When thinking about the dangers of oil and gas drilling, the BP (NYSE: BP ) Gulf of Mexico oil spill quickly comes to mind. Clean Harbors (NYSE: CLH ) helped clean that mess up. Newalta, out of Canada, and Waste Management (NYSE: WM ) are helping to clean up some less public trouble spots.
Big and public
There's nothing like a massive oil spill to destroy a public image. ExxonMobil went through it with the Exxon Valdez in early 1989. Although a public black eye, the giant was able to handle the cleanup and image hit without too much difficulty. BP, however, can't say the same thing about the 2010 Deepwater Horizon disaster.
In the end, BP was forced to sell assets to pay legal and cleanup costs. Although the final bill isn't in yet, the company is starting to get back on its feet. Still, BP isn't the same company it was before the spill. The stock's 5%-plus yield may be enticing, but most would be better off sticking to an oil major like Royal Dutch Shell with a similar yield and much less baggage.
But this highlights the ugly underbelly of oil and gas drilling—it's dirty and dangerous. When bad things happen, experts like Clean Harbors make money. The BP spill led to a nice top and bottom line bump at Clean Harbors. Although its emergency spill response business makes the headlines, the company's true specialty is waste management. That includes headline-grabbing emergencies, as well as such mundane things as cleaning and recycling services.
The company has been growing organically and through acquisitions, taking its top line from around $600 million to nearly $2.2 billion over the past decade. An expanding U.S. oil and gas industry should continue to drive solid growth, with the occasional boost from a headline-grabbing disaster.
Room for one more?
Waste Management has been trying to get in on this act too, though not in the emergency response space. In August, it acquired Summit Energy Services and Liquid Logistics to expand its environmental service offerings in the Bakken Shale formation.
Although this is a relatively small division when compared to its massive trash hauling business, it better positions the company in the growing U.S. oil and gas drilling market. And, perhaps equally as important, it burnishes Waste Management's image as an environmental steward, a tactical shift that management has been working on for years.
U.S. oil and gas, however, isn't the only messy energy business in North America. Canadian Oil Sands, for example, is the lead player in one of the continent's most controversial energy plays, pulling oil out of the gunky sand in Alberta Canada. This is a messy and energy-intensive process with which Newalta has been involved for more than 15 years.
The company is small, but its top line has grown from around $150 million to over $700 million over the past decade. It also services land-based oil and gas drillers in the United States, like Waste Management and Clean Harbors. So, the company should have plenty of growth ahead as North American production, above and below the border, expands.
An environmental kicker
One of the most interesting things about all three of these companies, however, is the recycling angle. All three take the waste they receive and make something out of it. For Clean Harbors and Newalta that means things like extracting a little more oil and selling it. Waste Management, meanwhile, makes electricity on the side, among other things. As if cleaning up oil and gas drilling residue wasn't enough, each member of this trio is an expert recycler, too.
A dirty business
There's no question that oil and gas drilling is dirty. And that is an opportunity that Clean Harbors, Waste Management, and Newalta are taking advantage of. As the industry expands domestically, the trio is well positioned to go along for the ride.
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