Expro Ltd

We increased our stake in Expro Group, a company that has faced some share price pressure despite stable results and an upcoming acquisition of Enhanced Drilling, which specializes in pressure management technology for well drilling. This acquisition aligns with Expro Group's strategy of enhancing its portfolio with high-margin products, projecting margins above 30%. The company's global platform allows it to scale these new offerings effectively, positioning it for significant growth in the oil and gas value chain.

Expro has faced a revenue decline of -13%, attributed to a global production surplus and falling oil prices, which were projected to drop below $60. Despite this, Expro's EBITDA grew by 1.4%, contrasting with profit reductions seen in peers like TGS and KLX. The ongoing conflict with Iran has further complicated the landscape, leading to a block on exports from the Persian Gulf. The manager notes that while there is potential for recovery in the sector, the current environment remains challenging.

This quarter we identified a new opportunity in the oil services sector: Expro. This company provides services and solutions to oil and gas producers throughout the full life cycle of a well. Expro was formed in 2021 through the merger of Frank’s International and the former Expro, following a business and capital restructuring process. Since going public, the company has carried out several acquisitions that have expanded both its geographic footprint and product range, strengthening the breadth and resilience of its offering. The current lack of investment in new exploration and production projects is particularly benefiting companies like Expro, which focus more on the intervention, access, management, and decommissioning of existing wells. All of this, together with a very strong balance sheet, rising profitability, and a capital allocation policy clearly geared toward value creation—including a significant share buyback program—has led us to add Expro to the portfolio.

Expro, the oil exploration and production services company, has shown a significant recovery, rising more than 38% this quarter. The company confirmed an expected EBITDA for the full year of $350 million, with a market capitalization of $850 million and net cash of $130 million. This performance indicates that patience and sound analysis have paid off, even in a weak oil sector. The positive trajectory of Expro's financials suggests a strong potential for continued growth and value creation.