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Shale Natural Gas, Oil and NGLs and ESA
An SI Board Since August 2008
Posts SubjectMarks Bans Symbol
6160 88 0 ESA
Emcee:  jrhana Type:  Moderated
Shale natural gas is turning hot on a national scale. This is abundantly documented in the thread itself. This country is up to its ears in natural gas. We have so much that we almost don't know what to do with it. I could even rename this thread Natural Gas Nation. With all this natural gas we literally have the opportunity to become energy independent and become an energy exporter. And natural gas is benign from an environmental stand point (as also is well documented through out the thread).

Please take the time to listen to Senator Hatch's 50 second audio

Message 25769044

and to read Senator Menendez's article

Message 25767993

There now appear to be 6 major shale NG deposits in North America. Barnett, Fayettville, Haynesville, Marcellus, Eagle Ford, Horn River.

Message 25774013

Here is a great map of the Marcellus Shale courtesy of Isopatch

This post that I wrote on Shale gas is appropriate for the thread header IMO

Message 25681289

Here is a nice piece on the NG vehicle

ESA right now is awaiting proof that it can realize its potential

Message 25775332

ESA could prove to be an excellent investment but it is not for trading

Message 25775348

Original thread introduction:

ESA now known as Energy Services of America has finally successfully completed its SPAC IPO process.

To have an understanding of ESA one should start with Marshall Reynolds. Marshall Reynolds has a long history of deal making centered in the West Virginia area. His style is not that of a typical corporate raider like that of Michael Douglass in the movie Wall Street.

Rather he generally searches out small well run and profitable niche type companies and packages them together so as to bring synergies and economies of scale. In contrast to the typical corporate raider, Marshall Reynolds looks to improve employment and benefit his area's economy in addition to richly rewarding his investors. Marshall Reynolds likes to create real companies that provide real services to real customers while realizing real earnings and generally paying a dividend.

After carefully rationalizing and improving the management of these smaller companies joined into one, he then generally will sell his deals at a large multiple. I have no doubt that this is his plan for ESA: to make it a profit making machine and then sell it out at a large multiple to today's price.

And his investors have done well. Informally Marshall Reynolds has been known to claim that he has created more millionaires than any other living American with the exception of Bill Gates.

Marshall Reynolds apparently had a vision some years back about the need in the USA for domestically produced energy and that environmentally clean NG would be crucial for meeting this need.

West Virgina and the other Appalachian states happen to be sitting on top of the Marcellus Shale NG field.

Message 24656876

Apparently the Marcellus Shale contains huge amounts of NG in close proximity to the huge energy markets of New York, New England, the Mid Atlantic the Midwest states. Not only is this NG conveniently located, but it appears very economical at least according to a recent Deutsche Bank study.

Message 24840066

ESA comes into the picture with its just approved purchase of two pipeline companies.

The most important highlights of the deals can be found here:

This is the huge more than you ever want to know version. This crucial SEC document took over 1 year of working nights and weekends to finalize. ESA has shown that it is very careful about making sure it passes regulatory muster. All the ts were crossed and every i was dotted in this document:

One of these companies is CJ Hughes.

C.J. Hughes management overlaps with the ESA management itself including its CEO Ed Burns. C.J. Hughes has been in business since 1946, but has recently enjoyed exponential type growth in its revenues and earnings. It is a preferred contractor for Marathon Oil (MRO) among others.

In addition while ESA was undergoing its arduous SPAC acquisition progress in May 2007, C.J. Hughes itself acquired a nifty company called Nitro Electric. As detailed in its web site Nitro Electric is sort of an electrician to the electric utility companies. From what I understand the profits from its first large contract payed for its entire purchase.

Nitro Electric gives the pipeline businesses of of ESA a further advantage in procuring contracts. The contracting companies like to avoid confusion by dealing with a limited number of providers and now with ESA they can directly contract for a wide variety of services ranging from pipeline to a full gamut of electrical services including high voltage power line construction.

The second part of the acquisition was ST Pipeline. Its founder Mr Shafer played a major role in the construction of the original Alaskan pipeline, but he had the foresight to recognize early that West Virginia was going to be where the action was. So in 1984 he came to West Virginia and founded ST Pipeline where they have also enjoyed success and have their own loyal customers..

ST Pipeline will be run separately because of the very personal nature of its sales force and because although both C.J. Hughes and ST Pipeline enjoy excellent labor relations, the unions of the two companies are quite separate and would probably not be worth trying to merge. They will enjoy significant cost saving synergies in terms of sharing heavy equipment and in the purchase of insurance.

After the dust has cleared with the closing of the SPAC acquisition, it appears that ESA will have about 12.5 million shares outstanding. In addition there are approximately 20 million warrants exercisable at $5.

<Each warrant entitles the holder to purchase one share of our common stock at a price of $5.00. Each warrant will become exercisable on the later of our completion of a business combination and August 29, 2007 and will expire on August 29, 2011 or earlier upon redemption.>

<Energy Services may redeem the warrants at any time after the warrants become exercisable, in whole and not in part, at a price of $.01 per warrant, upon a minimum of 30 days prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $8.50 per share for any 20 trading days within a 30-trading-day period ending three business days before the notice of redemption is sent. Redemption of the warrants could force the warrant holders (i) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous for the holders to do so, (ii) to sell the warrants at the then current market price when they might otherwise wish to hold the warrants, or (iii) to accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants.>

For now at least, ESA and its warrants are best suited as an IT or LT investment and should not be bought for ST trades:

Message 24886348

For anyone unfamiliar with SPACs please reference Glen Petersen's thread header and thread.
Subject 55438

Notice: Anyone who posts on this board is expected to do so reasonably and with courtesy. Anyone who posts in an unreasonable or inappropriate manner will be immediately banned. I will be the sole judge of this.
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ReplyMessage PreviewFromRecsPosted
6160Trump’s legal team on Monday asked a federal judge to appoint a “special master”Vitas-August 23
6159Anyone here who wants to talk about specific oil or gas stocks they are considerPaul Senior-August 6
6158 Gas Giants Share OPEC's Shale Pain as U.S. Supply Flows Eastby Dan MurtauGlenn Petersen-4/5/2017
6157Energy milestone: Nat gas has surpassed once-dominant coal as fuel source for elGlenn Petersen-3/22/2017
6156Just fine. JoanJoan Osland Graffius-1/13/2017
6155I see there are no responses to your post. How is your investment turning Out?Investor2-1/13/2017
6154Is anyone here buying into oil & natural gas. I just bought into a partnershJoan Osland Graffius-12/4/2016
6153A good year for ESOA: Energy Services of America Releases Earnings For Fiscal Glenn Petersen-11/29/2016
6152The Next Shale Boom Will Be Built on Sand D avid Wethe @davidwethe BloomberGlenn Petersen-8/7/2016
6151Follow the Sand Walter Russell Mead & Staff The American Interest August 5,Glenn Petersen-8/6/2016
6149Dividend announcement: Price picked up just a little on the newsJohnJr-6/2/2016
6148Hydraulically fractured wells provide two-thirds of U.S. natural gas production Glenn Petersen-5/5/2016
6147Natural gas expected to surpass coal in mix of fuel used for U.S. power generatiGlenn Petersen13/21/2016
6146Growth in domestic natural gas production leads to development of LNG export terGlenn Petersen-3/4/2016
6145Few more ESOA developments First a promising letter to the shareholders - &quJohnJr12/25/2016
6144ESA has made a run of a little over 20% above the moving average for the past 50JohnJr-2/24/2016
6143Company debt levels determining who lives and who dies in the current energy busisopatch12/8/2016
6142Will this proposed tax cut pass both houses of the WV legislature? Dunno. Shoulisopatch11/27/2016
6141West Virginia natural gas production numbers ‘shocking’DinoNavarre21/27/2016
6140Your memory is correct. The Prize remains a must read for anyone interested in tGlenn Petersen11/25/2016
6139Current energy down cycle reminds me of late 1920s and 1930s price impact of masisopatch11/25/2016
6138Natural gas prices expected to rise over next two years U.S. Energy InformationGlenn Petersen-1/25/2016
6137Average annual natural gas spot price in 2015 was at lowest level since 1999 U.Glenn Petersen-1/21/2016
6136Marcellus, Utica provide 85% of U.S. shale gas production growth since start of Glenn Petersen-12/30/2015
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