Americas Energy Services North America Strength and Middle East Uncertainty

Goldman Sachs upgrades XPRO to Buy, citing a valuation dislocation relative to international peers like SLB and HAL. The report highlights near-term strength in North American markets while projecting a medium-term inflection in international and offshore activity driven by supply diversification.

Key Takeaways

• 1.XPRO is upgraded to Buy from Neutral due to a valuation dislocation, trading at 4.0x 2027 EV/EBITDA compared to larger international peers at 8.5x.
• 2.Uncertainty in the Middle East is driving a preference for North American exposure in the near term, but it is also expected to stimulate international and offshore investment as buyers diversify supply.
• 3.Oilfield service companies (AESI, LBRT, PUMP) are aggressively expanding 'Behind-the-Meter' power deployment capacity to meet rising demand.

Table of Contents

• International and Offshore Exposure Underappreciated in Current Macro; Upgrading XPRO to Buy
• Point 1. Underappreciated international exposure given stock trades at ~4.0x 2027 EV/EBITDA vs peers at ~8.5x 2027 EV/EBITDA
• Point 2. XPRO's ~80% international revenue, ~70% offshore revenue gives significant thematic exposure to offshore activity and spending increase compared to peers
• Point 3. Idiosyncratic factors such as the Drive25 initiative could increase earnings power over time
• XPRO Estimate Changes & Valuation
• XPRO Key Downside Risks
• Key Areas of Focus Following 1Q Earnings Season
• Estimate Changes, Valuation, and Key Risks
• Disclosure Appendix