2 Junior Oil & Gas Plays Worth A Look In The Wake Of Recent Developments

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Includes: BAS, NES
by: Heather Ingrassia

Summary

Recent developments at both Nuverra and Basic Energy could impact long-term revenue growth.

Nuverra's long-term revenue growth will be impacted by the company's ability to capitalize on the growing demand for water-related solutions, since newer technologies are using five times more water.

Basic Energy's long-term revenue growth will be impacted by the company's ability to continue to demonstrate improved performance in such areas as total drilling days and drilling rig utilization.

As the growing demand for oil & gas support-based solutions continues to rise, recent developments at two of the lesser-known junior names should certainly catch the attention of investors especially since these development have the potential to impact long-term revenues.

#1 - Nuverra Environmental Solutions (NYSEMKT:NES) - Based in Scottsdale, Arizona, and possessing a market cap of $380 million, Nuverra Environmental Solutions provides full-cycle environmental solutions to customers focused on the development and ongoing production of oil and natural gas from shale formations here in the United States. The company, in my opinion, is also well-positioned to benefit from the growing demand for water-related solutions.

By noting the recent increase in both drilling and completion efficiencies, as well as the fact that newer completion technologies are using nearly five times the amount of water versus some of the previous technologies, Nuverra finds itself in a position to capitalize on this growing demand.

Since the company specializes in full-cycle environmental solutions, I strongly believe both potential investors and existing shareholders could see the company's revenues increase by a minimum of at least 5%-to-8% over the next 12-18 months as the result of the growing demand for such solutions.

#2 - Basic Energy Services (NYSE:BAS) - Based in Fort Worth, Texas, and possessing a market cap of $967 million, Basic Energy Services provides a range of services to America's oil and gas producers. Its services support the entire life cycle of a well - from drilling to production and finally - abandonment and in the wake of its recently announced operating data for August 2014, I think there are a number of variables that could help enhance the company's long-term growth.

Included in the company's most recent operations update were an 11.1% increase in the number of drilling days (from 279 to 310) over the last 12 months, an 8% increase in its drilling rig utilization (from 75% to 83%), and a 5.4% increase in the number of fluid service trucks in operation (from 970 to 1022).

Since the company specializes in servicing the entire life cycle of a well, its recent operations update not only indicates that the company continues to benefit from the growing demand for such services, but is also well-positioned to see a considerable increase in its revenues over the next several years.

Conclusion

For those of you who may be considering a position in either Nuverra or Basic Energy I'd continue keep an eye on the growing demand for such things as water-related solutions in the case of Nuverra and rig-related solutions in the case of Basic Energy.

If either of these companies can successfully capitalize on the growing demand for their respected solutions, there's a very good chance that not only will each company's share price rise but their long-term revenue growth could also be positively impacted.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.