Ridgeline Energy Services (RLE.V) -- this company has apparently found a cost-effective way to treat frac flowback water and produced water from oil & gas wells. The issue of having to dispose of this contaminated water is a huge one for E&P companies and the current environmental concerns about this stuff are only going to heighten from here.
The typical way in which both frac flowback water and produced water is dealt with currently is that it's injected into water disposal wells. Sometimes old shut-in oil or gas wells can be used for this, but more & more the E&P companies, not wanting to depend on the old well casings holding up, are ending up having to drill brand new water disposal wells in order to ensure that the water they inject cannot possibly end up leaking into the water table. Alternatively the E&P companies can just pay someone to come take the water away, but that option is very costly -- I believe the going price charged by reputable water-haulers is something like $1 -- $2 /bbl. in most areas of the southwestern US.
Also its getting harder and harder for companies to obtain water to use for fracking, especially with the severe drought that is going on in Texas and western Oklahoma. Livestock are being slaughtered earlier than planned by the thousands, due to there not being enough water for them to drink or to grow hay for them to eat. This has increased the cost of obtaining water for fracking use, if it can be obtained at all.
Ridgeline solves the above problems by allowing the E&P company to essentially re-use most of the water from frac flowback and oil or gas production. They clean the water through use of what they call their "Low Energy Electro-Catalytic" process, which "cracks" the water at a molecular level.
Ridgeline's first installation was up in the Horn River Basin in Canada, and was installed last winter. Evidence of the success of that was provided in June when they recorded revenue of $2.1M from that client. This amount was significant given that it resulted in Ridgeline's water business having generated a net profit from the period through its inception last year to 1Q '11. Further evidence of how well things went with this first installation was the fact that the same client that paid the $2.1M in June has just recently asked Ridgeline to set up another installation down in that client's New Mexico operations, in the Leonard Shale play in Lea County.
I don't know for certain but I strongly believe that the identity of the above client is none other than EOG Resources. This is because EOG is in both the Horn River and Leonard Shale plays and I am not aware of any other company that is in each of these. EOG currently has only a single rig going in the Leonard Shale but has stated that they plan to ramp up activity there next year.
RIdgeline's stock has been stuck in a range around the $.50 mark for quite awhile in spite of a slew of very positive news releases that announced both the events described above plus some other things. I believe a big reason for this is that, after announcing an agreement to acquire 100% control of this special water treatment technology last April, they have yet to close on that transaction. I understand that should occur later this month, at which point I expect the stock to break out to new levels.
As you can see I'm interested in this space and would welcome leads on any other companies operating in it. So far I've seen several others, each of which are interesting but which don't excite me nearly as much as Ridgeline for one reason or another. These are Heckman (HEK), Open Range (ONR.TO), Veolia Environment (VE), and Ecosphere (ESPH.OB).
AI
