sectors is or could soon be apparent.
"If
you think back three, four years ago when we all had LNG euphoria, that there
was a slew of projects ahead of us, we certainly didn't see any boxes being
ticked to the same degree that they are today," stated Horizon North
Logistics Inc. (HNL:TSX ) Chief Financial
Officer Scott Matson. "Our view internally is that the flag in the ground
was Petronas buying in. We have a hard time believing they would spend an ounce
of time, energy or a dollar unless they had a clean line of sight to the
project moving ahead."
LNG Canada is a joint venture between Royal Dutch Shell
Plc, PetroChina Co. Ltd, Mitsubishi Corp
and Korea Gas Corp. TransCanada Corp will build the
pipeline.
The
Centre of the Universe?
In
St. Albert near Edmonton Alberta, there were several reasons the Enterprise C-Suite
team worked to save, expand and grow Enterprise Group. During the almost fatal resource decline
mid-decade, one main reason was the new prospect of the significant resurgence
of massive LNG spending.
The
reasons for this renewed activity years on --after Pacific Northwest LNG
populated mainly by Malaysia's Petronas cancelled participation in 2017. Always
watch the left hand as in a feat of corporate legerdemain it is now a major
partner in the phoenix-like reanimation of LNG Canada. The workforce will not
be a vast majority of TFW (temporary foreign workers) which was a major plank
of the previous plan, but the vast majority (approximately 95%) Canadian.
" The
potential for the development of LNG to announce and go ahead in the fall is
roughly an 8 out of 10," stated Des O'Kell SVP of Enterprise. "
Related activity is apparent from
Kitimat to Fort St. John; negotiations with First Nations, equipment plans and
office leasing. All of this is against a backdrop of high condensate prices to
make the bitumen flow effectively. The reality is that early exposure to this development
trend is key; with an eye to commodity prices. Opening a valve to Asia would
very simply provide massive growth of Canada's energy exports."
To give some
perspective, Alberta's Black Diamond (BDI: TSX) announced to a
contingent $42.5 million camp contract in concert with indigenous partnerships.
The landscape is getting thicker with a growing list of monies to be spent and
plans to be executed. Houston-based Civeo Corp
(NYSE:
CVEO) has already been awarded conditional contracts for a 440-bed
permanent facility at Kitimat and a 4,500-bed temporary camp for the export
terminal construction phase.
Kitimat’s Haisla Nation has made its
support apparent through a letter to the NDP from Chief Councillor Crystal
Smith:
“Unlike others who think the answer is simply ‘no’ to development, we believe
in balance between the economy and the environment. Projects can be built
right. A project like LNG Canada provides the right balance for us, being a
potential major employer and the lowest CO2 emitting LNG facility in the world.
We’ve spent more than a decade speaking with LNG proponents to emphasize what’s
important to us in our communities and we’ve enjoyed the debate which has led
us to today.”
BC Opposition is also onside. Former BC
Liberal LNG Minister Rich Coleman stated; "It would get a product we have
a huge amount of, we have a 150-year supply of natural gas and would allow us
to ship it to China and other countries. Shipping to China would help with
climate issues and everything else."
LNG
has much going for it, not the least of which, along with massive supplies is,
no apology to Trump, the natural replacement for coal. It's also important to
realize the Trump factor which seems that he could do something ridiculous that
could help or hurt the resource sector. He could do nothing with the same
result. There will be no in between.
From
the Financial Post: "Those LNG markets are turning around, says Shell's 2018 LNG
outlook. It found the market has defied expectations, growing by 29 million
tonnes in 2017."Based on current demand projections, Shell sees a
potential for a supply shortage developing in the mid-2020s, unless new LNG
production project commitments are made soon."
So,
what do we get? We unlock a giant-killing amount of Nat gas, open up LNG
markets to lessen dependence on the US. As well as essential jobs created for
decades and the prospect of further projects. Considerable interaction with
First Nations as substantive partners. Get bitumen flowing to markets. This
situation is not merely some ‘nice little resource deal.' It is an entirely and
possibly multi-generational expansion that, until alternatives come online,
provides a viable and cleaner source of power that of coal, oil, etc.
After
the last two go-arounds this decade, trepidation would likely be an apt
description. But as any risk-taking investor will tell you; Fortune Favors the Bold and merde happens.
Faites vos jeux, mes amis.
For further Enterprise news and corporate
updates, and to speak directly with the #management team, join the Enterprise
"Investor Group on 8020 Connect http://bit.ly/2FNPjyk
Article source – Baystreet.ca
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