Civeo Corp (CVEO) stock intrinsic value fair value estimate & owner earnings analysis

Civeo owns and operates remote workforce lodges and villages and provides catering, housekeeping, facility management and related services to mining and energy customers. In 2025 about $460 million of its $639 million of revenue came from Australia (coal, iron ore and other mining in Queensland, New South Wales and Western Australia) and about $179 million from Canada (oil sands lodges near Fort McMurray, Alberta, and Sitka Lodge in Kitimat, British Columbia). The U.S. business was closed in late 2024. How we measured earnings. We start from operating cash flow, remove swings in working capital, and subtract stock compensation and capital spending needed to keep the lodges running. Two years, 2024 and 2025, describe the business as it now exists: the Canadian oil sands lodges lost roughly 29% of billed rooms in 2025, the U.S. operations and the McClelland Lake Lodge are gone, and Australia has become the larger and steadier segment. Earlier years (about $80 million a year of owner earnings in 2020 to 2022) reflect a bigger Canadian oil sands and construction footprint that has not held and are not used. Owner earnings were about $22.7 million in 2024 and $28.0 million in 2025, roughly $25 million on average. We count that against the 10.95 million shares outstanding in February 2026, because Civeo bought back about $54 million of stock in 2025, reducing the share count from about 14.3 million to about 11 million. Interest on the roughly $183 million of revolving credit debt at December 31, 2025 is already deducted in these cash flows, so no separate debt adjustment is made. Capital spending was deducted in full because revenue fell in 2024 and 2025; the company itself describes only $11.2 million of the 2025 spending as maintenance, so this is a conservative choice. Growth check. Owner earnings rose about 23% in 2025 over 2024. The base case assumes about 3.5% in the first year (from $28.0 million to about $29 million), below the trailing rate. The lift is limited to something already paid for: the Qantac villages in Queensland's Bowen Basin (1,368 rooms) were acquired on May 6, 2025 and contributed $20.2 million of revenue in about eight months, so 2026 carries a full year. First-half 2026 revenue of $352.7 million versus $306.7 million a year earlier is consistent with that. Base case, about $29 per share. Owner earnings hold at about $29 million a year for ten years, then decline about 8% a year. The support is contracted revenue of $626 million at year-end 2025 ($196 million in 2026, $146 million in 2027, $86 million in 2028 and $198 million after that), Australian gross margin steady at about 26% in both 2024 and 2025, and a long record of operating these assets. We give no credit for new contracts, higher rates or a recovery in oil sands occupancy, and we assume nothing lasts forever once the current contracts and lodge lives run out. Bear case, about $10 per share. Owner earnings fall to about $14 million for five years and then decline about 12% a year. The named pressures are: Australian labor costs rising faster than inflation (the company cites Fair Work Commission wage decisions and a tight labor market) squeezing the 26% margin by about two points; further Canadian lodge closures as oil sands producers push lower operating costs, WTI now forecast below $60 a barrel and Sitka Lodge running at low occupancy after LNG Canada's Phase 1 started up in mid-2025; and the credit facility, which matures on August 8, 2028 with $183 million drawn, being refinanced at a higher cost. The company has a history of cutting costs in Canada, but the 2025 tax bill in Australia (about $13.6 million of tax expense on a pre-tax loss) shows how little cushion is left. Bull case, about $40 per share. Owner earnings of about $38 million a year for ten years, then decline about 6% a year. This assumes the levers the company already controls: the full-year Qantac contribution, the customer-supported reactivation of Buffalo Lodge in Canada, the $2.2 million of Canadian cost savings, and the $5.5 million of shareholder-activist costs incurred in 2025 not recurring. We do not assume commodity prices or occupancy in oil sands improve. What we left out. Growth from new Australian integrated-services contracts and a rebound in Canadian oil sands or LNG Canada phase 2 are not counted because none is contracted and the record of the last two years shows Canada moving the other way. What could make this wrong. Owner earnings could fall below $22 million if Australian met coal customers cut activity (the filing points to more coal supply entering the market in 2026 and downward price pressure), or rise above $38 million if Canadian occupancy returns. The share count, debt level and quarter-to-quarter cash taxes also move per-share results; 2025 and first-half 2026 operating cash flow ($22.3 million and $1.9 million) were held down by cash taxes and working capital that we removed to show underlying earnings. Also, some prior-year figures, including 2018 and 2019, include U.S. operations that have since been exited. The margin-of-safety price is roughly $14 per share, set with a wide margin over the downside case given the leverage and commodity exposure.