Solid Management Team Leads Nuverra Environmental Solutions In The Right Direction
Long/Short Equity, Portfolio Strategy
Seeking Alpha Analyst Since 2012
If the world is serious about dealing with energy concerns, then there is potential for companies which provide environmental solutions. Nuverra Environmental Solutions, Inc. (NYSE: NES) is one of the companies in the environmental enhancement business that seems to have a solid business model. As such, it's worthwhile for investors to consider the company.
Nuverra is involved in providing full-cycle environmental solutions to customers in energy and industrial end-markets. The company has about 2,700 full-time employees. Nuverra's stock has suffered this year, losing over 55 percent of its total value to date. The main reason for the loss of value is that the company's earnings have broadly missed estimates this year. This insinuates that Wall Street isn't confident that this company can be profitable. But, there is something about Nuverra that gives hope that it will eventually become profitable.
It does not matter how large the potential of a business if the people at the helm aren't capable of leading it in the right direction. As for Nuverra, the management team is capable of leading the company to success based on what they've achieved in the past. A merger between Heckmann Corporation (owned by Richard Heckmann) and Power Fuel (owned by Mark Johnsrud) is what gave birth to Nuverra. After the merger, Johnsrud became the CEO.
Johnsrud acquired Power Fuel in 2005 and within four years he turned the company into a leading water service company in Bakken. Heckmann, before founding Heckmann Corporation, built and sold US Filter. Exceptional among Heckmann's many talents is his ability to spot good companies and acquire them. For the record, he acquired in excess of 250 water companies while at US Filter.
Moreover, the addition of R.D. Nelson to Nuverra's Board of Directors should make it easier for Nuverra to expand. R.D. Nelson had worked at Exxon Mobil (NYSE: XOM) for 32 years before retiring in 2009. At retirement, he was the Vice President of Exxon Mobil based in Washington, D.C., a position he held for about six years. Prior to that time, he served in various capacities in the UK and Saudi Arabia.
A section in the press release from Exxon about his retirement reads, "At a time of unprecedented public interest in energy issues, Dan Nelson represented Exxon Mobil with distinction in sharing our perspectives with Congress, the executive branch and representatives of the business and policy communities on options to address the energy challenges our nation faces."
That serves as confirmation that Mr. Nelson understands the energy challenges of the world and ways to tackle them. In addition, Mr. Nelson's experience in the oil industry means that he would know where business opportunities lurk in the industry that Nuverra can harness.
The company might be struggling to improve its bottom line at the moment, but as we've seen the company is in the hands of trusted professionals. In addition, the company's partnership with Halliburton (NYSE: HAL) should make it easy for the company to expand into the business of water recycling; a business that's expected to have a market value that runs into billions of dollar by 2017.
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