Superior Energy Services, Inc. (NYSE:SPN) is a diversified oil service company that offers drilling, completion and production-related services worldwide. A significant amount of capacity came out of the industry over the past two years when oil dropped below $30 per barrel. However, as oil has stabilized in the $50 per barrel range, drilling activity is picking up and we are beginning to see a recovery in pricing for pressure pumping and other land-based services. Superior is investing in additional pressure pumping horsepower that is expected to be deployed in the second half of 2017, but its higher than expected fleet reactivation costs and need to rehire personnel impacted the stock. Also, there has been some concern about the timing of a recovery in the offshore and international businesses, though we believe this will be more than offset by positive contribution from Superior’s land-based business. Management sees reactivation costs per crew declining over time and we would view the reactivation cost issue as an investment in growth as exploration & production customer activity picks up over the course of 2017.
From the Keeley Small Cap Value Fund first quarter 2017 commentary.
