HEK's and the NG-industry's business models have changed for the better for them and for their investors.
HEK's recycled-water portion of the business earns most of its money after each wells has been drilled (80% during 30-year life of well versus 20% during drlling), which is why HEK's long-term contracts with the majors are so important to its business stability and predictability.
HEK management's decision to purchase Thermo
Fluids as part of its goal to be the premiere one-stop environmental services company is brilliant.
TF adds a critical service for HEK to offer its existing customers, diversifies HEK's business even more (i.e., 1/3 oil, 1/3 NG, and 1/3 recycled oil), offers high growth achieved via HEK's plan to branch TF's business into California where recyled oil has the largest portion of the U.S.'s market of 1.4 trillion gallons of used oil.
TF has more than 20,000 existing customers. HEK plans to use that customer base as well as its own to growth that market.
As I've mentioned elsewhere, NG business model has changed because U.S. is embracing NG, which if exported will fetch prices far higher ($9-$16 range: $9, Europe; $13, Japan; $16, China).
The NG "gold rush" has begun. Watch HEK's investor presentation from March 13, 2012, and review the slides. They do a great job of explaining their business and where they're taking the company.
he also said that it's not for everyone .. will be up and
down .... and implied not to bet the farm on it ...
with NG drillers at bay and taking down more rigs , the
bread and butter for HEK will stagnate for a while ..
watch the fcf and see if they can keep enough money coming
to to avoid taking on debt for operations ..