GreenHunter 2012 Financials: Revenue Up, Net Loss Up More
GreenHunter Energy, a shale and fracking wastewater treatment company, released their 2012 financials on Monday. The headline they tout is that annual revenues were up a huge 1,444% in 2012 over 2011. However, total revenues for 2012 were just $17.1 million. Hey, we’ll give GreenHunter their due that the company is growing nicely, so hat’s off to them. But the company is still relatively small. In addition to $17.1 million in revenue, they had a write-down of a project in 2012 that caused them to register a net loss to shareholders of $21.2 million for the year. Doing a little math, we find that GreenHunter went in the hole $4.1 million for the year.
You may recall that GreenHunter now owns six barge terminals in PA, WV and OH (see GreenHunter Buys Barge Terminal in Wheeling for Frack Wastewater). They have a lot riding on a decision by the U.S. Coast Guard and the Obama White House on whether or not to allow barge shipping of frack wastewater. If approval comes this year (it’s supposedly with the White House now), GreenHunter will likely see black ink on the ledger for 2013.
The press release from GreenHunter on Monday:
GreenHunter Energy, Inc., a diversified water resource, waste management and environmental services company specializing in the unconventional oil and natural gas shale resource plays, announced today financial and operating results for the fiscal year ended December 31, 2012.
OPERATIONAL RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2012
New business activities in our water management segment comprised the entirety of our $17.1 million of operating revenues during 2012 compared to water management operating revenues of $1.1 million in 2011. Adjusted EBITDA increased $8.1 million from a negative $2.8 million during fiscal 2011 to $5.3 million during fiscal 2012. Our net loss to common shareholders for fiscal year 2012 was $21.2 million or ($0.73) per common share compared to a net loss of $5.5 million or ($0.22) per common share during 2011. The net loss in 2012 included a non-cash write-down of a legacy renewable asset in the amount of $15.9 million, the Mesquite Lake biomass development project ($0.55 per common share). Management decided to write this asset down to scrap value at year-end.
SOLID PROGRESS IN TOTAL WATER MANAGEMENT SOLUTIONS™
During 2012, GreenHunter Energy’s wholly-owned subsidiary, GreenHunter Water, experienced substantial growth by continuing to build its Total Water Management Solutions™ portfolio of shale water products and services in the unconventional resource plays. The Company further strengthened its dominant position as an owner and operator of commercial salt water disposal (SWD) wells in the Marcellus and Utica Shale plays in Appalachia where it exited the year with over 12,700 barrels per day (BBL/D) of operating permitted disposal capacity and a fleet of 26 water hauling trucks. As the first to operate a barge transloading and bulk storage facility for oilfield brine in Appalachia along the Ohio River, GreenHunter Water plans to bring on additional riverside water treatment and logistics centers during 2013.
Demand for commercial SWD capacity in Oklahoma’s Cana Woodford and Mississippian Lime unconventional resources plays near GreenHunter Water’s existing assets has significantly increased disposal volumes in our two operating commercial disposal facilities. This increase in activity has driven management to identify multiple acquisition targets within the States of Oklahoma and Kansas.
During the fourth quarter of 2012, GreenHunter Water drilled and completed one commercial SWD well in the Eagle Ford Shale play in South Texas. Since the beginning of 2013, three additional SWD wells have been drilled, completed and equipped in South Texas bringing total permitted commercial SWD disposal capacity to 85,000 BBL/D in the region. Meanwhile, the Company’s South Texas fleet of water hauling trucks now total 23 units.
IMPROVED CAPITAL STRUCTURE
During 2012, management significantly improved the Company’s Balance Sheet. Previously outstanding Series A and Series B Convertible Preferred Stock and the Series B Debentures were either converted and/or exchanged into common stock and Series C Perpetual Preferred Stock. During 2012, 1,561,144 shares of the Series C Perpetual Preferred Stock was issued as consideration for specific acquisitions and as part of both an initial public offering and a subsequent follow-on offering. As of December 31, 2012, combined liquidation preference of the outstanding Series C Perpetual Preferred shares totaled $39.0 million. By issuing Series C Perpetual Preferred shares to fund a large proportion of the Company’s organic growth and acquisition activities, common shareholders benefitted with minimal dilution as book equity per share grew 169% to $0.70 per share on December 31, 2012 as compared to $0.26 per share on December 31, 2011. Additional cash proceeds of $2.9 million were received during the fourth quarter from the sale of a California wind project marking the Company’s complete exit from the last remaining renewable wind development project.
NEW PROPRIETARY MODULAR ABOVE GROUND TANK SYSTEM
GreenHunter spent a significant amount of time engineering and fabricating a next generation modular above ground MAG Tank™ during fiscal year 2012. The design was built to accommodate heavy fluids in addition to fresh water and was designed using standardized modular steel MAG Panels™ that are configurable in multiple form factors and in virtually unlimited capacities above 11,000 barrels. GreenHunter’s proprietary MAG Tank meets or exceeds industry standards for above ground oilfield fluid storage. In the fourth quarter of 2012, GreenHunter built multiple MAG Panels and deployed a MAG Tank in Louisiana during the first quarter of 2013 to test and prove out the system concept. Following this successful test, GreenHunter is currently working with interested parties to secure a purchase orders for either the sale or lease of multiple MAG Tank systems.
Commenting on GreenHunter Energy’s results released today, Mr. Jonathan D. Hoopes, Interim CEO, President and COO, stated, “During 2012, GreenHunter Water quickly established a leadership position in the Total Water Management Solutions™ space. We are anxious to expand our presence in Appalachia, South Texas, Oklahoma and the Williston Basin via acquisition and organic lease-permit-drill activities planned for this year. GreenHunter Water is proud to offer riverside transloading and bulk storage services and we look forward to adding Frac-Cycle™ water reuse and barge logistics in the near future. With new disposal capacity already in place, we expect 2013 to see significant top line revenue growth which should in-turn expand our EBITDA margins. We are also very excited to be rolling out our new proprietary MAG Tank™ product line as we begin processing and manufacturing our first orders.”*
*GreenHunter Energy, Inc. (Apr 8, 2013) – GreenHunter Energy Reports Fiscal Year 2012 Financial and Operating Results