Heckmann shares rise on surprise 4Q profit

Heckmann shares get a boost from better-than-expected 4th-qtr net income

Associated Press

NEW YORK (AP) -- Heckmann Corp. shares jumped almost 12 percent Tuesday after the drilling services company announced a surprise profit for the fourth quarter and better-than-expected revenue.

THE SPARK: Heckmann posted a profit of $5 million, or 3 cents per share, while analysts polled by FactSet expected a loss of 3 cents per share. Revenue more than doubled to $113.2 million, beating the average Wall Street prediction of $110.1 million.

The company was also optimistic about its prospects for this year, saying it expects revenue to more than double again to between $750 million and $825 million. Analysts expected $756.6 million.

THE BIG PICTURE: Heckmann, which plans to change its name to Nuverra Environmental Solutions, provides energy companies with water for hydraulic fracturing. Companies inject a pressurized mixture of water, sand and chemicals into the earth to fracture shale formations to access oil and gas. Heckmann also treats the wastewater generated during the process.

Production of oil and natural gas has been rising in the U.S. because drillers have learned to tap once-inaccessible reserves trapped in shale formations with techniques like hydraulic fracturing. That's led to rising supplies of oil and natural gas.

The Scottsdale, Ariz., company said Monday that a recent increase in oil prices made it more optimistic about its customers increasing drilling this year, which would lead to higher demand for its services.

THE ANALYSIS: Jefferies analyst Scott Graham said that excluding a tax benefit, the company actually posted a loss of 14 cents per share for the quarter, well below average predictions. But he backed his "Hold" rating and $4.50 price target, saying that he thinks the currently tough shale operating and pricing environment will soon begin to improve.

Wedbush analyst David Rose was less optimistic and kept his "Underperform" rating and $2.50 price target for the stock. He said the quarter's results show that business conditions were much worse than he thought and called the company's 2013 guidance a "big stretch."

THE SHARES: Up 44 cents, or 11.9 percent, to $4.15 in afternoon trading, after peaking at $4.25 earlier in the day. Over the past 52 weeks, the shares have traded between $2.60 and $5.14.

Since the beginning of the year, Heckmann shares are down about 3 percent.

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