Civeo (CVEO) needs to take significant actions to increase value for shareholders, including by shrinking its outstanding shares, or an outright sale, Engine Capital said in a letter to Civeo's board Tuesday.

Engine Capital, which owns roughly 9.8% stake in the company, said Civeo's returns have lagged behind its peers and it needs to close the value gap by "effectively privatizing," reducing costs and, if necessary, a possible sale.

The firm suggested the company should buy back 25% of its outstanding shares via tender offer and initiate an automatic repurchase program afterward to reduce the number of outstanding shares. It also needs to slash costs, eliminate dividend, and abandon any mergers and acquisitions.

In fact, Engine asked the board to initiate a strategic review at a suitable time, perhaps by the end of 2025, for a possible sale.

Civeo acknowledged the letter in a public statement and said it would closely review it and engage in open dialogue with Engine Capital and other shareholders.

Civeo shares were up more than 5% in recent trading.

Price: 21.85, Change: +1.11, Percent Change: +5.33