Been watching this company for a few years and the excitement is centered around that profitability is right around the corner and/or already occurring.
Expansion is occurring in terms of infrastructure. 4 depots opened means we can produce enough excelyte for up to 4K wells. EPA approvals for the product are done. Testing is showing significant cost savings for oil and natural gas producers. EP Energy has already committed wells to us and this was the reason for the uptick in revenue. We were at 235 wells by year end, but Infrastructure can handle way more.
Just with the 235 wells, majority of which were only revenue generating towards the end of the year the company turned a revenue in the neighborhood of 460k. Operating costs are about 3m per year, so costs are fairly easy to cover once we get to 600 wells. This is assuming 2 dollar per gallon cost with the average well needing about 12000 gallons per year to be treated. This would translate to an annual revenue of greater than 7m at just 600 wells. Revenue was so low in 2015 because it was done for free for a large part of the year to gain the testing results and customer base.
I am leaving a buffer in between the current 3m operating costs and the potential 7m revenue at 600 wells for further increase of operating costs as they expand. Further testing, employee growth, depot build outs, etc...
EP Energy alone has 1100 wells, so if we just got all of their wells, which seems likely given their satisfaction of the product we could be in the neighborhood of $1.50 per share.
The whole caveat is getting a financial statement that actually shows profitability so that the PE ratio is a positive figure to actually get a fair market valuation.
Hope this helps!
