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Factzplz

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  • Buy U.S. Silica Holdings Now For Explosive Potential Returns [View article]
    I have to believe the author meant as dry humor the statement, "...I really don't have much reason to think this business will have any future success." I am also quite shocked that so many comments show so little understanding of the frac sand industry, and why it has incredible upside potential.

    I own 4x more EMES than these my other holdings combined of SLCA and HLCP. I also have ABCAF the largest Canadian gravel producer awaiting permit for a frac sand mine, and ABHD a speculative water treatment company that filters out 99.9% of oil/gas from produced well water, so it can be reused.

    The correct type of sand, found primarily in Wisconsin, also in Minnesota, part of northern Illinois, and part of Texas, increases well production by 30-50%.

    A new pressure technique uses 4x the amount of sand.

    To answer the issue of what percentage of wells use sand, there are two approaches. At the Chesapeake Energy annual meeting in June, I asked the CEO if CHK was using the 4x method. The reply was it depends on the formation - some use no sand, and some use the 4x methodology, and everything in between.

    The best way to look at this issue is that the percentage of wells using sand depends on the availability of sand. If a driller cannot get sand, then his % of wells using it will be smaller. So if the number is 20% that is because, in general, that is all the sand that is available.

    Consider, currently EMES, SLCA, and HCLP are sold out for the next four (4) - and that includes the new mines coming online. New contracts are on a "Take or Pay" basis. Prices are being raised by 10%-20% (SLCA put thru a 20% price increase on non-fracking sand effective July 1).

    SLCA will double its capacity this year from 5 to 10 million tons
    EMES will quintuple its capacity from 2.5 to 12 million tons
    HCLP will increase capacity from 4.2 to 6.8 million tons by year end

    Contrary to a comment above, "I don't see how they can keep printing money like this without competition coming in." Well, competition is not going to happen for several reasons:
    1. Fracking sand is difficult to find as it is primarily in WI, plus MN, IL and TX
    2. It needs to be accessible to rail lines
    3. Permitting takes 2 years for local, county and state
    4. Construction takes another year
    5. Minnesota has a two year moratorium on new sand mining
    6. There are only 3 major players - EMES, SLCA, HCLP plus a few small operations
    7. Reliability of supply is critical - EMES has 4,500 railcars, and by mid-2015 will have 10,000 railcars - which smaller players cannot get the railcars, or afford them
    8. Quality of sand is also critical that it is sorted and dried properly

    Though I own SLCA and HCLP my focus is on Emerge, current price $119 – my yearend target $140 ($180 in one year)

    · The comment on the MLP being difficult for taxes is not really so, given all the MLPs that are available. But only HCLP and EMES are sand MLPs. I own EMES because the dividend in 2014 will be $5 – expected to be near $10 in 2015, and $16-$20 in 2016

    · EMES two-year price target? What will a stock paying a $16 dividend be worth? With a 6% yield the price will be $266

    · Unless America stops fracking, profits are predicable because all supply is presold for next four years – even with tripling its capacity

    · Acquisition news could push the stock up faster as profits will accelerate as EMES has four potential small mines to roll-up (which eliminates the two year permitting process), plus its venture capital partner is looking to make another acquisition.

    · Leading fracking sand producer in efficiency and largest profit margins because of the efficient operations

    · Fracking sand allows drillers to get up to 30-50% more oil per well for a nominal cost – so demand will not go away

    · EMES has the highest grade Northern White Sand which is premium priced

    · Sand is not reused – once shoved down an oil well it is there forever

    · EMES sold 2.5 million tons in 2013, will increase to 12 million ton run-rate by mid 2015 – a 5x increase in sales rate in 18 months - which may go higher if the acquisitions are made

    · 12 million tons annual capacity will make it the largest producer in North America

    · Completely sold out of all production to mid 2015 when 5th new mine coming online

    · In last seven months increased long-term contracts from 1 million tons to 8 million tons annually, with new contracts on hold until new mines operational

    · Number of railcars hauling sand was 2,800 at end of 2013, will increase to over 10,000+ railcars by mid 2015 (which would be a 400% profit increase)

    · Price increases of 10% is in effect, and all contracts have escalator clauses

    · Demand is increasing as new drilling technique uses 4x the amount of sand = 4x the demand

    · New mines are tough to find, tougher to find near railroad line, tougher to get city, county, state permits

    · EMES mines have a 25 year life

    · Drillers switching from other products to Northern White Sand (Carbo Ceramics, “CRR”, sells ceramic “sand”, stock has fallen from $156 to $103)

    · Do not hold more than 100 EMES shares in an IRA to avoid taxable IRA income, and when dividend exceeds $10, then sell half

    · Do you know of any other company that will have sales & profits grow 5x in 18 months? If so, please, Please, PLEASE let me know !!!

    Hope this helps.
    Aug 19 11:01 PM | Likes Like |Link to Comment
  • Is This The Summer Of 2007? (Video) [View article]
    Excuse me, but was there supposed to be a video link attached? I cannot find it. Thank you.
    Aug 18 10:01 AM | Likes Like |Link to Comment
  • Demand For Sand Offers 25%+ Total Return Potential [View article]
    Thanks for a good article, but I offer three "adjustments" as to why EMES has a bunch more upside than you mentioned...

    Difference in railcars: More cars = more sales = more profits

    You said, "...Emerge owns 4,700 rail cars with plans to increase to 6,400 within the next year. "
    But the CEO said, "But we’re going to need to be at 8,000 cars basically by spring of 2015 when this last plant comes on and then frankly if we move ahead with yet another plant that we’ve talked about in concept at least you can do the numbers we’re going to need over 10,000 cars when that point comes on.”

    Sales potential too conservative:

    You said, "...should result in 20% distribution growth through at least the end of 2015."
    The CEO said, "...be at right at 12 million tons of capacity which will make us certainly the leading we believe frac sand supplier in the industry.” With another follow on statement for profits as one mine is brought online by yearend, " and then there will be a marked improvement in tons and the bottom-line.”

    You did NOT mention another potential blockbuster advantage for EMES with acquisitons:

    From the call, What are they "excited" about?
    1) "...this is driving us to work closely with Insight Equity [which owned 7.2 million shares, roughly 30% of EMES stock] to look at the next expansion and we’re excited about that and moving forward in that direction..." and

    2) "...we’re mentioning the fifth plant in particular is because we think it has a high probability of success, in other words we think its past the point now where it’s going from unrealistic to realistic," and

    3) "...there are other opportunities that are at an earlier stage but the probability of them becoming real is increasing as the months go on and we’re hoping that we can add even more news about capacity expansions in the future.”
    Aug 11 09:06 AM | 4 Likes Like |Link to Comment
  • Chesapeake Energy Is Uncovering Billions From 3 Roaring Shale Plays [View article]
    Good article except the inaccurate rehash of too much debt comments.
    CHK does NOT have a scary level of too much debt that you toss out an undocumented scare, "Watch out for the debt levels..."


    What is there to watch out for?


    See Page 34 of the latest presentation:
    5% - Avg rate
    5.4 years - Avg maturity


    CHK is just 1 notch off of investment grade!
    If the rating agencies are on the verge of upgrading (with the recent debt reductions / repurchases / restructuring) why are you so alarmed?


    Debt is bad only if there are no assets to back it (credit card debt for a vacation vs. a mortgage for your home). CHK has 19,000 net sq. miles of leaseholds, and arguably the largest and best reserves.


    CHK just rolled out billions of debt by 5 years at a 2% lower rate. My guess is that with rates as low as they are today, it will try do the same, with the 2017 debts. And if it does not, so what, by 2017 - 3 years - it will have generated roughly $5 billion of free cash to repay it.


    Also, look at Devon (NYSE:http://bit.ly/sf7eaY). Devon was founded in 1950, nine years before McClendon was born. It has 28% debt to capital, a fraction of the oil/gas reserves, and a net worth just 10% greater.


    There are dozens of oil companies with far higher debt levels and far less reserves, and even less potential. Why are you not writing about them? They are scary.


    When CHK is put into proper perspective with the industry, it is a FANTASTIC company, and why it is one of my largest positions (EMES is larger), and I sleep quite well knowing that Lawler is executing McClendon's vision.
    Aug 10 08:38 AM | 2 Likes Like |Link to Comment
  • Chesapeake Energy Finally Attains Its $10 Billion Target - This Is A Positive Milestone [View article]
    A so-so recap, but interesting.

    Two corrections:
    1) you omitted three 000s after the acreage
    2) CHK was nowhere near "came close to going bankrupt" - if you have been involved with CHK for 10 years you would have an understanding of the history, and that the current management is doing exactly what McClendon's stated plan was over a year before his departure.

    Lawler is doing an excellent job in executing McClendon's plan, but he could never accomplish this if the assets had not been discovered and held, giving CHK arguably the best, and largest, reserves of any U.S. driller
    Aug 7 08:55 AM | 1 Like Like |Link to Comment
  • The Day I Sold Everything [View article]
    Somebody else said Credit Defult Swap prices were rising in Europe.

    Yet, every chart I find shows CDS flat to down.

    What is/are your source/s?

    Thanks in advance.
    Jul 26 09:52 PM | Likes Like |Link to Comment
  • Emerge Energy Offers 50% Upside In 1 Year [View article]
    NO for retirement accounts - you are only allowed $1,000 of MLP "dividends" or your IRA/ 401K becomes taxable due to UBTI - Unrelated Business Taxable Income.

    IRS Publication 598 covers this.

    This becomes an extra expense and hassle for your income tax preparer to deal with this, as a separate Form 990-T must be filed.
    Jul 24 12:13 AM | Likes Like |Link to Comment
  • Emerge Energy Offers 50% Upside In 1 Year [View article]
    Thank you Todd for the excellent analysis.
    Since you are an EXTREMELY cautious investor, who would rather Under Promise and Over Deliver (UPOD), your 50% upside is, to me, very conservative.

    Actually, there are all sorts of "opinions" here, dilution from the secondary (totally wrong), cost of new mines, over priced, supposed high cost of red tape to open mines (I doubt it), etc. - perhaps valid concerns - but all of which make me the most bullish investor - and EMES is by far my largest holding.

    Sit back and calculate/ strategize/ dream with me...
    HCLP with its recent dividend increase (annualized) to $2.30 has a 3.4% yield
    EMES last quarter dividend was $1.13 (annualized) to $4.52 - divided by 3.4% = $133
    BUT - I expect EMES will have a BIG dividend increase this quarter...

    Railcar Predictor
    2,800 cars @ 12-31-13
    4,300 cars @ 3-31-14 (assume brutal winter added capacity at qtr. end)
    5,800 cars @ 6-30-14 (per 14Q1 conference call)

    5,050 cars average (assume 1,500 Q2 cars added straight line thru qtr.)
    = 80% more railcars than 13Q4
    Unless Union Pacific (NYSE:UNP) is just parking these cars and not hauling sand (doubtful), then...

    $1.00 13Q4 dividend
    $1.13 14Q1 dividend (after brutal winter with car constraints)

    14Q2 sales should be 80% higher
    Dividend could be 80% higher
    But factoring in other comments of new capacity build, permitting costs, possible hit from fuel division, etc., knock off 30%, leaving JUST a 50% dividend increase - to $1.50 - $6 annualized.

    But wait! There's more!
    On the conference call...there will be 8,000 cars in 15Q1 - and with the capacity growing with the new mines, and price increases with Take-or-Pay contracts, 2015 sales should be 3x 2013's (285% increase in cars + price increases), so the dividend should be 3x higher, too.

    $1.00 13Q4 dividend (annualized) = $4 x 3 = $12 run-rate by the end of 2015.

    As Todd stated, EMES is the most cost efficient. EMES has a 50% higher Operating Profit margin than SLCA and HCLP, especially with the design of its processing facilities that allowed no down time this past brutal winter (but railcar availability hindered higher sales).

    Plus EMES will include:
    1. the new dedicated rail facility opened in April in Alberta (see April press release)

    2. the new layered drilling technique in the Bakken whereby a well is drilled, then another below that, and another, and another - they are getting 32 wells per pad. Which of course means more sand.

    3. the new industry wide technique being adopted for pressure pumping sand uses 4x the sand as previously, so more demand industry wide

    4. the fuel sector (I believe, hope, pray) will be made more profitable with the new manager, who I expect has the same profit motivation as the CEO

    5. EMES mines have a 25 year life, EMES has the highest return on equity at 44% (14Q1 annualize), capacity is doubling by year end (supporting sales projections), etc.

    6. Union Pacific stock is pushing higher, and the CEO is bullish on fracking...

    Advance to 5:20 minute mark
    http://cnb.cx/1yHk0J1

    7. ABCAF is my sand speculation that EMES will buy it once ABCAF gets its permit, as it is just 200 miles from EMES' rail terminal in Alberta, and on the same rail line. This would allow EMES to use ABCAF for its Alberta customers and redirect sand to the Bakken and elsewhere.

    8. I also have one other fracking speculative play, ABHD, which can remove 99.99% of oil & gas from "fracking water" and is working with oil companies to adopt its technology (it also is working on municipal water cleanup, with a recent $12 million contract)

    http://bit.ly/1tABd38

    SUMMARY:

    EMES will double in the next 12 months, IF the dividend (i.e., earnings) goes to $12+.

    (Hey, my crystal ball is black, has 3 holes, and says Brunswick - so I could be wrong. I gave you FACTS to make your own decision, that c/should prove true, but as I said above, "...dream with me..."
    Jul 23 12:58 PM | 2 Likes Like |Link to Comment
  • Hi-Crush Partners LP Is To Fracking As Knife Is To Chef [View article]
    I own EMES (more than these others, combined) HLCP, SLCA, ABCAF, ABHD (my 100:1 spec play on fracking water recycling)...


    This should be a definitive week for EMES, as it will announce its dividend for the quarter, which = pre-announcing its earnings as it pays out 100% of earnings.


    The 13Q4 dividend = $1, the 14Q1 = $1.13, and my model predicts $1.53 for this quarter. Of course my crystal ball has three holes in it and says Brunswick, but it might be right.


    Given the recent secondary of insider selling, the institutional buyers of $450 million of EMES have to have gotten the "wink" that the dividend would be good this quarter - especially based on the 14Q1 earnings conference call - one of the most upbeat I ever heard. Of course, since there is a refinery portion to EMES' earnings, though relatively small, it could have some effect.


    Yet, the question overhanging the market is why did insiders sell now, rather than in a year from now when EMES should be at least double.


    I would buy the December 90 or 95 Calls, deep in the money with little premium, and if my modeling is correct, (and watching the option buying) there could be a $10-$15 move up this week, especially if EMES hits my best-case, upper range of a $2 dividend for this quarter.


    After all, what other company has the potential to triple its sales/profits in two years from 2013 to 2015?
    Jul 19 10:30 AM | 2 Likes Like |Link to Comment
  • Halozyme Attracting Attention With Upcoming Adcom And Potential Blockbuster Pancreatic Cancer Treatment [View article]
    Another comprehensive artlicle - Thank you.
    Jul 8 01:00 PM | 3 Likes Like |Link to Comment
  • Antares: Uncertainty Creates An Exceptional Buying Opportunity [View article]
    Thank you for an excellent in depth analysis.

    Where it all shakes out will take time, but my guess is that the CEO resignation will be a good thing, and that sales and initiatives will accelerate. So until some real sales and profit news happens the stock will languish.



    Jul 8 11:59 AM | Likes Like |Link to Comment
  • New research links surge in Oklahoma earthquakes to drilling activity [View news story]
    I own ABHD that is introducing its Smart Sponge for removing oil, gas, chemicals from fracking water, so clean it is considered "swimmable and fishable." It has a flow thru water transfer rate equivalent to a fire hose, but the oil is locked in and cannot be squeezed out. The used sponge can be burned with 320# producing a a MW of electricity.

    The water is then clean enough to reuse. The same process is used for produced water - no more waste water injection
    Jul 4 01:42 AM | Likes Like |Link to Comment
  • Buy Emerge Energy on price dip as fundamentals intact, Wunderlich says [View news story]
    EMES profit will double this year, and triple from 2013 in 2015, with the dividend going to $8 by year end, and $12-$14 in 2015.

    If you want to assume a 6% yield on EMES, then $12 / 6% = $200

    THAT is why EMES is a bargain at today's price.

    See my previous posts for the story, or check the 10Qs of the three players and conference calls yourself.
    Jul 1 03:30 PM | 2 Likes Like |Link to Comment
  • Hi-Crush Partners LP Is To Fracking As Knife Is To Chef [View article]
    The 10Q breaks out the sand portion of EMES.
    There are some "decisions" on how to pull out the info from all the companies as disclosures are not exactly the same, but doing the best I could, some figures:

    Sand Operating Profit Margin EMES 30%, HCLP 21%, SLCA 16% (but more difficult to decipher, as its other sand operations are not totally broken out).

    To SLCA's credit it put through a 20% price increase on May 1, and another 10% on certain sands July 15, which should boost its profits.)

    Debt/Equity: EMES 65%, HCLP 85%, SLCA 112%

    14Q1 ROE (annualized) EMES 44%, HCLP 39%, SLCA 24%

    Listen to the EMES conference call. In spite of Wisconsin's second coldest winter there were NO lost days of production. At year end the number of rail cars hauling was 2,800, will be 5,800 by June 30 (double 12-31-13), and 8,000 by early 2015. This means that sales will double in the second half, and with almost 3x the rail cars + price increases, sales should triple in 2015.

    Of course this means that EMES dividend will increase from $4 to $12 in 2015.

    I own EMES, plus HLCP, SLCA, ABCAF the Canadian "spec" sand play (awaiting permit for frac sand operations), and ABHD a spec on fracking water recycling.
    Jun 25 12:46 AM | 4 Likes Like |Link to Comment
  • Hi-Crush Partners in new frac sand purchase deal with Halliburton [View news story]
    My "friends & family" own a HUGE amount of EMES, plus SLCA, HCLP, and ABCAF (and ABHD for water treatment/recycling of fracking water).

    In my detailed analysis of the three majors, the following items are a dozen of my reasons to own the sand companies:

    1. The market demand is so large for sand that the industry will be "rationing" sand to the highest bidders on "take or pay" contracts for at least three to four more years.

    2. New supply cannot come online quickly as the discovery, permitting, buildout, and rail siding takes at least two to three years.

    3. HCLP has the highest dividend, now, and has good growth prospects

    4. SLCA has a larger float and may attract more institutional investors, as SLCA on May 1 raised its silica sand price 20%.

    5. EMES is by far my favorite as its 2014 profits will double, and 2015 will triple from the 2013 level, and by 2015 the dividend will be near $12, which means the stock price will be 2x to 3x higher.

    6. EMES has the highest Operating Profit margin and the most efficient operations

    7. The new fracking techniques demand 4x more sand, so whatever drillers thought they needed, as they adopt the new methodology to increase yields, they will need 4x more sand.

    8. Reports out of the Bakken are about the new "layered" fracking where wells are drilled 4 deep (e.g., 1 mile down, 1.5 miles down, 2 miles, etc.) which means 32 wells from one pad = MORE TRAINLOADS OF SAND.

    9. Union Pacific has very bullish comments on the sand business

    Advance to 5:20 minute mark...
    http://cnb.cx/1yHk0J1

    10. U.S. oil production is growing as more pipelines are built/connected (30,000+ miles in the last 6 years) so more wells can be drilled, increasing sand demand.

    11. Chesapeake Energy at the annual meeting said it is adopting the 4x use of sand in formations where it will enhance yields.

    12. No other industry has the growth, just 3 suppliers, inventory shortage/constrained, with pricing power, with profit growth to accelerate for two to three years - amazingly as it is in the sand business.
    Jun 23 09:45 PM | 2 Likes Like |Link to Comment
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