Emerge Energy Services LP, a diversified energy services partnership headquartered in Southlake, had a stellar run after going public in 2013. Its stock reached almost $146 per share one year ago in August. The company’s growth soared from $873,255 million in 2013 to more than $1.1 billion in 2014.
Then, beginning in 2015, the oil and gas industry started into a nosedive. Because of the decline in energy prices, Emerge Energy’s stock has dropped a staggering 80 percent in just under a year, trading at around $17 today.
The company’s business, however, remains strong and continues to move forward.
“We’re gaining share, we’re setting up great partnerships and we’re positioning ourselves well for the market recovery,” said Chairman Ted Beneski. “And while this market is testing us, we have and will continue to meet its challenges as we move through the bottom of this cycle.”
Emerge Energy Services was formed in 2012 by Insight Equity Holdings LLC, a private equity firm also based in Southlake. Founded in 2002, Insight manages a diversified portfolio of companies, which total more than $4 billion in aggregate revenue. Beneski is Insight’s chief executive officer and managing partner.
Emerge Energy operates under two segments – sand and fuel – via three subsidiary companies: Superior Silica Sands based in Fort Worth; Direct Fuels based in Euless; and Allied Energy Co. based in Birmingham, Ala. The sand segment is involved in the mining, production and sale of industrial silica sand primarily used in the extraction of oil and natural gas through hydraulic fracturing, or fracking, as well as the production of building products and foundry materials. The company operates three processing facilities in Wisconsin and another one in Kosse, Texas.
The fuel segment processes transportation mixture (transmix), distributes refined motor fuels, operates bulk motor fuel storage terminals, and provides complementary fuel. Direct Fuels is the largest independent regional fuel distributor and specialty processor in North Texas.
When Emerge Energy’s management saw the oil and gas downturn happening in February, they took advantage of market conditions and took action with several goals that would position the company – in particular the frac sand business, which has seen demand down roughly 40 percent from its 2014 peak – to be stronger when the market rebound happens. Among the down-cycle goals: gain market share; broaden the customer base; reduce production costs; seek merger and acquisition opportunities; be prepared to bring on additional sand capacity in case of a quick resurgence of demand when the rebound does happen; and improve business processes such as software, departmental resources and real-time data access.
The company found success with all of these goals.
“Yes, these are challenging times for our industry, but Superior Silica Sands team sees this as a time of opportunity,” said Emerge Energy CEO Rick Shearer. “And we have taken definite steps to build further our position as one of the elite frac sand companies in the industry.”
In second quarter 2015, Emerge saw production costs fall slightly as a result of the company producing all the wet sand it is processing rather than making third-party purchases. The company is experimenting with a new hydro mining technique in two of its Wisconsin mines that could achieve a $2.50 to $3 per ton reduction in frac sand production costs if implemented across the company’s systems. The company continues to develop a dustless proppant, which it plans to introduce in the fourth quarter of this year. Emerge also began expanding its global sand sales, exporting frac sand to Argentina, Colombia and Peru.
“2015 has been challenging and the balance of this year will continue to press us to improve our business every day,” Shearer said. “We will meet these challenges and be a better company for it.”
About Emerge Energy Services LP
Location: 180 State St. • Suite 225 • Southlake 76092
817-865-5830 • www.emergelp.com
Public Company : No. 8