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Active Board http://www.investorvillage.com/smbd.asp?mb=193&pt=m

Putin Frees Russian Gas Chilled Amid Permafrost: Energy Markets

http://www.bloomberg.com/news/2013-12-06/putin-frees-russian-gas-chilled-amid-permafrost-energy-markets.html?cmpid=yhoo

Liquefied natural gas from Russia’s Yamal plant, built on pylons driven into northern Siberia’s permafrost, will reach Europe just as global output is predicted to expand by a record amount.
President Vladimir Putin ended state-owned OAO Gazprom’s monopoly on LNG exports on Dec. 1, allowing OAO Novatek (NVTK), built by Russian billionaire Leonid Mikhelson, to sell fuel from Yamal. The plant will help boost annual global capacity in 2018 by an unprecedented 75 million metric tons, a quarter of the current level, according to Energy Aspects Ltd., a London-based consultant.
While the Yamal project, valued by the company at $20 billion, will have costs that are about a third of those at competing Australian plants, it will have to ship to Asian markets via northwest Europe for eight months of the year when the sea route freezes over. LNG prices are close to a record as buyers in northeast Asia and South America compete for cargoes, spurring new projects globally that will also add to supply in the next several years.
“It isn’t the best time to start new projects,” said Valery Nesterov, an analyst at Sberbank Investment Research in Moscow who has four decades of experience in oil and gas. “Russia is a bit late and now we have to take full advantage of the strong points of our projects, such as low upstream costs at Yamal LNG.”
Asian Prices
LNG for delivery to northeast Asia climbed 10 percent this year to $19 a million British thermal units, according to World Gas Intelligence assessments of cargoes for delivery in four to eight weeks. Prices in southwest Europe gained 24 percent to $13.80, while U.S. natural-gas futures rose 19 percent to $3.98 on the New York Mercantile Exchange.
Global LNG capacity will reach 468 million tons in 2018, from 295 million this year, according to Energy Aspects. That includes the expansion of output from Russia and excludes projects in East Africa and Cyprus that will probably be delayed into the next decade, said Trevor Sikorski, the consultant’s head of natural gas, coal and carbon.
There will be “enough room for everyone” in the LNG market and those with more competitive costs will benefit, Denis Solovev, a Novatek spokesman based in Moscow, said today by e-mail, citing earlier remarks by Mikhelson.
Putin pushed for the gas export law to increase the clout of Russia in global LNG markets. The nation is the world’s biggest gas exporter. It accounts for about 5 percent of LNG supply and 30 percent of pipeline deliveries, according to data from BP Plc.
Spanish Demand
Yamal LNG, the Novatek-led venture whose other partners are Total SA (FP) and China National Petroleum Corp., signed in October a contract to sell 2.5 million tons a year from the 16.5 million-ton project to Gas Natural SDG SA (GAS), which will meet 10 percent of Spain’s annual gas demand. The 25-year deal is the first for direct LNG supplies from Russia to Europe.
Novatek plans to build three units of 5.5 million tons each on the Yamal peninsula, where temperatures drop to minus 50 degrees Celsius (minus 58 degrees Fahrenheit) in winter, according to Gazprom. That compares with Chevron Corp.’s, 15.6 million-ton Gorgon project, a three-unit project and the largest resource development in Australia’s history. It will ship its first cargo in 2015.
Gorgon is the cheapest of seven Australian LNG projects, with upstream capital expenditure and pipeline costs of $1 billion per billion cubic meters of gas produced, compared with Yamal’s $300 million, according to Sberbank.
Finding Buyers
“As long as Yamal LNG is to supply gas at competitive pricing conditions relative to the current market they will find buyers in Europe willing to buy their LNG,” said Massimo Di-Odoardo, a gas and power analyst at Wood Mackenzie Ltd. in London. “So far it’s been Gas Natural, but there might be some other buyers lined up to bring gas into northwest Europe.”
Yamal LNG is the only project under construction to pump onshore conventional resources and will require $400 million per million tons of capacity in upstream and pipeline spending, compared with as much as $2.3 billion for Australia’s Ichthys project or $1.5 billion for Sakhalin-2, Russia’s only operational LNG plant, Sberbank said.
Yamal expects to complete an international airport capable of accepting Boeing Co. 737 aircraft by June, Gabriel Brecque, director of marketing and shipping, said at a conference in Paris last month. The nearest airport is currently a three-hour helicopter ride away.
Six Icebreakers
The plant will be built on 4,800 pylons, raising it 1.5 meters (5 feet) off the 500 meters of permafrost beneath and protecting it from soil movements during summer thaws. Two anti-ice barriers and six icebreakers will keep access to the Sabetta seaport free of ice.
LNG sales into Europe slumped 24 percent last year, according to BP. Supplies will again reach the peak seen in 2010-2011 by around 2018, Graeme Wildgoose, a natural gas and LNG consultant at Poten & Partners Inc., said Oct. 30 at a conference in Amsterdam.
Demand increased in Japan and South Korea, the two biggest LNG importers, as the former shut nuclear reactors after the March 2011 Fukushima disaster and the latter halted units after discovering the facilities were using components with fake quality warranties. Latin American countries including Brazil bought more for power generation after the worst drought in 50 years depleted hydro reservoirs.
Europe offers more profitable terms for contracting and the transport cost is also a factor, Mikhelson, the company’s chief executive officer, said last year.
Gunvor Group
He built Novatek together with fellow billionaire Gennady Timchenko, a co-founder of Gunvor Group Ltd. They own about 48 percent of the Yamalo Nenets, Siberia-based company. Novatek pumps more oil and gas than BG Group Plc (BG/) and aims to double gas production to about 113 billion cubic meters a year by 2020, according to a strategy presentation in 2011. That would be enough to supply France and Germany.
Yamal will use Europe to transfer its LNG from November through June, when the so-called Northern Sea Route to Asia becomes inaccessible even for the project’s 16 specially commissioned ice-breaking tankers.
Europe buys most of its gas under long-term contracts linked to the price of Brent crude, which is more expensive than buying the fuel on traded markets such as the U.K.’s National Balancing Point.
Border Gas
Russian gas at the German border cost an average of $11.27 a million Btu in the first 10 months of this year, compared with $10.33 on the NBP, according to data from the World Bank and ICE Futures Europe.
Novatek will base its European supply contracts on a combination of NBP and Brent pricing, Chief Financial Officer Mark Gyetvay said Nov. 8 on a conference call.
The company should use swaps rather than physical transshipments, keeping the Yamal LNG cargoes in Europe and meeting Asian commitments by sourcing cargoes nearer that region, according to Julian Lee, an analyst at the Centre for Global Energy Studies in London.
“LNG portfolio players are usually practical people,” Frederic Deybach, vice president for prospection at GDF Suez SA’s LNG unit, said at a conference in London in September. “Maybe at the end of the day some of the LNG will not end up where it was contracted and stop on the way where it’s actually maximizing benefit for everyone.”

Here's 1 Fracking Issue Being Removed From the Equation

http://www.fool.com/investing/general/2013/11/22/heres-1-fracking-issue-being-removed-from-the-equa.aspx

Can Nuverra Actually Capture this Critical Market?

http://www.fool.com/investing/general/2013/11/21/can-nuverra-actually-capture-this-critical-market.aspx

Porscha I saw the post you justifiably removed by fredugsi

fredugsi was insulting and belligerent to a fellow poster
simply because that poster was Long NES

Thanks for your monitoring of the situation

Nuverra: On the Cusp of a Rebound?

http://www.fool.com/investing/general/2013/11/12/nuverra-delusional-or-on-the-cusp-of-a-rebound.aspx

After yet another disappointing earnings report for Nuverra Environmental Solutions (NYSE: NES ) investors need to remain focused on the long-term picture. Sure the company announced plans for a reverse split, and reduced EBITDA brings debt covenants into question, but investors always need to keep cool and research all the facts.

You can't deny that Nuverra has been a serial disappointer, on the path to becoming a complete environmental solutions provider to customers in the energy and industrial end-markets. The promise of providing environmental solutions for the dangerous materials produced by hydraulic fracturing once provided enormous potential.

Though Nuverra hasn't realized that potential yet, grounded investors might realize a better future by paying attention to the earnings call. The encouraging part is the capital expenditure increases of oil exploration companies such as EOG Resources (NYSE: EOG and Continental Resources (NYSE: CLR )

Disappointing results
With fears circulating on missing debt covenants, the expectations were for Nuverra to beat numbers this quarter. Instead, it saw a sequential decline in revenue and EBITDA that only adds fuel to the fire. Nuverra reported revenue of $162.6 million versus estimates of around $185 million. Yes, that is correct: The expectation was for a nearly $20 million sequential increase from the $165 million generated in the second quarter, yet the company delivered a small decline.

Possibly, the most devastating number was a reduction in EBITDA to $25.1 million from $33 million sequentially. Again, management overpromised EBITDA and expected it to increase to over $40 million -- that didn't happen. On top of these ugly numbers, the company plans to execute a 1 for 10 reverse split. For some reason, the reverse split scares investors, though it really has no other impact than reducing its outstanding shares.

Signs of a rebound
Clearly, the biggest problem with Nuverra continues to be confusion over whether the disappointing results are market-related or company-specific. Since the days of Heckmann, this company has repeatedly overpromised and underdelivered. But investors shouldn't get too caught up in the earnings report and ignore important details about the future of the company. Sure management could be overpromising again, but it had a ton of bullish nuggets that would have been missed if you only read the headline numbers.

One positive is that despite missing estimates and liquidity fears, Nuverra actually paid down debt by $15 million. Adding the $17 million repaid last quarter; this company has reduced debt by $32 million while struggling to meet expectations. Another shocking revelation is that it is in advanced discussions for several potential acquisitions that would be accretive to EBITDA. On top of that, management suggested that limited stock buybacks, or below-market repurchases of debt, could be in order. A further good sign is the start-up of the landfill business in the Bakken that should add $8 million to $10 million of EBITDA for the year.

Possibly most surprising was the forecast that industry growth would reach the mid-teens in 2014 based on forecasted customer spending. Nuverra is so comfortable with those forecasts, that it actually has started hiring people, which hurt EBITDA in the third quarter. Analysts think Nuverra is delusional considering September issues in the Bakken caused part of the shortfall in the third quarter. Regardless, the company has already seen a rebound in October and growth forecasts for 2014 justify hiring workers, who take up to three months to be productive.

Spending plans
One thing that will help these disappointing results is increased spending by customers. In that manner, two of the more prominent exploration firms in the Bakken are Continental Resources and EOG Resources. In both cases, the companies have provided credible plans to spend more in 2014.

In a recent earnings report, EOG forecasts 39% oil production growth for the full year of 2013. In addition, the company has raised $620 million (on a planned $750 million) from asset sales. EOG wasn't specific on next year's plans, but it did announce intentions to increase its level of drilling activity.

Continental Resources reported that its third quarter 2013 production hit a record level, up 39% from the prior year. The company also generated record profits (before depreciation, interest, and taxes) that were up 62% compared to the same quarter last year. Both numbers not only solidify plans by Continental Resources to increase oil and natural gas production in 2014, but they provide the company with incentives and financial resources to follow through on those plans.

Bottom line
After repeated disappointments, it is difficult for the market to believe that Nuverra Environmental Solutions could have anything positive going on. The forecasts of major E&P firms like EOG and Continental Resources suggest that Nuverra may be right about a rebound in 2014. Investors might want to think twice before dumping their shares after the stock plunged 30% in a single day.

Who knows but it is interesting that NES planing on possible buy back of stock after TFI sale

IMO there is only 2 ways to get companies to stop wasting water (discarding water down disposal wells)

1. Gov/EPA Regulation
2. HAL H2OForward

If H2OForward takes off recycling water would be good for NES

Halliburton's H2O Forward Service

NES Short Interest Decrease -6.65 percent

10/15
Short Interest (Shares Short) 33,450,400
Days To Cover (Short Interest Ratio) 20.0
Short Percent of Float 23.34 %
Short Interest - Prior 35,831,900
Short % Increase / Decrease -6.65

HAL Reports Monday
May get some news on 1st first joint frac
Treatment & Recycling expected to occur in late September



Halliburton H20SM Forward Service
• Allows E&P operators to treat and re-use flowback and produced
water

• Nuverra will be providing surface environmental solutions, including logistics and treatment

• Joint customer market meeting in August with first joint frac
Treatment & Recycling expected to occur in late September

NES Buy Rating Reaffirmed Wunderlich Zacks upgraded neutral

Nuverra Environmental Solutions (NYSE:NES)‘s stock had its “buy” rating reaffirmed by equities research analysts at Wunderlich in a research note issued to investors on Thursday, AnalystRatingsNetwork reports. They currently have a $5.00 price target on the stock. Wunderlich’s price objective would suggest a potential upside of 123.21% from the company’s current price.
Several other analysts have also recently commented on the stock. Analysts at Jefferies Group cut their price target on shares of Nuverra Environmental Solutions from $2.75 to $2.50 in a research note to investors on Thursday. They now have a “hold” rating on the stock. Separately, analysts at Zacks upgraded shares of Nuverra Environmental Solutions from an “underperform” rating to a “neutral” rating in a research note to investors on Tuesday, October 1st. They now have a $2.30 price target on the stock. Finally, analysts at Imperial Capital initiated coverage on shares of Nuverra Environmental Solutions in a research note to investors on Wednesday, September 4th. They set an “in-line” rating and a $2.50 price target on the stock. They noted that the move was a valuation call. One investment analyst has rated the stock with a sell rating, three have assigned a hold rating and five have given a buy rating to the company’s stock. The company has an average rating of “Hold” and a consensus target price of $3.42.
Shares of Nuverra Environmental Solutions (NYSE:NES) traded down 1.75% during mid-day trading on Thursday, hitting $2.24. 1,052,241 shares of the company’s stock traded hands. Nuverra Environmental Solutions has a one year low of $2.65 and a one year high of $4.99. The stock’s 50-day moving average is $2.72 and its 200-day moving average is $3.42. The company’s market cap is $582.3 million.
Nuverra Environmental Solutions (NYSE:NES) last issued its quarterly earnings data on Thursday, August 8th. The company reported ($0.05) earnings per share for the quarter, missing the analysts’ consensus estimate of ($0.03) by $0.02. The company had revenue of $165.50 million for the quarter, compared to the consensus estimate of $168.64 million. Nuverra Environmental Solutions’s revenue was up 82.3% compared to the same quarter last year. On average, analysts predict that Nuverra Environmental Solutions will post $-0.13 earnings per share for the current fiscal year.
Nuverra Environmental Solutions, Inc, formerly Heckmann Corporation, provides environmental solutions to protect, enhance and advance environmental sustainability.

http://tickerreport.com/banking-finance/31419/nuverra-environmental-solutionss-buy-rating-reaffirmed-at-wunderlich-nes/

Positive no pre-announce on Missed numbers

Operating inefficiencies has always been a problem.

4 Things You Probably Don't Know About Fracking

Hydraulic fracturing, or fracking, is a hotly debated topic. Movies like Gasland have brought to light some points of concern on the practice used to extract additional oil or gas from wells. The industry has countered with facts of its own, making it tough to know what to believe. There is a lot of noise when it comes to fracking and with it there are some really interesting facts that many miss. So here are four things most people probably don't know about fracking.

Fracking had humble beginnings
Halliburton (NYSE: HAL ) performed the first experimental fracturing operation in Kansas in 1947. It took the company two years before it was actually commercially successful with the process.

The process has only recently come under scrutiny because of its combination with horizontal drilling. George Mitchell is credited with starting the latest boom when he began to use it to unlock the Barnett Shale in Texas in the 1990s. He later sold his company to Devon Energy (NYSE: DVN ) , which has continued to drive the fracking boom. However, it is the widespread use of the technique in places such as Pennsylvania, where residents are not as familiar with the process, that has fueled much of the recent debate. Not to mention some earlier missteps by the industry that has hurt its image.

1.1 million frack jobs and counting
Over the past six decades the industry has undertaken 1.1 million fracturing operations. In fact, nine out of every 10 wells drilled onshore in the U.S. require some form of fracture stimulation. The technique is used in reaching shale gas in Pennsylvania, unlocking the oil riches of North Dakota, and various other locations.

Not all fracking chemicals are harmful
The industry has gone to great lengths to change its methods in order to calm public fears. One of the big fears surrounds the chemicals used in the fracking process. While 99.5% of what's pumped into a well is a mixture of water and proppants like sand, it's that last 0.5% that causes concern. That's because when millions of gallons of water are involved these chemicals add up to tens of thousands of gallons.

Halliburton, however, has developed a safer solution. It is called CleanStim, which is a new hydraulic fracturing solution made up entirely of ingredient sources from the food industry. While it's not exactly fit for human consumption, it does significantly reduce the risks involved with the chemical exposure that so many are concerned about.

Water recycling is the new normal
Each frack job uses millions of gallons of freshwater. However, if Halliburton has its way the industry will use 25% less freshwater next year, employing recycled water instead. The company has partnered with Nuverra Environmental Solutions (NYSE: NES ) on a solution called H2O Forward that will recycle water that flows back during the fracking process. Nuverra Environmental Solutions is an ideal logistical partner on this venture because its entire business model is built around treating, recycling, and properly disposing of the water used to frack each well.

Energy companies have made great strides in recycling the water produced from fracking. Devon Energy, for example, has built its own water recycling plant in Oklahoma to support development of the Cana-Woodford shale. During its first nine months of operations, the plant has saved 5 million barrels of freshwater from being used to frack Devon's wells. There are countless examples in which the industry is working toward the goal of using less water in fracking operations.

Final thoughts
Fracking will continue to be controversial for years to come. The industry still has a long way to go to clean up both the process and the image of fracking. However, it is making solid strides as it uses less harmful chemicals and recycles more of the water employed in the process. Because of this the fracking boom isn't likely to slow down anytime soon.

http://www.fool.com/investing/general/2013/10/16/4-things-you-probably-didnt-know-about-fracking.aspx

Nuverra: Liquidity Fears Overblown


http://seekingalpha.com/article/1740302-nuverra-liquidity-fears-overblown?source=yahoo

While some continue to fret over debt issues at Nuverra Environmental (NES), the company recently announced an update to an important credit facility to provide it more time to turn around operations before encountering liquidity issues. The move shouldn't be a huge surprise to investors, as creditors normally want to work with companies to provide ample time to improve numbers to acceptable levels. Not to mention, our previous article highlighted how positive operating cash flows would make it a slam-dunk for the modified covenants, if needed.

The company is dedicated to the protection and enhancement of environmental solutions for the removal and disposal of restricted fluids primarily from shale drilling. It has scattered operations in most of the shale areas with a focus on the Bakken shale from the Power Fuels merger last year. Several catalysts for improving operations include the shift away from contract workers in the Marcellus shale and new management to guide the Eagle Ford segment that struggled during Q213.

The shorts are right that the company is walking a fine line regarding debt leverage ratios, but the company appears set to finally exceed estimates as the industry stabilizes.

Updated Credit Facility Leverage Ratios

The amendment to its existing $325 million credit facility basically increases the allowable debt leverage ratio for the next year on a sliding scale of stricter requirements. As the table below shows, the company will be back on the original schedule starting on September 30, 2014:

Table - Debt Leverage Ratio


(Click to enlarge)

Probably the most shocking part of the news was the statement by the CEO that the credit agreement provides amble liquidity to evaluate potential acquisitions as they become available. Probably surprising to most that for some reason thought Nuverra might be headed to bankruptcy, it surprisingly flipped the switch towards returning to growth. The company though doesn't appear to be in a great situation to make more deals from an equity standpoint. Any deal would be too dilutive with stock and adding more debt isn't going to be seen in a positive light by investors. The only real solution is to show investors that the new Nuverra can operate based on the business line that already exists.

What Do These Ratios Mean?

The company needs to generate enough EBITDA on a trailing twelve months basis to cover the outstanding debt of $541 million with the reported numbers. Based on the numbers, the Sept. 30 goal would be $114 million. A level very easily achieved, but the key will be when next year comes around. As the leverage ratio hits 4.0x next June, the company will need to generate roughly $135 million in TTM EBITDA. The interesting part of that level is that the company only forecast an updated target of $135 million on the low end for this year. Nuverra will need to exceed the low end estimates this year or exceed next year's 1H numbers in order to not run afloat of the more restrictive covenants next year.

The updated target for the 2H of 2013 appears very conservative considering the issues in the Bakken region during the 1H of 2013. One concept that the shorts need to understand is the psychology of a management team. After being burned quarter after quarter based on a weak market, the team tends to finally under promise. How many times do you have to be hit in the head to realize you might need to change your tune? Most investors make the common mistake that once a company misses a few times that it will always miss.

Worth nothing, the original article highlighted how the whole industry underwent wholesale reductions in earnings estimates from Sept. 2012 through Sept. 2013. In essence, the data shows that Nuverra isn't any worse at forecasting than the industry as a whole.

Shale Solutions

Ultimately the future of Nuverra depends on the ability to operate efficiency in the major shales. All of the top four had operating issues during Q213 whether controlled by the company or not. Either way, Nuverra must perform exceptionally in the 2H in order to put the leverage fears to bed. The Bakken has seen improved weather during Q3 and the Marcellus and Eagle Ford situations are completely under the control of Nuverra management. See the below slide for more details on the operational issues during Q2:


(Click to enlarge)

Note that while the Bakken saw lower than expected revenues, the company still generated gross margins in excess of 30% in that area. In total, gross margins only amounted to 16% on average company wide. The issue with the whole Heckmann division was the inability to generate decent margins from a far-flung business operating in a large amount of shales. Improving margins of existing business will be paramount to improving profits. The below chart compares the gross margins from the group of smaller energy service firms presented in the previous article - Basic Energy Services (BAS), C&J Energy Services (CJES), Key Energy Services (KEG), and Superior Energy Services (SPN):

NES Gross Profit Margin Quarterly Chart
(Click to enlarge)

NES Gross Profit Margin Quarterly data by YCharts

Some discrepancy exists in how these different companies present the cost of goods component in the gross margin. As an example, Superior Energy breaks out depreciation costs into a separate line so it isn't include in cost of goods sold. Removing the $155 million cost in the last quarter would've pushed the gross margin down to 25%. Conversely, if Nuverra excluded the $22 million depreciation charge from cost of goods sold, it would've generated a gross profit margin of 27%.

Stock Action

Over the last few months, the stock action has been mostly negative for the group, but Nuverra made an extreme turn south when the original report regarding liquidity fears serviced. As the chart below shows, it has vastly underperformed the group over the last 45 days:

NES Chart
(Click to enlarge)

NES data by YCharts

Conclusion

While the modified covenants provide Nuverra with a little extra time to prove the business model, the company is closer to achieving operating profits than most expect. Once the market realizes that Nuverra is nowhere close to defaulting on its loan covenants, the stock should turn around and could quickly match the 8% gain of Key Energy in the last 3 months. The company is a lot closer to success than a loan default at this point, but it will need to prove it in Q3 by exceeding the reduced operating targets

Latest Short Interest data Decrease -3.17


9/30
Nuverra Environmental Solutions NES

Short Interest (Shares Short) 35,831,900
Days To Cover (Short Interest Ratio) 15.8
Short Percent of Float 25.00 %
Short Interest - Prior 37,003,300
Short % Increase / Decrease -3.17

Shares Float 143,330,000
% Owned by Insiders 43.08%
% Owned by Institutions 25.90%

3 Reasons to Buy Nuverra Environmental Solutions
By Matthew DiLallo | More Articles | Save For Later
October 10, 2013 | Comments (0)

There are a lot of reasons to buy a stock. It might pay a large dividend or it's trading at an incredible bargain. That being said, there is always an underlying business that an investor is buying anytime a share of stock is purchased. With that in mind, when investors buy shares of Nuverra Environmental Solutions (NYSE: NES ) what are they really buying?

Jockey play
Nuverra's predecessor company was started by Richard Heckmann who has a history of building companies from scratch and then flipping them to the highest bidder. One of the main attractions to Nuverra are the strong odds that he can do that again with his latest venture. Basically, an investment in Nuverra is one with the thought that one day it will end up being sold to a much larger oil-field service company.

The company has a long way to go before that day arrives. That's why last year's merger of Heckmann with Bakken focused Power Fuels, served two main purposes. First, it added the high growth oil focused Bakken to its platform, but more importantly it added current CEO Mark Johnsrud. In making that move Richard Heckmann was able to turn over the day-to-day control of the company over to someone who knew how to run an oil-field service company. That move freed up Heckmann's time to focus on strategically building the company from the top, while Johnsrud focused on building it from the bottom.

Pure play on pure water
Nuverra differentiates itself from its competitors by offering energy companies a complete environmental solution surrounding the water used for fracking. This includes transporting the water to the site, collecting produced water, treating and recycling what it can and then disposing of the remains. It's the only company purely focused on this process with the scale to take it across multiple shale basins.

Many of its potential customers handle water internally by either investing capital to recycle or dispose of the produced water. For example, Devon Energy (NYSE: DVN ) built a water recycling facility in Oklahoma to support the development of the Cana-Woodford Shale. Devon has been able to save five million barrels of freshwater in the first nine months of this project. Nuverra does have its own water recycling facility, which it uses to serve customers in the Marcellus. This saves them from the large up-front capital required to build a water recycling plant like Devon's.

The other option for producers is to simply dispose of the leftover frack water. This is how SandRidge Energy (NYSE: SD ) has handled its water problem as it continues the development of the Mississippi Lime. This has saved it from hiring a company like Nuverra to truck the water away. However, it still has cost the company more than $530 million to drill over 130 wells and lay 850 miles of disposal pipeline. Nuverra has 56 disposal wells of its own spread around the country. These save its customers from having to join SandRidge Energy in spending capital on a salt water disposal system that could have been spent on drilling oil and gas wells.

Emerging growth opportunity
The energy wastewater business is still emerging and Nuverra has the opportunity to consolidate its way to the top. The company is always snapping up smaller competitors as it continues to build scale. Already this year it has purchased smaller rivals in both the Marcellus and Utica shale plays. Looking ahead, Nuverra could also someday end up buying up the assets that Devon, SandRidge and others have built relating to water recycling and disposal.

In addition to this, Nuverra has an emerging opportunity with Halliburton (NYSE: HAL ) involving the company's H20 Forward service. Nuverra is serving as Halliburton's logistical partner on the process and sees its role being that of owning and operating a centralized treatment facility. With Halliburton's goal to see the industry recycle a quarter of its water usage in the year ahead, it points to a really large opportunity for Nuverra to expand.

Investor takeaway
At the end of the day an investment in Nuverra boils down to three things: Management, water and growth. The company has an experienced management team that's pursuing an emerging growth opportunity. So, for inventors that want a pure-play on purifying the water and the image of fracking, Nuverra is the company to buy.

http://www.fool.com/investing/general/2013/10/10/3-reasons-to-buy-nuverra-environmental-solutions.aspx

Agree depends on 3rd quarter

CEO positive with his 900,000 buy
credit facility amended positive vote by Banks
No insiders sold

I think people may expect to much from HAL H2O forward service
since the 1st joint frack was in late Sept.

fredugsi don't think insiders can buy since end of quarter

At least no insiders selling

and $325m credit facility amended. New leverage ratios
No credit default in foreseeable future

CEO 900,000 share buy
CFO 25,000 share buy

However, Any short story and we get hit
and no defense from NES

GRH up 9% NES Down 6%

What is up with GRH

Wonder if a new short article coming for NES

GreenHunter Energy GRH unchanged and NES down 5%

Go Figure

trebeg I agree just the mention of NES in a short Article brings us down for no REAL Reason

Too easy to bring NES down

because of

GreenHunter - Ongoing Concerns... Failed Asset Sale, Negative Working Capital, No More Room On Shelf

http://seekingalpha.com/article/1733392-greenhunter-ongoing-concerns-failed-asset-sale-negative-working-capital-no-more-room-on-shelf?source=yahoo

GreenHunter - Ongoing Concerns... Failed Asset Sale, Negative Working Capital, No More Room On Shelf

http://seekingalpha.com/article/1733392-greenhunter-ongoing-concerns-failed-asset-sale-negative-working-capital-no-more-room-on-shelf?source=yahoo

GreenHunter (GRH) continues to be precariously positioned from a funding perspective. Despite recent rosy headlines, attendance at expensive conferences and hosting fancy dinners for potential investors, the company seems to be running out of options to raise capital to fund its cash flow negative operations (including capex) and its multi-million dollar preferred dividends.

In GreenHunter's last financial report, it showed negative $9.1 million in working capital, which is a large deficit for a small company with a history of negative cash flows. GreenHunter had planned to fund that negative working capital through a combination of asset sales and issuance of preferred stock, as disclosed in its quarterly report.

GreenHunter failed to sell the assets it planned to sell, leading to the company "guiding up" its expected revenue, but not explaining how it would fund the millions of dollars in negative working capital, as well as its capex budget. And the $3.18 million gross (the company had to pay over 5% of that in commissions and expense reimbursements) it raised by issuing preferred stock may have simply gone to fund capex and pay required dividends on existing preferred stock, leaving the large negative working capital balance in place.

With a substantial negative working capital balance in place, it seems likely that GreenHunter may again have to issue a "going concern" warning in its financial statements. Except that the next warning may be worse than the past disclosure. Through the recent $3.18 million preferred issuance, GreenHunter completed the allowed issuance of preferred and common stock available under its shelf filing. This means that GreenHunter may need to take additional steps before issuing more preferred or common stock, which may negatively impact the market for such securities.

While GreenHunter has been able to secure a contract with sister company Magnum Hunter (MHR) for Mag Tanks, which combined with rosy press releases and extensive stock promotion, may have driven GRH stock up recently, it remains unclear how capex on Mag Tanks will be funded. And it remains unclear how dividends on preferred stock will be funded, as GreenHunter's core business does not seem to generate enough cash flow to fund itself, much less fund payment of millions of dollars a year in dividends.

One possible explanation for why GreenHunter's former CFO (who had also been an executive at Magnum Hunter) may have left GreenHunter recently is that it appears the recent preferred issuances could be funding dividends on existing preferred. This is obviously unsustainable - if at any point the market for the preferred stock dried up, if GreenHunter is using new issuance to fund payments to existing stock, it would be unable to fund such payments. This is a precarious situation, and if fully disclosed as a risk by the company, could negatively impact the market for the preferred and the common stock.

This unsustainable funding situation and negative working capital position, combined with GreenHunter's disclosed plans to spend tens of millions of dollars on capex to grow its business, indicate that GreenHunter may be in the market to raise additional capital. If GreenHunter did raise more money, it would likely have to do so either in unregistered equity at a very large discount to the current market price, or as junior debt with a high interest rate and/or conversion feature. If GreenHunter issued more debt, it would further lever the company, impose a further interest and dividend burden on the asset base, and would "prime" the existing $50 million (face value) of the preferred. This could negatively impact the asset coverage of the preferred stock and could introduce further risk to the common equity.

One other consideration worth noting - competitor Nuverra (NES) is much larger but has had similar funding and operational issues, and the previous leading provider of modular above-ground storage tanks, Poseidon Concepts, went bankrupt after admitting to falsifying financial statements. One of the reasons to invest in small cap companies is the hope that one day they might grow larger and achieve premium valuations associated with successful, mature businesses. Nuverra and Poseidon's issues dim that hope for GreenHunter, tarnishing the case for investing in the stock and challenging the underlying valuation support for GreenHunter's preferred and common stock.

Additional disclosure: I am short GRH and may buy or sell it or any other security mentioned at any time with no further notice.

Profit From More Fracking Regulation

http://www.fool.com/investing/general/2013/10/06/profit-from-increased-fracking-regulation.aspx

Fracking linked to radioactive river water in Pa.

http://www.usatoday.com/story/news/nation/2013/10/02/fracking-radioactive-water-pennsylvania/2904829/

NES will benefit from the States regulating fracking and the treatment of flowback water

GreenHunter Resources announcing Increased Revenue Guidance for 2013


GreenHunter Resources, Inc. (the "Company") issued a press release announcing an Operational Update and Discussion of Increased Revenue Guidance for 2013.

The operations and finance update included the following:
? Recent $3.2 million private placement of Series C Cumulative preferred stock;
? Record current volumes of fluid transport, fluid disposal and water treatment activities;
? Raise 2013 expected revenues guidance to a range of $36 million to $40 million (from $31.6 million); and
? Visibility of a strong outlook into early-2014.

http://biz.yahoo.com/e/130930/grh8-k.html

Is Nuverra Environmental Really That Bad?


http://seekingalpha.com/article/1658852-is-nuverra-environmental-really-that-bad?source=email_rt_article_readmore



Is Nuverra Environmental Really That Bad?
Aug 27 2013, 09:14 | 32 comments | about: NES, includes: BAS, CJES, KEG, SPN BOOKMARK / READ LATER
Disclosure: I am long CJES, NES. (More...)

The recent article against Nuverra Environmental (NES) used personal attacks to distract from the real results of the company. Claims that the well-respected former CEO made an acquisition to escape or that the company creates a "distorted reality" by making adjustments to financials is absurd.

The company is dedicated to the protection and enhancement of environmental solutions for the removal and disposal of restricted fluids primarily from shale drilling. As environmentalists fret over the safety of the fluids used in fracking, Nuverra was suppose to benefit from the need to safely dispose of the "dangerous" fluids

The contributor made some great points regarding the company consistently missing guidance and having a lot of debt that could become a problem, but he should've stuck to those points instead of making claims that the Chairman is distancing himself from the "sinking ship". Though one could easily argue that the stock was trading below $3 due to these issues. What is missed in that article is that the charges such as amortization and stock-based compensation removed by Nuverra are a standard industry practice and a valid method for valuing an investment. It wouldn't surprise me to learn that a business school doesn't teach the practicalities of adjusting charges to reach a real world valuation. In fact, if Nuverra management would provide those adjusted numbers for the operating income and net income lines the company would likely be seen in a much different light.

The interesting nugget in the whole article regards the ability of the company to generate $13.5 million of free cash flow (FCF) in the 1H13. Also, supposedly the new CEO, Mark Johnsrud, is a solid operator that could save the company if it wasn't already too late. It's amazing that the full article attacked the 'distorted reality' of the adjustments yet the FCF makes the contributor happy. Those numbers don't lie and we'll take the next few paragraphs to address some of the issues.

Domestic Industry Struggles

The biggest failure of the article is to address the beating that the domestic oil service firms have taken over the last year with weak natural gas prices limiting drilling and completion services. While Nuverra is a proclaimed environmental firm naturally disputed in the article, it still faces the same pressures as Basic Energy (BAS), Key Energy (KEG) and Superior Energy (SPN) used for comparative analysis. If those firms are struggling than it is no surprise that Nuverra is having problems hitting numbers. Now one could probably argue whether these firms would provide valid comparisons for valuation metrics, but for this argument we'll just highlight how missing guidance is an industry issue and not related to Nuverra. In addition to those oil service firms used, C&J Energy Services (CJES) is included to juice up the valuation. C&J is a well-respected hydraulic fracturing leader that made a Bakken related acquisition. Using it for comparative analysis is probably a lot more valid than Basic Energy or the others.

The below chart shows the earnings estimates for the current fiscal year for all of these firms:



NES EPS Estimates for Current Fiscal Year data by YCharts

Notice the trend for all of the stocks is consistently downward over the last year. Evidently all of the executive management teams and analysts are as incompetent as Dick Heckmann and Nuverra to consistently overestimate the strength of the industry.

Over the last year, the stock price has been similar for all of these stocks as well. Naturally Nuverra had an initial huge spike due to the excitement over the Power Fuels deal, but that premium has disappeared with the weak results.



NES data by YCharts

Again after reviewing these numbers one doesn't get an impression that Nuverra is performing any different than the general industry.

Adjusted Operating Income

Now lets review the operating income claims of a "distorted reality" with consistently adjusting the financials. This claim can easily be put to rest by reading just about any financial report. Again the nugget about the FCF is mind-blowing and very damaging to the short theory. Most investors see FCF as the least manipulated financial number. If the company can generate FCF in the worst period in the industry in over a decade, would a bank really default on them?

Anyway back to adjusted income. The biggest disservice the company did to investors was not providing adjusted operations income and net income numbers. As the previous article mentioned, the company has a ton of worthless intangible assets so naturally those should be excluded from income statements. That number amounted to nearly $9 million in Q2. Income from operations was a reported loss of $7.7 million, which means operating income was actually positive excluding only the most basic of worthless non-cash charges. What about excluding $5 million of restructuring charges? What about $2.3 million of integration and rebranding charges? What about stock-based compensation of $1.3 million?

So lets look at the adjusted financials, as the company should've provided them. The below table provides all of the adjustments to the net loss of $12.9 million. Any investor can choose to remove one-time or non-cash charges to value the company and it's far from distorted to remove one-time or non-cash charges to value an equity position.

(click to enlarge)

The below table is adjusted to exclude all of these charges.



As can be seen when excluding the charges, the results quickly turn to operating income. Unfortunately the interest expense swamps the adjusted $11 million of operating income, but the number is a far cry from the negative analysis.

Default Risk Known

Default risk is a major concern with any small cap stock that has $541 million in debt. The company must maintain minimum interest coverage ratios pretty standard in all debt deals. The analysis appears very solid around these numbers and the article would've been better suited to focus on these details than the personal attack on the Chairman.

Based on the provided numbers, Nuverra would need to reach $146 million or trip the covenant, but undoubtedly a company that reaches $145 million would be able to obtain a modification without much risk. The real key is whether an investor believes the sector hit a bottom during the spring. If anything, it appears that management conservatively guided towards the exact amount of the covenant to avoid default concerns yet make sure it easily exceeded those estimates.

Here is where the nature of Wall Street works against the perma-bears. Due to the nature of not wanting to disappoint the markets again, the typical company provides overly conservative guidance in order to prevent from missing numbers yet again. In the end, the cycle works against those betting on continually missing guidance as the sector eventually bottoms out.

Conclusion

Clearly the issue with Nuverra is as much one with the industry than anything company specific. All of the domestic only focused oil service firms have been crushed over the last year. As an example, earnings estimates for Basic Energy have plunged from expectations for a 2013 loss of $0.22 all the way to $0.56 in only the last 90 days. Taking shots at Nuverra for possibly overpaying on the Power Fuels deal could be valid, but making statements that it somehow should've avoided the collapse in domestic pricing power or avoided the bad weather in the Bakken just doesn't hold water.

The bottom line is that Nuverra needs to beat estimates in Q3 or it faces numerous issues from management concerns to the need to modify loans. Remember though that the guidance of $75 to $85 million in EBITDA for the 2H13 is ultra-conservative considering the ability to generate $65 million during a horrible 1H. In the end, a company that can generate FCF and operating income (yes even if adjusted) isn't likely to default considering the 2H numbers should only improve. Investors should look into scooping up these shares on the irrational default risk fears.

Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.

Understanding NES's Default Risk from Keg MSG Board

NOTE texas_value is SA MBAvalueinvestor

http://finance.yahoo.com/mbview/threadview/;_ylt=AgiNN3K5s5R6Ue4clVpRlkPeAohG;_ylu=X3oDMTB2cGlrdDVpBHBvcwMxMQRzZWMDTWVkaWFNc2dCb2FyZHNYSFJVbHQ-;_ylg=X3oDMTBhYWM1a2sxBGxhbmcDZW4tVVM-;_ylv=3?&bn=1fcee5e0-40cf-3cb7-8688-3eb2afd6f47f&tid=1380300775074-5f5ea9ac-985c-46f1-852c-0d3d3932806e&tls=la%2Cd%2C0%2C3

Recycling fracking water could be a ‘game-changer’ in N.D.

http://oilpatchdispatch.areavoices.com/2013/08/14/recycling-fracking-water-could-be-a-game-changer-in-n-d/#sthash.mRxoUlWf.dpuf

Short Interest Decrease -6.7

Short Interest (Shares Short) 37,003,300
Days To Cover (Short Interest Ratio) 16.3
Short Percent of Float 25.82 %
Short Interest – Prior 39,667,300
Short % Increase / Decrease -6.7

Shares Float 143,330,000
% Owned by Insiders 43.08%
% Owned by Institutions 25.90%

http://www.shortsqueeze.com/?symbol=nes&submit=Short+Quote%99

Thanks trebeg Anyone see Bloomberg interview mentioned below

The SA author has one agenda and that is to short the stock. That's what he does. He will spin the numbers to scare investor's into selling. It worked the last time and so far it's working again in early trading today. The author has written 5 articles for SA, gets paid about $500 for each one. But his main objective is to make money by shorting stocks. Consider this when reading his crap. After his last article, Kathy Price responded to me with, "Thank you for contacting Nuverra investor relations. Jay Parkinson, CFO, refuted the Seeking Alpha article yesterday in an interview with Bloomberg TV, particularly the point about the company being headed toward bankruptcy. (Nuverra is light years away from not being able to meet its obligations. What is more, the covenants would not impact all of the debt, only the bank debt, which as of Q2 stood at $152 million. And the Company continues to pay down that debt.)

In addition to Mr. Parkinson speaking with Bloomberg TV, Nuverra management and investor relations have been out proactively speaking with investors.

I have spoken with Kathy since and am personally satisfied that Nuverra is fine. Things are headed in the right direction. Don't fall victim to this garbage from SA.

Kettleman you are Correct about the half truths !


Here is another one

Heckmann responded that he wasn't planning on buying more because he "had enough shares already." Yet, Heckmann's stake in Nuverra is actually relatively small--I think at a paltry 5%.

When Heckmann actually said
"i'm the second-largest shareholder. Mark Johnsrud is the largest, our CEO and we are all very bullish about what's going on here"

Not Just Fines, XTO agreed to recycle more wastewater


As part of its federal settlement, XTO agreed to implement an estimated $20 million plan to recycle more wastewater and to install a remote monitoring system at all well sites in the region to trigger alarms in case of a spill.

prosecution of the Exxon subsidiary for wastewater spill

Pennsylvania Attorney General Kathleen Kane's decision to prosecute a major Marcellus Shale natural-gas driller for a 2010 wastewater spill has sent shock waves through the industry. But environmentalists Wednesday hailed the prosecution of the Exxon Mobil Corp. subsidiary as a departure from the soft treatment they say the industry has received from Pennsylvania regulators. "We have been very concerned about enforcement in the Marcellus, and we welcome the attorney general's taking an active role," said Myron Arnowitt, Pennsylvania director of Clean Water Action. Kane's office announced charges Tuesday against XTO Energy Inc. for discharging more than 50,000 gallons of toxic wastewater from storage tanks at a gas-well site in Lycoming County. XTO in July settled federal civil charges over the incident by agreeing to pay a $100,000 fine and deploy a plan to improve wastewater-management practices. The consent decree included no admissions of liability. The Fort Worth, Texas, drilling company, which Exxon acquired in 2010, said it had worked cooperatively with federal and state authorities to clean up the spilled waste, known as "produced water." XTO excavated and removed 3,000 tons of contaminated soil from the site. "Criminal charges are unwarranted and legally baseless because neither XTO nor any of its employees intentionally, recklessly, or negligently discharged produced water on the site," XTO said in a statement. Kane's office said it did not need to prove intent to prosecute the company for crimes. XTO is charged with five counts of unlawful conduct under the Clean Streams Law and three counts of unlawful conduct under the Solid Waste Management Act. Industry leaders said the prosecution of a company for what they called an inadvertent spill creates a hostile business environment. "The incident has been fully addressed at the state and federal levels, and this action creates an untenable business climate that will discourage investment in the commonwealth," Kathryn Z. Klaber, president of the Marcellus Shale Coalition, said in a statement. The Pennsylvania Chamber of Business and Industry also protested. "This decision sends a chilling message to all businesses looking to locate in Pennsylvania that they could be held criminally liable in the event of an unintentional spill by a contractor that resulted in no injury to humans or wildlife and that had no lasting impacts on the environment," said Gene Barr, its president. First to be charged XTO is the first Marcellus Shale production company to face criminal charges. A Western Pennsylvania waste-hauler, Robert Allan Shipman, was convicted of illegally dumping waste in 2012, and sentenced to serve seven years of probation and 1,750 hours of community service, and to pay $382,000 in restitution and fines. The attorney general has appealed the sentence, arguing that Shipman deserved jail time. In the XTO case, a grand jury did not charge any individuals. XTO faces a fine of $25,000 a day per violation, said Kane spokeswoman Carolyn E. Myers. The leak took place during the two months the company stored wastewater on the site. Activists believe that Kane, a Democrat, has been looking to make a statement on shale drilling since she assumed office in January. "She has indicated that she is on the watch for a criminal prosecution opportunity in the Marcellus Shale," said Arnowitt, of Clean Water Action. The XTO case was referred to the attorney general by the Department of Environmental Protection before Kane took office. "The prosecutorial powers of this office are used carefully and with great consideration," First Deputy Attorney General Adrian R. King Jr. said through a spokeswoman. "We closely examine the facts and the applicable law in each case and proceed accordingly." The XTO spill received very little public attention when it occurred. A DEP inspector discovered wastewater leaking from an open valve on a storage tank during an unannounced visit to the Marquardt well site on Nov. 16, 2010. The wastewater spilled into a tributary of the Susquehanna River and also contaminated a spring. Pollutants were present in the stream for 65 days after the spill. The grand jury's presentment does not say who opened the valves on the tank or why. XTO officials at the time suggested vandals might be responsible. But it noted that the drilling site had no secondary containment, little security, and no alarm system for leaks. Shale-gas wells produce huge quantities of wastewater after they are hydraulically fractured, which involves the injection of water, chemicals, and sand deep underground. The wastewater contains fracking chemicals and pollutants from the shale formation itself, including barium, calcium, iron, magnesium, manganese, potassium, sodium, strontium, bromide, and chloride. As part of its federal settlement, XTO agreed to implement an estimated $20 million plan to recycle more wastewater and to install a remote monitoring system at all well sites in the region to trigger alarms in case of a spill. BY THE NUMBERS 50,000 Gallons of toxic wastewater were discharged from storage tanks at a gas-well site in Lycoming County in 2010. $100,000 Fine XTO Energy agreed to pay. The drilling company also agreed to improve wastewater management practices.

http://mobile.philly.com/business/?wss=/philly/business&id=223351871

3 Companies Poised to Lead California’s Black Gold Rush

two companies that could be leading this black gold rush are Nuverra Environmental Solutions (NYSE: NES ) and Halliburton (NYSE: HAL ) . This is because the biggest problem with unlocking the Monterey other than geology could be its environmental impact. Because fracking involves so much water, and this is California we are talking about, the water recycling solution that Nuverra and Halliburton have partnered on in the Bakken could be the key to making fracking more palpable to Californians.

In fact, Nuverra already has its sights on taking its full-cycle water solutions model into the Monterey. CEO Mark Johnsrud specifically pointed out on the company's last conference call that the "bigger leap will be when we start looking into California, as that potentially develops down the road." In fact, the dynamic duo could really prove to be in the driver's seat to help oil companies responsively develop the Monterey given the experience will be gaining in the Bakken as the current partnership programs begin to develop.

Given the amount of technically recoverable oil in the Monterey, oil companies will try hard to find a way to get it out. Occidental is likely to lead its development on the production side, while Halliburton and Nuverra should be the leaders on the hydraulic fracturing and water recycling side. That makes these three companies the most likely to lead California's future energy boom.

http://www.fool.com/investing/general/2013/09/11/3-companies-poised-to-lead-californias-black-gold.aspx

Cramer still calling NES a Nat Gas play

He said a lot of Fracking going on in Oil but not Nat Gas

NES 70% Oil 30% Nat Gas

Oil side should be Good !

Wunderlich Securities Upgrades NES to Buy

http://www.streetinsider.com/Upgrades/Wunderlich+Securities+Upgrades+Nuverra+Environmental+Solutions+%28NES%29+to+Buy/8666103.html?si_client=st

I Agree with fredugsi

fredugsi post# 1296

Remember, the option is a put at $3, not a call. This seems to me protection on a large long position, however, that's just me analyzing. Who really knows, other than the firm making the large bet. Time will tell.