Ensign's strategy is based on a particular model. With few exceptions, the company does not buy its rigs on the new market; instead, it obtains them at 30% to 40% of their new value when it acquires smaller operators in financial distress.

At $2.55 per share at the time of writing, Monday, May 8, 2023, that's exactly the valuation the market assigns it: x0.4 the value of its equity. It must be said that there is a significant net debt, more or less equal to the equity.

However, the majority of it is a bank credit line that the company believes it has no problem refinancing. The presence of Murray Edwards, one imagines, is a valuable wild card here.

Ensign owns 232 rigs and generates three-quarters of its revenue in North America. Over the last cycle, the company's earnings power has fluctuated with market conditions, but it has generated a cumulative cash profit of $850 million.

Two-thirds of this was distributed as dividends to shareholders, while the rest was used for acquisitions - ahead of a modest increase in debt. To put it plainly: the market capitalization of $470 million - at a price of $2.55 per share - represents just over half of the profits generated by the company over the last decade, and less than the sum of the dividends paid out.

Another way to look at it: the average free cash flow per share over the period 2012-2022 is $0.5; we will relate this history to the current price to get an idea of the valuation. Overall profitability is modest, even with significant leverage, but Ensign has had only two loss-making years over the period under review.

In fact, the management team is buying shares in the market. They were recently joined by the well-known Prem Watsa, whose Fairfax holding company - the Canadian "Berkshire Hathaway" - has acquired a 12% stake in Ensign.

It is to be hoped that the acquisitions made from 2018 to 2020 will prove lucrative. In any case, they have been remarkably well executed, in the midst of a downturn in the oil and gas sector.