The bear market in crude oil has claimed yet another victim.
Late Monday, Civeo (CVEO), the provider of temporary and long-term accommodation to oil projects, issued a steep profit warning and suspended its dividend payment. Tuesday, the stock cratered, falling more than 50% to $4.11.
The firm said it expects 2015 revenues between $540 million and $600 million, well below the $815 million analysts were expecting. Its first quarter revenue guidance, a range of $160 million to $175 million, also came in far short of expectations of $228 million.
The company blamed a slowdown in oil sands projects in Canada amid an environment of low oil prices for the shortfall, while also noting that low coal prices in Australia are also hurting sales.
In response, Sterne Agee analysts Stephen Gengaro and Ivan Suleiman wrote:
Civeo's near-term strategy of suspending its dividend and paying down debt is prudent and will enable the company to remain compliant with its debt covenants. Management expects 2015 capital spending of $75-85 million versus $260-280 million in 2014, including $55-60 million of maintenance. With about $250 million in cash on its balance sheet and our expectation the company is cash flow positive in 2015 even with depressed expectations, the company should be able to lower its debt levels to $450-500 million.
Civeo's share price was already under severe pressure before the profit warning. The shares hit a previous 52-week low of $6.81 on Dec. 17, a fall of more than 75% since it hit a high in June following its spinoff from Oil States International (OIS).
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