June 01, 2018 - 1:42pm EST by
2018 2019
Price: 3.70 EPS -.5 -.27
Shares Out. (in M): 168 P/E n/a n/a
Market Cap (in $M): 620 P/FCF 19.5 24.6
Net Debt (in $M): 276 EBIT -68 -2
TEV (in $M): 896 TEV/EBIT n/a n/a

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Civeo is one of the largest providers of workforce accommodations, logistics and facilities management
services to oil and coal producers in remote areas of Canada (63% of Revenue), Australia (27%) and US
(10%). I originally recommended the stock at $1.30/share on 4/25/16 in VIC and even though the stock
has appreciated over 180% since my original post, the company could be on the cusp of an operational
turnaround and the stock has significant upside from here if you believe oil and coal prices are going to
stay at today’s levels or increase from here. Refer to my original post for more details on the company.
Since my original post, a number of events have occurred for Civeo:
11/27/17: acquired Noralta Lodge in Alberta Canada for $289mm a mix of cash, stock and
convertible stock. Noralta Lodge operates 11 lodge facilities with 5,720 owned rooms and 2,100
managed for external owners. Noralta has contracts in place with Suncor and Syncrude that
generate annual revenues of over $103mm in annual revenue and the combined company will
generate over 75% increased operating cash flow post acquisition. For context, in Q1 2018,
CVEO had a total of 17,205 rentable rooms.
3/1/18: acquired a 400 room facility on 40 acres of land near Lake Charles LA for $28mm.
Oil prices have increased from $42 to $74/barrel. Australian Met Coal prices have increased
from $97 to $184.
Like many real estate operators, CVEO’s net income numbers look terrible as the company has large
depreciation charges and an impairment charge in Q1 2018. There is also a large time lag between when
oil and met coal prices increase and when you see an impact in CVEO’s occupancy and room rates. There
is no assurance that oil and coal prices stay at today’s levels or increase from here, however if they do,
CVEO’s earnings could have a large increase as the business has a ton of embedded leverage with
occupancy and room rates.
REVPAR=average room rate x occupancy
                              2012  2013  2014  2015  2016  2017  Q1 2018
Canada                    $141 $130   $ 108   $73   $66   $72      $66
Australia                     $97 $78       $ 63  $41   $33   $34      $36
                               2012  2013  2014  2015  2016 2017   2018
EBITDA (mm’s)       $492   $428   $331  $122    $82   $64   $109 (guidance)
CVEO has been operating at a cash flow positive level with very depressed REVPAR. If either occupancy
and/or room rates increase, the increase in REVPAR will have a dramatic result on CVEO’s free cash flow.
In 2012, CVEO had EBITDA of $492mm on Total Revenues of $1.1 billion. When the company was spun
off from Oil States in 2014, the stock traded as high at $27.14 on 7/4/14.
Horizon Kinetics, a mercurial value investor owns 18.7% of the shares.


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


  • With increased scale from the Noralta and Lake Charles acquisitions, Civeo's ability to pay down their debt load is significantly increased, removing the largest uncertainty when I originally posted in April 2016. Prior to the acquisition, Civeo had gone from $775mm in debt in 2014 to $295mm at the end of 2017.
  • Civeo was awarded the contract to construct a 4,500 person workforce accomodation center for the liquefaction and export facility in Kitimat British Columbia originally planned for the end of 2016 by LNG Canada. The project was delayed however recent public statements by LNGC and new reports indicate that the decision is expected in the 2nd half of 2018. There are three different potential revenue streams for Civeo from the project. 1) 436 room Sitka Lodge which is currently empty would fill up and generate $30mm in annual revenue with a 50% EBITDA margin. 2) $100-200mm in construction revenue to build the workforce accomodation center with a 10-20% EBITDA margin. 3) $100-150mm revenue at a 25% EBITDA margin for 8,000 rooms required during the pipeline construction period.
  • Oil Prices have increased from $42 to $67 and Australian Met Coal prices have increased from $97 to $184 since my original post on 4/25/16. While there is a lag between higher resource prices and production activity, the longer prices stay elevated, the more likely production activity will increase. Production activity requires manpower.......
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