Excellent post falconeer, anyone doing serious due diligence can start with your well thought out post.
I completely agree with your assesment, especially when you consider that the Eagle Ford in arid South Texas is the most active horizontal and fracking operation in not only the US, but the entire world based on rig count:
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"But every detailed examination of each water sales production scenario leans strongly to very high-end and profitable outcomes. I do not discount any of these controlling factors: (a) massive numbers of new Eagle Ford wells to be drilled in the next year within a 100-mile radius of the Aqueous Solutions load out facility, (b) essentially unlimited amounts of withdrawn water for sale, and (c) increasing local water prices as local frackwater sources are limited and exploited by an expanding water demand market."
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And this analysis is spot on:
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"With that, Aqueous Solutions’ revenues will be greatly enhanced. Aqueous Solutions’ customers will be charged “coming (with returned water for processing and/or disposal) and going (for water taken in trucks out the gate).” Charges for water leaving the facility. Charges for water coming back for recycling or disposal. Those who have done their homework on horizontal fracturing are aware of the magnitude of the water acquisition, recycling, and disposal problems of this oil and gas production method.
Freestone and Aqueous Solutions are in the right spot (the Eagle Ford), at the right time (with dozens of new wells to be drilled), with the right services (supply water and recycling and disposal).
Check around. See what other firms will be offering to Eagle Ford drillers what Aqueous Solutions will be providing. Not much competition, in the middle of a giant market. Access to sufficient frack water is the major limiting factor for exploitation of the hydrocarbon resources of the Eagle Ford. Freestone has those resources, in abundance, and will be selling increasing volumes, at increasing prices."
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Good to see additional in depth due diligence posted, it is appreciated.