Koil Energy Solutions, Inc. (KLNG Quick QuoteKLNG - Free Report) shares have climbed 41.2% in the past year compared with the industry’s 26.3% growth. The company has outperformed other industry players, including Clearway Energy, Inc. (CWEN Quick QuoteCWEN - Free Report) and Meren Energy Inc. (MRNFF Quick QuoteMRNFF - Free Report) . Shares of CWEN and MRNFF have rallied 32.4% and 27%, respectively, in the same time frame. KLNG benefits from a favorable offshore energy cycle, rising subsea tie-back activity, expanding opportunities in Brazil, strong contract wins, growing international presence, and enhanced financial flexibility.

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A Key Look Into KLNG’s Business Operations

Koil Energy is a global energy services company that provides specialized equipment, engineering expertise, and operational support for offshore energy projects, primarily serving oil and gas markets while expanding capabilities applicable to offshore wind, wave energy, hydrogen, and LNG sectors. Operating through subsidiaries in the United States and Brazil, the company delivers subsea engineering, project management, installation, commissioning, testing, spooling, storage, refurbishment and intervention services. Its product portfolio includes steel tube flying leads, umbilical termination systems, riser and subsea isolation valve control systems and a broad range of installation aids. Manufacturing is centered in Houston, TX. Koil Energy serves major integrated, independent, and national energy companies, subsea equipment manufacturers and installation contractors worldwide.

Koil Energy’s Key Tailwinds

Koil Energy is benefiting from a favorable offshore energy cycle driven by rising global energy demand and years of underinvestment in offshore exploration and production. Management highlighted increasing capital allocation toward deepwater and ultra-deepwater developments in key regions such as Brazil, the Gulf of America, and West Africa. Subsea tie-back projects are becoming the preferred development model because they offer lower costs, faster payback periods, and the ability to leverage existing infrastructure. 

The company delivered a strong first-quarter 2026 performance, with revenues increasing 56% year over year to $8.2 million and returning to profitability. Growth was primarily driven by a sharp increase in fixed-price project activity and contributions from new customers. Management noted that new clients accounted for a substantial portion of the revenue increase, demonstrating successful market penetration and expanding customer relationships. 

Koil Energy continues to secure meaningful contract awards that strengthen revenue visibility. During the quarter, the company won a significant manufacturing contract, a subsea distribution system award in the Gulf of America, and a major offshore installation and pre-commissioning contract in West Africa. The West Africa project is scheduled for mobilization in the second half of 2026 and highlights Koil Energy’s growing international presence. Management also emphasized record bidding activity and an expanding pipeline of opportunities globally. 

A major growth driver is Koil Energy’s expansion into Brazil, one of the world's most active offshore energy markets. Management indicated that the company is now qualified to pursue opportunities with several major oil and gas operators and is increasingly reaching final bidding stages on large projects. 

Koil Energy recently strengthened its balance sheet by securing a new $5 million asset-based revolving credit facility. The facility provides additional liquidity while replacing the company’s prior factoring arrangement, which has been fully repaid and terminated. Management believes this financing will support the expansion of its high-margin rental equipment portfolio, a business that can generate recurring revenue and improve profitability.

Challenges Persist for KLNG’s Business

Koil Energy remains highly exposed to volatility in offshore oil and gas spending, as customer capital expenditure decisions are closely tied to fluctuating commodity prices and broader energy market conditions. Management notes that delays or reductions in offshore drilling, production, and subsea development activity could negatively affect contract awards, revenues, earnings and cash flows. Rising raw material and consumable costs, higher personnel expenses, and expansion-related investments in Brazil and growth initiatives may weigh on profitability. Additionally, liquidity remains modest with only about $1.2 million of cash on hand, while working capital is dependent on timely customer payments and receivable collections.

Koil Energy’s Valuation

The company is cheaply priced compared with the industry average. Currently, KLNG is trading at 1.27X trailing 12-month EV/sales value, below the industry’s average of 6.47X. The metric also remains lower than that of the company’s peers, Clearway Energy (10.85X) and Meren Energy (2.01X).

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Conclusion

Despite challenges from commodity price volatility, offshore spending uncertainty, rising costs, and limited liquidity, Koil Energy is supported by a favorable offshore energy cycle, growing subsea project demand, expanding international opportunities, and a strengthening contract pipeline, which underpin its long-term growth prospects.

Strong fundamentals, coupled with KLNG’s undervaluation, present a lucrative opportunity for investors to add the stock to their portfolio.