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Nuverra Environmental Solutions (NYSE: NES ) , known until last Friday as Heckmann, began its first day with a new name by announcing a brand-new acquisition.
Nuverra will be acquiring a 60-acre, oil-field-disposal landfill from Ideal Oilfield Disposal, located in McKenzie County, N.D. The landfill could have a potential capacity of 5.8 million cubic yards.
The acquisition is just another sign that Nuverra is building a huge moat around itself when it comes to providing the energy industry with all the water services it needs to drill for oil and natural gas, all while minimizing environmental impact, and trying to recycle as much water as possible.
The acquisition will increase Nuverra's capital expenditures by $6 million-$8 million, but the company expects the site to "produce approximately $18 to $20 million in annual run-rate revenue." Paying $8 million today to make $20 million per year consistently into the future sounds like a great deal for the company.
Just as important is that this deal helps solidify Nuverra as the one-stop-shop for energy companies looking to extract hydrocarbons from the earth. The location of the landfill is right in the middle of the red-hot Bakken Shale, where 45,000 wells are expected to be drilled in the coming years, and almost 800,000 barrels of oil are extracted per day.
Nuverra now has the capacity to provide the water necessary for fracking, dispose of it, and then recycle it -- all for lower costs due to its infrastructure build-out over the past couple of years.
I already own some shares of Nuverra, as I think its an interesting play on recycling water from energy extraction. But the company is far from my largest energy holding.
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