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  • Heckmann Corp. (HEK) Is “One To Watch” 0 comments
    Feb 9, 2012 1:59 PM | about stocks: NES

    Heckmann Corp. was created to act as a holding company, providing a lightweight, yet powerful, framework for growing a network of services-based companies organized to provide total water solutions for oil and gas (especially shale) operators. HEK's wholly-owned Heckmann Water Resources Corp. (HWR) company handles all operations and provides a full-spectrum water services package, ranging from disposal and treatment to fluid handling, trucking, pipeline transport facilities, and turnkey water infrastructure.

    Being able to offer operators a full service water program for their hydraulic fracturing needs has cemented the company's reputation within the industry and the Jan 30, 2010 completion of a 100k barrel/day, 50-mile water disposal pipeline in the Haynesville Shale really put HEK on the map. The subsequent joint venture (Feb 9, 2010) with Energy Transfer, owner/operator of a diverse portfolio of energy assets (from gas gathering/treatment/processing to marketing and transport), to handle water gathering and treatment infrastructure needs in support of complex Marcellus and Haynesville operations has placed Heckmann at the nexus of a key hydrocarbon artery.

    The HWR Haynesville fresh water pipeline is ideally positioned for access to both the Red and Sabine Rivers, with multiple strategically located reservoirs along the line to meet high-volume demands during peak frac intervals. Multiple sources, combined with the pipeline, and supplemented by HWR's comprehensive ability to utilize transmission lines and trucks, constitutes a cost-effective yet robust solution. HWR customers in the Haynesville area benefit greatly from the enhanced total water solutions package the pipeline enables and 2012 is expected to see the reinforcing of Haynesville infrastructure.

    Extension/expansion of the adjacent produced water pipeline in 2012 will extend the service envelope further to encompass full service options for fresh water, storage, temporary piping, and produced water transfer, through to disposal/recycle/treatment. Because HEK owns a fleet of several hundred semis and frack tanks, along with the temporary, portable piping required to handle rapid deployment in unconventional areas, the full service package the company offers is really attractive to operators.

    The average Haynesville Shale frac well takes around 6.3M gallons of fresh water and requires that capacity to handle flowback in the initial frac phase of around 20% (with the majority of the remainder returning as saltwater throughout the 30-yr. avg. life-span of the well). The complex and challenging water needs of this environment really require a total water solutions provider like HWR, who can take on all aspects and even provide site preparation, water pit excavation, and remediation services.

    Globally, surging demand for energy, especially in emerging markets, has generated incredible requirements and natural gas has all the properties necessary to fill that role. The technology exists to adapt natural gas for a wide variety of applications and utility-scale electric generation continues to improve with each passing year.

    HEK stock has recently suffered due to flagging natural gas prices, but it's both an oil and gas play, and the energy market is only going to heat up and domestic infrastructure is a sleeping giant. Q3 results for HEK really showed the growth of the company, which has subsumed the undercapitalized mom-and-pop outfits in areas of operation:

    • Revenue rose to a record $47.8M (compared to only $1.9M in Q3 2010)
    • Net Income was reported at $2.6M or earnings of $0.02/share (compared to a net loss of $2.2M in Q3 2010, or loss of $0.02 per share)

    There was also a huge increase in employees from only around 30 in Q3 2010 to some 1,050 domestic employees. The company is continuing to position for amazing growth and productivity as the domestic shale oil and gas boom continues to drive demand for supply and disposal of water used in fracking.

    Collectively, the management team has over a century of experience in the industry, with each individual having multiple decades in water services. Customers know that HEK is all about the water and all about delivering solutions that help the client prosper. The oil and gas sector continues to become increasingly dominated by large independents and major operators who want a professional, full service, HSE-driven integrated solutions provider like HEK and the company is uniquely positioned to capitalize on what is the preeminent issue for shale operators.

    Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html

    Stocks: NES
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