GreenHunter Resources' CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: GreenHunter Resources, (GRH)

GreenHunter Resources, Inc. (NYSEMKT:GRH)

Q4 2013 Earnings Conference Call

March 31, 2014 11:00 AM ET

Executives

Gary Evans - Founder, Chairman, and Interim CEO

Melissa Pagen - AVP, Investor Communications

Kirk Trosclair - COO

Analysts

Michael Hoffman - Wunderlich Securities

James Collins - Portfolio Guru, LLC

James Curran - New Salem Management Investment

Gerard Sweeney - Boenning & Scattergood

Operator

Good morning, my name is Anastasia, and I will be your conference operator today. At this time, I would like to welcome everyone to the GreenHunter Resources Fourth Quarter and Fiscal Year 2013 Financial and Operating Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

Mr. Gary Evans, Chairman and Interim CEO, you may begin your conference.

Gary Evans

Thank you, operator, and thanks to all of you for dialing in this morning. We filed before the market opened, our press release for the fourth quarter and fiscal year ended 2013 representing GreenHunter's financial and operating results for the fiscal year of 2013. We also will be filing our Form 10-K, with respect to our operations with the SEC later this afternoon.

I have with me today, Kirk Trosclair, our Executive Vice President and Chief Operating Officer; on the line, in Ohio, is Melissa Pagen, our AVP of Investor Relations; Ron McClung, our Senior Vice President and Chief Financial Officer is here as well; and Robert Sloan, of our executives is here. So everybody will be available to talk, once we go in the Q&A session.

So to summarize our results this morning, the company did have significant growth. Revenues were up 52% from 12/31/2012, growth from $17 million to right at $25.7 million. But more importantly, the improvement in the company's total operations, with respect to our operating loss, an improvement of $18 million from a $20.4 million loss last year, to $2.5 million this year.

We have done a lot of things to allow that to occur. Most importantly, we continue to grow the company's portfolio of SWD wells. We will give you a lot more detail about that. We have also made the decision with respect to the growth that we have experienced in the Appalachian region to concentrate totally on that region, and we have -- you will see in the financials as well, the 10-K, we consider South Texas as well as Oklahoma now, as discontinued operations. The real purpose of which is to utilize the cash we see from the sale of those assets to redeploy into our higher growth assets in Appalachian, and more importantly, our higher net margin assets there.

So that exercise is continuing. We announced last week. I'd say we have another one coming here in a couple of weeks, and that will completely change our balance sheet and put us in a positive working capital position, and allow us to continue to grow in Appalachian, where margins are much better.

We also have so many things to talk about, regarding future barging opportunities. We have been talking about a while, it has taken us longer to get that implemented than originally planned, really because of some foot dragging going on by the U.S. Coastguard. But we believe that with the acquisitions we have made and the leases that we have along three different waterways in West Virginia, Ohio, and Pennsylvania, that we can begin that operation in 2014.

I really should have done this before I got started, but I need to turn the call over to Melissa Pagen, she is going to read our forward-looking statements that is required for the fair disclosure. Melissa?

Melissa Pagen

Before we begin with the content of today's call, I would like to advise you that today's call may include forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, and Section 21-E of the Securities Act of 1934.

The following discussion provides information which management believes is relevant to an assessment and understanding of our financial condition and results of operation. The discussion contains forward-looking statements that involve risks and uncertainties, and may include statements regarding our expectations, beliefs and intentions or strategies regarding the future. Actual events or results may differ materially from those indicated in such forward-looking statements. This discussion should be understood in conjunction with the financial statements, accompanying notes and risk factors included in our SEC filings. The discussions should not be construed to imply that the results contained herein, will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment by our management. Actual events or results may differ materially from those indicated in such forward-looking statements. This disclaimer is in effect for the duration of this conference call.

Gary Evans

Thank you, Melissa. I'd like to also talk a few accounting things in a minute, but I want to let Kirk have an opportunity to talk about some of our most recent events and kind of emphasize again, why we have decided to move our operations exclusively to Appalachian. Kirk?

Kirk Trosclair

So in the first quarter of 2014, for the recent events we have sold two of our existing disposal wells down in South Texas, along with one permit, two separate buyers and the total purchase price of $7.3 million, included $2 million in cash down payments, with $5.3 million in notes receivable. We have contracted to sell the third well down in South Texas for $4.7 million in cash, which also ties back to one related note, the $2.9 million of existing debt will be paid off as well [ph] on the closing of that, with the sale of that SWD.

Total proceeds coming in, mid-April on that transaction will be approximately $7.3 million. We are in negotiations to sell all of our Oklahoma assets and anticipate that sale to close some time in the second quarter of 2014. We have some remaining assets down in South Texas, mainly transportation related, and we are in the process of getting rid of some old assets, and also transferring the majority of the assets to the Appalachian region, where they can be better utilized. Once the assets in South Texas and Oklahoma are sold, we intend to cease the operations completely from Mississippian Lime and the Eagle Ford areas.

So basically what we are doing there, in calendar 2013, fourth quarter or so, we made the decision to truly focus on our Marcellus and Utica division in the Appalachian and 100% of our efforts in that area. We have identified up to nine new SWD projects for potential growth in 2014 in the Appalachian, and by aggressively selling off the assets in South Texas and Oklahoma we can fund those operations.

Gary Evans

Thank you, Kirk. Also, one thing I failed to mention, when we were talking about our operations this morning, we highlighted in our press release, where our total disposal volumes, which is from our perspective, is really part of our business, increased approximately 120% in 2013 to 4.74 million barrels compared to 2.155 million barrels that we actually disposed in 2012; and so that's really going into all of our disposal wells. We also increased our trucking fleet significantly to 57 vacuum trucks that are also capable -- many of these trucks to haul not only brine, but also condensate.

So we have made a lot of changes with respect to the accounting department in 2013. Ron McClung is here, our CFO, he has brought on a new controller as well. You will note, I think we outlined it in the press release that the company had no material weaknesses in internal controls.

Ron and his group were able to rectify all of those from last year, so congratulations to him on that. And we've continued now to really home in on the business, we have made some management changes at senior level as well, and we are very-very excited about where we are going. It's also important to note that we kind of went through 2013 without doing anything to dilute the common shareholder. We really were able to move our asset portfolio around and keep the common shareholder from being diluted at a time when many companies would have gone out and raised equity capital, they would have done so.

So we feel excited about where the company is going, we look forward to reporting our quarters in 2014 that will drastically show the improvement in EBITDA that we have been discussing, as related to the shutdown of the South Texas and Oklahoma operations.

We are able to typically report a gain from all of these asset sales, because when we drilled the wells down South Texas, we did them in such an economic way, that they are generating actually a gain from the sale. So people ask, why are you leaving South Texas, why are you leaving Oklahoma? It’s real simple, all boils down to margins and underutilization. Those regions are very much more competitive. It's much easier for a company to get into our business. We are comparing $0.25, $0.35, $0.45 per day disposal rates to $3 to $3.50 in Appalachia.

So it makes no sense for us to beat our head against the wall, in areas where we can't get the margins, nor can we utilize the total volume capacity of these wells. Whereas in Appalachia, we are running 100%, every time we put a new well on, we are filling that well up. In fact, we put a new well on in the first quarter of 2014 at Ohio, and that well within days, Kirk, hits maximum capacity, did it not?

Kirk Trosclair

That's correct. Yes. We went directly to 100% capacity within the first day.

Gary Evans

So we have mentioned in the press release that we have nine specific SWD projects for potential growth identified in 2014, and we believe that we can implement these new projects at a very attractive rate and have a great return. So the numbers speak for themselves. We will be happy to open up the call now to our listeners, and analysts who currently follow GreenHunter Water. Operator?

Operator, we are ready to take on our first question.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Michael Hoffman from Wunderlich Securities. Your line is open.

Michael Hoffman - Wunderlich Securities

Thank you for taking my call this morning, Gary. Your barrels disposed number, just so we are clear, is that just Appalachia, the 4.474 compared to 2.155?

Gary Evans

No. That is everything. That's total.

Michael Hoffman - Wunderlich Securities

Can you share with us -- with going concern those same numbers would have been?

Gary Evans

Well, you mean if we had discontinued operations. I don't – actually - we do, yeah, we do. Hold on just a second. We are looking at it.

Michael Hoffman - Wunderlich Securities

And while we are digging into that data, could we break it down and tell us what you did in 4Q in the continuing operations alone? Just so we understand what the trend line looks like, and sort of framing that against 1Q?

Gary Evans

The thing you have to also remember, when you are looking for [indiscernible] this quarter is Appalachia is [indiscernible] country, where we have the greatest weather issues, and as you, I am sure you are aware, Michael, the northeast had one of the worst winters since the 1970s. And so that did affect us to some degree. So here is -- tell me what we got here?

Kirk Trosclair

That's the Appalachian barrels injected for 2013.

Gary Evans

Okay. For 2013, we injected 2,630,000 barrels. In Appalachia.

Michael Hoffman - Wunderlich Securities

Okay. And that compared to like -- if I remember correctly, 1.98? Is that accurate? For 2012?

Gary Evans

Yeah, that's right.

Kirk Trosclair

That's correct.

Michael Hoffman - Wunderlich Securities

And then, do you have a 4Q 2013 number? Same barrel --?

Gary Evans

The fourth quarter of 2013 for Appalachia was 894,000 barrels. That was a record. Let me just give you a breakdown by quarter for Appalachian. First quarter was 471,000 barrels. Second quarter is 543,000 barrels. Third quarter was 723,000 barrels, and fourth quarter was [894,000][ph] barrels.

Michael Hoffman - Wunderlich Securities

Got it. Great. I get the weather issue because in Virginia yesterday we actually had snow blowing sideways for about six hours. So what I was interested in is, sort of the demand side of the business, sort of the trends what you are seeing, and where you are in sort of that total addressable capacity? I think if I have gotten my numbers right, you are sort of 13.1 million, 13.5 million barrels of sort of available capacity in Appalachia?

Gary Evans

It’s - 13,900 barrels today is what we have. So I mean, we are trying to add a new well about every month to two months, and our newer wells are having a higher capacity than our early ones, just because of where they are physically located, versus this last well we put on, what, it can do about 35,000 barrels a day?

Kirk Trosclair

Yeah, a little over 3,000 is the maximum injection gotten into it. Average would be probably just a little below that. But those wells down there, Michael, in the southern portion of Ohio, have much better porosity and are taking volumes much easier.

Michael Hoffman - Wunderlich Securities

Okay. Great, that's very helpful. Then so, you're talking about adding sort of one a month and at about a 3,000 per day kind of capacity?

Gary Evans

I mean, if you are in that area, I would say more 2,500.

Kirk Trosclair

Because not all the new wells that we put on will be down in that Southern Ohio section. Some of them are along -- the Ohio going a little further North and East.

Michael Hoffman - Wunderlich Securities

Okay.

Gary Evans

We know, Michael, from the drilling activity of our customers, and we have all the big customers in this area, and we see what's coming, and we got a tidal wave coming. So we are trying, another reason for making the decision we made was, we need this capital to put these new wells on. I mean, that's really where our margins are. So we are trying to stay ahead of the volumes we see coming.

Michael Hoffman - Wunderlich Securities

Okay. And so to that end, just so I understand, you take everything you've got sold or about to sell. Roughly, how much cash will you have to invest back into the business, as a result of selling Oklahoma, Texas, the biomass plant?

Kirk Trosclair

All in, it will bring a little over $11 million, $11.5 million, and we will use the significant portion of that to fund the additional growth. Some of it will be used to pay down some existing debt, but we will use that cash --

Gary Evans

I would say you could count on 30% to 50% of it for future growth.

Michael Hoffman - Wunderlich Securities

Okay. And that will all go towards the SWDs expansion?

Gary Evans

Yes, we can typically finance trucks 89% with our banks. So it's really the SWDs.

Michael Hoffman - Wunderlich Securities

Got it. So you've talked generally about -- desiring to have about $40 million worth of growth capital, and I am assuming it’s in total, so there is this -- call it 10 plus another 30 or maybe it’s 30, 35. How do you think about what the source of that 35 is, and more importantly, how do I think about the return of it? How does that leverage into incremental EBITDA?

Gary Evans

Well if we were to raise additional capital in some form or fashion, it would predominantly be used to get the barging segment of our business up and going, and we have leased and we have acquired various facilities along these waterways up there, but obviously, we are not barging yet. And we are getting closer to that. We have been fighting to some degree, with U.S. Coastguard for about a year and a half now, and we think we are within a month or so of having the carte blanche. Even though we know we can barge legally, we are trying to do it in the right way. So there has been a lot of politicking going on in that regard. So to answer your question, if we raise additional capital, it would predominantly go to expansion of the barging side of the business, and accelerate, putting these additional SWD wells on.

Michael Hoffman - Wunderlich Securities

Okay. And is there a time limit in which you give Coastguard to finally come clean on some of the wording of the language they have got in the public domain, and clarify some of this issue? Because if I read everything correctly, you could do this now, they have just kind of confused the situation with the way they are wording it.

Gary Evans

Yes, you're exactly right. In fact, we have gotten the oil and gas industry, the producers, pretty much involved in this, because there is one particular person, the gatekeeper at the Coastguard that has created this havoc, and so they have obviously got a ton of industry comments. So we have told them specifically, we are going to start barging in short order without them, but we are trying our best to apply appropriate pressure to get the right ruling that's deserving.

Kirk Trosclair

They've given us new guidance Michael that they plan to have the new regulation published and out before the first of June.

Michael Hoffman - Wunderlich Securities

Okay. All right. I will let somebody else ask some questions, maybe I will come back in.

Gary Evans

Thanks Michael.

Michael Hoffman - Wunderlich Securities

Thank you.

Operator

Your next question comes from the line of David [Knapp Seeger] [ph] with RBC Wealth Management. Your line is open.

Unidentified Analyst

Thanks. First I'd like to complement you on the fine upgrade of the presentation that came out a week and a half or two weeks ago. It really helps a lot on the understanding for those of us who have been following it for a while. My question is really a follow-on to the previous a bit. With the sales, I assumed in one announced last week, the 3.375, is the final one, and that's how we come up to the $12 million to $14 million presented there. With the negative current ratio of about $9 million, $10 million, does this get you to the point now where we won't have to have any more issuance of the preferred C, when you say financing will come around for the barging process? Is that a little bit too optimistic or…?

Gary Evans

No, just so you know, when you read the K today, dig through the numbers because there are still some current liabilities that we are having to report for GAAP purposes, that we don't believe will ever be paid. They have to do predominantly with the biomass project in California, that statute of limitations is continued to expire on, and we are having to report current liabilities that don't exist, and that's maybe what, $1 million?

Kirk Trosclair

$1.2 million.

Gary Evans

$1.2 million. It was about $1.2 million in the current that we don't think will ever be paid, and we are continuing to reduce it over time. So to answer your question about the Series C, we are done with the Series C and can't issue anymore Series C preferred. So if we were to do any other equity, it'd have to be a different type of series, and that's currently not in the cards.

Unidentified Analyst

Okay. And kind of -- looking at the progression in the last four quarters of your disposal, are you in that same growth rate, that might be up to what, $1.2 million for this quarter, is that --?

Gary Evans

Well this quarter again, when I was mentioning about weather, we were probably more affected in the first quarter by weather in Appalachian than we were in the fourth quarter, because of -- what happens is, you can't drive the trucks down the roads because of ice and snow, and the water gets hauled. So we were affected more by weather. I mean, when I look at our weekly numbers, I mean, we are continuing to hit records in the first quarter, for the spot records, because of this aberration with respect to weather.

I think the first quarter will undoubtedly show improvement, mainly because, you got no more losses and no more drain of capital occurring in these other divisions. The real fruit in the pudding will be in the second quarter, that will be a clean quarter without the discontinued operations all gone, and you will have much better weather and new wells on.

Unidentified Analyst

You mentioned spot records, so what is a good week now?

Kirk Trosclair

Now, we have busted the 80,000 barrel a week mark and pretty consistent, right around that 80,000 barrels.

Unidentified Analyst

Very good. Okay. Thank you.

Kirk Trosclair

Thank you.

Operator

Your next question comes from the line of Jim Collins with Portfolio Guru, LLC. Your line is open.

James Collins - Portfolio Guru, LLC

Thanks. Good morning guys. Last conference call, you mentioned an agreement with an institution for secondary financing, $30 million supposed to close by year end. Obviously that didn't happen. Are you still in negotiations with the same institution? Have there been extensions, is that still the type of financing that you're seeking? Thanks.

Gary Evans

Very good question, and we chose to go a different route. We felt like the cost that financing was too prohibitive. The handcuffs that we were going to be under, with respect to the loan covenants and the inability to repay the debt, there was huge prepayment penalties. We just felt like the financing was not conducive for our growth, and we felt like we were better off taking non-core assets and selling them and using that capital, rather than go and use this hybrid as an [indiscernible].

James Collins - Portfolio Guru, LLC

Okay. And just a follow-up, I mean, you have obviously in the Series C, the ability to not pay that for quite some time. Is that something that you've looked at as a way to free up additional capital to go sort of [indiscernible] on that, if you will?

Gary Evans

To me, not paying the dividends on the Series C is probably the last resort. We think we can continue to grow the company. There is a lot of other things going on behind the scenes, that will allow us to access capital, and not paying the dividends on the preferred. That's just really a fall back position, in my opinion it's not something we would look at as a business plan.

James Collins - Portfolio Guru, LLC

Okay. Thanks a lot Gary.

Gary Evans

Okay. Thanks.

Operator

Your next question comes from the line of Jim Curran with New Salem Management Investment. Your line is open.

James Curran - New Salem Management Investment

Hi. I applaud your efforts to focus your business in one area. I am curious, for starters, the MAG Tank business. Are you focusing that in the Marcellus-Utica as well?

Kirk Trosclair

That's where our initial deployment have taken base in the Marcellus and the Utica, but I wouldn't say we are going to just focus on the Appalachian region with the MAG Tank. The MAG tank can be utilized across the country, and we also think, maybe [indiscernible]. No, we are not just focusing on just the Appalachian region with MAG Tank deployments.

Gary Evans

But today, the place a MAG Tank is deployed into two locations in Ohio.

Kirk Trosclair

One can take inspiration there. We have deployed two tanks, but up until recently, we really didn't have any inventory in stock. So that's what kind of hindered us in the fourth quarter of 2013. We do have panels now that are coming out of the fab shops and going into inventory as we speak.

Gary Evans

Yeah. You probably saw that we did a specific financing with a group of investors, that would allow us to have the capital build the inventory, and like you need business, if you don't have the inventory, you can't make the sale, because the lead time to get in to start construction, is just too great. So that was our biggest hurdle, is that, we probably missed out on half a dozen sales last year, because we didn't have sufficient inventory. So we have rectified that problem, and now, we will be a position to deliver very rapidly when a customer requests it.

James Curran - New Salem Management Investment

I recall you talked about, may be you know, do one large tank a month, or something like that?

Gary Evans

It depends on, obviously the tank size can vary from small to large, and I think that's still a possibility, once we get the inventory completely constructed.

James Curran - New Salem Management Investment

Okay. So just in general, I mean, you are focusing your assets up there, and just curious if there is other things you can do to like save costs, focus -- you showed some, in your headquarters is in Texas, is there a need to move your headquarter closer to the region? What things are being done to kind of -- you streamline the business, say across --?

Gary Evans

Well we fired the CEO, that was a big reduction. So there is undoubtedly, we recognized that we needed to make some changes at the headquarters. We have done that, and we feel like we need to increase our revenues to grow into our G&A. So we are very closely watching G&A and looking for ways to continue to cut costs. It's not cheap being a public company these days, because of all the -- from the accounting to the internal controls to the SOX compliance, all of the things you have to be. We figure it's probably couple of million bucks a year. We think that right now, the time is to stay where we are. We own the building we are in, so we are not having to pay a lease, and we have the ability to grow here.

So our focus though, is undoubtedly Appalachian. We have some very exciting things that we can't talk about yet, that we hope to announce. It could double and quadruple our throughput volumes in that region. And all companies are looking for ways to cut costs, whether it be the barging idea that we have been discussing or pipelining. And so, we see that continuing to occur in this region, as more gathering systems are laid, there is a lot of talk of [indiscernible] lines in the same trench, for hauling water or pipelining water.

So the fact that we are by far the largest disposal company in the region, gives us a huge advantage, and we want to capitalize on that. So I think you will see, now that our focus is on Appalachian, some significant improvements, probably never been more excited about where we are going, than we are today, and we are in a region that just fortunately, our wells are right in the heart of the basin, not that they ruled out some outage, it just happened that the basin moved right to us, and so were there. And the fact that our record is so good, with respect to safety, we spent enough capital to make sure that the disposal facilities are top notch, and nobody wants to take their water anywhere else, because we do have the Class A facilities in the states of West Virginia and Ohio come to us, when there is a problem, because they know that we run our business right. So by taking that capital and spending that properly from day one and having the kind of facilities we have implemented in operation today, gives us a huge advantage over our competition.

James Curran - New Salem Management Investment

Okay. If I could just ask quickly, you mentioned a significant part of payment for the wells you sold and its notes receivable. So what are the terms on that, as far as being able to turn them into cash? And then just in general, can you talk about, how far are you from being free cash flow positive, where you can, to some degree, still fund your growth?

Kirk Trosclair

We did report obviously positive EBITDA last year, even after all the issues with South Texas and Oklahoma. I think, when we look at our monthly financials now, we are right at cash flow positive, servicing everything. So it didn't take much for that to snowball and catapult in some pretty big numbers. So we are covering our nuts and I think the numbers will reflect it as the year progresses.

James Curran - New Salem Management Investment

Okay, great. And then on the notes, I figure its $4 million, $5 million of notes receivable, what are the terms of that?

Gary Evans

Well what Kirk was saying earlier is, one of the sales was supposed to occur by mid-April. One of those larger notes will be paid, in conjunction with that sale.

James Curran - New Salem Management Investment

I see.

Gary Evans

In other words, that note will go away.

James Curran - New Salem Management Investment

All right. Turns to cash. All right. Thanks very much.

Gary Evans

Thank you.

Operator

(Operator Instructions). Your next question comes from the line of Gerard Sweeney with Boenning & Scattergood. Your line is open.

Gerard Sweeney - Boenning & Scattergood

Good morning guys. Can you try to may be give us a breakout for the fourth quarter disposal transportations and storage? Understanding that, I know, there were some weather impacts, but just to get a standalone of how those -- each of those segments did in the quarter?

Gary Evans

Well as I mentioned, quarter disposal was a record 894,000 barrels, and then with respect to the trucking, we have been running --

Kirk Trosclair

97%.

Gary Evans

97%, I was going to say, right at 100% of our availability.

Kirk Trosclair

We broke the record again last year, with trucking hours in Appalachian with over 60,000 hours.

Gary Evans

And so, we are probably one of the largest users of third party trucking in Appalachian. We made a decision not to have more than about half of our trucking needs with our own fleet, just because we see significant competition coming with our barging and pipelining processes, and don't want to be too truck heavy. But with our own trucks, as we actually moved some of the South Texas trucks to Appalachian. As soon as we move up there, obviously displays a third party. So there is no reason we shouldn't continue to run, right at 100% of capacity with our trucking.

Gerard Sweeney - Boenning & Scattergood

Okay. And then, when you said you wanted to add disposal wells, one every month, one to two months, any idea when we can expect the first one to be up and running. I guess you said there was one that already had been --

Gary Evans

We just put one on in January, and it kind of went live early February, and then we have another one near this one, that we are finishing up the permitting, and that should go on live, next 30 days.

Kirk Trosclair

And then there is another one coming right behind it. So the agreement that we had down there in Southern Ohio, is actually going to be a two well package. So you will have one per month come out over the next few months. Just at that facility.

Gary Evans

It's important to note, that facility, we designed it, where all the -- storage equipment and everything is at one location and the water gets pipelined to these various wells, and that happens to be a facility, where we have barging capability. So the goal here, with that particular project, is to have capacity approaching what, 8,000 barrels a day, and then you'd be able to start barging into that location and pipelining it to these wells. So you basically eliminate trucking 100%.

Gerard Sweeney - Boenning & Scattergood

And speaking of barging, I know you had some facilities leased, and you're waiting for the Coastguard. But how much barging can you do without that $30 million of growth CapEx, because you said, a good portion of that was going to be focused on that?

Gary Evans

We can --

Kirk Trosclair

Some of the terminals are leased facilities, so that some of the terminals that are in place further north are set up and ready to go. So it's really not a huge capital influx to get those projects online. The main portion of our capital spend will be at the Southernmost portion down in Ravenswood, Ohio, which is the facility where we just mentioned, will be adding new wells, and will be our largest facility. That's where the majority of the capital comes in. Yeah, $1.5 million.

Gary Evans

$1.5 million, so it's not like it’s a huge number. And that facility, we don't have the terminal set up for the Dolphin. And that would probably be one of the first things that we try to do, is get that going, because we can already pick up water in the Northern part of the rivers. We just have no place to displace it in the southern part, and that's why we are putting these new wells in, so we will be ready for that.

Gerard Sweeney - Boenning & Scattergood

Okay got it. That's helpful. That's it from my end. Thank you.

Gary Evans

Thank you.

Operator

Your next question comes from the line of Jim Curran with New Salem Management Investment. Your line is open.

James Curran - New Salem Management Investment

At the last call, just as mentioned $30 million of CapEx, I guess I'd never heard you say, so I wanted to confirm it. Is that a number you put out there, that you're planning on $30 million CapEx this year, can you explain it?

Gary Evans

That's a wishful CapEx. The beauty of not having any money is, you get really efficient the way you things. We believe that, we can begin barging just with this one project that we have mentioned, that needs to be implemented in the Southern part of our play. And the $30 million that's kind of a wish list. I think in reality, if we don't raise any outside capital this year, our CapEx is probably going to be closer to $10 million, and I think we can still grow our volumes, a solid 25% to 35%.

James Curran - New Salem Management Investment

Okay. And your barge terminals, what kind of assets do you have kind of tied up that aren't being utilized right now, because you're still waiting for that --?

Kirk Trosclair

The only facilities that we have on that side, is a terminal facility that we bought in Wheeling, West Virginia and spend a little under $0.75 million on the facility. We have not started the construction yet, because we are waiting on the Coastguard permit. The only other facility we have tied up, would be our New Matamoras facility, which is a leased facility. I mean New Matamoras, Ohio, which we are using as a transloading terminal. And if we get the okay to barge, we could actually take barges to that New Matamoras, Ohio facility right now, and then truck down to our Racing facility to get to ultimate disposal. But that's not the most efficient; the most efficient way is to set up the temporary terminal down in Ravenswood, in our Southern facility and pipe it directly to the injection wells, until we actually build the permanent facility.

Gary Evans

And our third is on our letter of intent, we haven't closed it yet, but it’s a huge facility further north, right?

Kirk Trosclair

Just a little north.

Gary Evans

Just further north, and then to our fourth would be Ravenswood. So right now, two, that we already have, that have dolphins and have terminal facilities tanks. The third one is in Ravenswood, where we mentioned we have put in our new wells, and we have a fourth one, which we just signed a letter of intent on, it's an existing facility that would go operational immediately.

Kirk Trosclair

But the other facilities that we have on the river, which make up for all of our things now at this point, fixed -- is the rest of the remaining of them are leased facilities that have things on premises and could start terminaling operations immediately.

James Curran - New Salem Management Investment

When you say leased, are you currently paying lease on those? Are those subject to doing business?

Kirk Trosclair

Subject to doing business.

Gary Evans

We structured the leases, so we don't have to pay until we start using the facilities.

James Curran - New Salem Management Investment

Okay. On your most recent presentation, I am looking on the map, barging terminals. It shows eight white circles, surrounded by reds. I mean, you just mentioned, I think six, so I guess I am confused by that.

Kirk Trosclair

Additional to the other two that are existing now. We have our -- operational mail.

Gary Evans

Yeah. Some of these other terminals you see on that slide, relate to joint ventures with other companies that have approached us, that are in the condensate and NGL business, where they have existing terminals and would like to team up with us, because they have no other way of handling water.

James Curran - New Salem Management Investment

So the best perspective is then, does that require much capital to get those up and running?

Gary Evans

To get it running, it would just be -- we would then start taking water from those locations.

Kirk Trosclair

They are already running for the other products.

James Curran - New Salem Management Investment

I see. Okay. All right. Thanks.

Gary Evans

Operator, I think we have taken all the calls. Yeah, one more left? Oh Michael, you want to come back one more time?

Operator

Michael Hoffman from Wunderlich Securities. Your line is open.

Michael Hoffman - Wunderlich Securities

Yeah sorry, I had my phone muted. On the capital spending, what's the maintenance number for 2014?

Gary Evans

Gosh, its pretty low. Maybe $1 million.

Michael Hoffman - Wunderlich Securities

Okay. So if I understood the comment made, if you spend $9 million, you should be able to support, call it midpoint, 30% volume growth, and I am using $2.6 million as the basis. So that number could be up 30% in 2014 if you can invest $9 million?

Gary Evans

That's right.

Michael Hoffman - Wunderlich Securities

Okay, cool. Thanks.

Gary Evans

You got it. All right. Thank you, Michael. Operator, I think we are done. I would like to thank everybody for taking the time to listen to our call today. 2013 was definitely a year of transition and used to see better financial results, as we move into 2014 and concentrate only on Appalachian. Thank you and feel free to call either Melissa or Kirk, with any specific questions you may have that we didn't address today. Operator?

Operator

This concludes today's conference call. You may now disconnect.

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