Who says oil and water don't mix? Not Heckmann. The holding company disposes of, transports, and treats wastewater from oil and gas operations through subsidiary Heckmann Water Resources (HWR). (Water-based chemical solutions are necessary to release underground oil and gas deposits.) HWR provides water delivery and disposal, trucking, fluids handling, treatment, pipeline facilities, and water infrastructure services in the Eagle Ford, Haynesville, Marcellus, Utica, Barnett and Tuscaloosa Marine Shale plays. The company has agreed to buy North Dakota-based environmental services company Badlands Energy, dba Power Fuels, in a deal valued at about $381 million.
Power Fuels is the largest environmental services company in the Bakken Shale area of North Dakota. The company also completed the acquisition of a majority interest in Appalachian Water Services, which operates a wastewater treatment recycling plant that recycles water used in hydraulic fracturing in the Marcellus Shale area.
Heckmann's top three customers, Chesapeake Energy, Kinder Morgan, and Exco account for about half of sales.
While there are plenty of companies that perform hydraulic fracturing to explore for natural gas, Heckmann only supplies the necessary water to get the job done. The company entered the oil and gas field services business in early 2010, when it completed a 50-mile wastewater disposal pipeline in the Haynesville Shale that can treat and dispose up to 100,000 barrels of water per day. By December it bought Texas-based Complete Vacuum and Rental, Inc. (CVR) for $64 million. CVR came with 175 tractors, 200 trailers, and about 800 frac tanks, as well as six disposal facilities totaling 125,000 barrels per day of wastewater capacity. (Heckmann already had seven wells with a 65,000-barrel-per-day disposal capacity.)
The company's acquisition streak continued into 2011 when it bought assets from three companies in April -- trucks and two saltwater disposal wells from Bear Creek Services, LLC; Devonian Industries, a transportation and frac tank rental company; and more trucks and saltwater disposal wells from Sand Hill Foundation LLC. By June 2011 it bought three more water transportation and frac tank rental companies -- Excalibur Energy Services Inc., Blackhawk, LLC, and Consolidated Petroleum, Inc. As a result, Heckmann owns and operates a fleet of more than 600 trucks and more than 1,100 frac tanks.
With its trucks, tanks, and wells ready to service oil and gas operations across the US with water and wastewater needs, the company finally saw its revenues take off. The company got into services for hydraulic fracturing at a time when natural gas exploration is booming, even if fracking itself is a controversial technique among environmentalists. Overall sales grew from $15 million in 2010 to $157 million in 2011. However, Heckmann recorded a net loss of $23 million, most of which stemmed from taking a cut on discontinued operations when it was previously a bottled water distributor in China.
Heckmann has had a couple of different stops-and-starts since its founding as a blank check company in 2007. It first bought a Chinese bottled water maker, China Water and Drinks, in 2008 from its chairman and president Xu Hong Bin for $505 million. The following year the company sued Xu, settled a lawsuit with China Water's former CEO, and took a second look at the assets, which led to a net loss of $395 million in 2009. In 2011 the company sold China Water and Drinks to Pacific Water & Drinks, a Hong Kong-based company owned by Jon Olafsson, the chairman of Icelandic Water.
In 2010 it formed Heckmann Water Solutions, a 50/50 joint venture with Energy Transfer Partners, to develop waste water pipelines and treatments for shale field oil and gas producers. The two companies ended the JV in July 2011 and Heckmann recorded another net loss of $500,000 in both 2010 and 2011.
In April 2012 the company entered a new business segment - recycling used motor oil. Heckmann paid $227.5 million for Arizona-based Thermo Fluids, Inc., which sells preprocessed fuel oil from recovered used motor oil. Renamed Heckmann Environmental Services, the business operates about 30 facilities in a dozen states and has a fleet of almost 300 trucks and more than 190 railcars that pick up used motor oil, antifreeze, and oil filters from customers such as CEMEX, ConocoPhillips, Halliburton, Jiffy Lube, Peabody Energy, Penske, and Wal-Mart. The company recycles used oil into reprocessed fuel oil and sells it to industrial customers for less than half the cost of diesel fuel. Much of the reprocessed fuel oil is used as a feedstock to make base lubricants. In 2011 Thermo Fluids processed and sold about 55 million gallons of reprocessed fuel oil to 250 customers.
CEO Richard Heckmann is the company's largest stockholder with a 10% stake; former Vice President Dan Quayle sits on the board of directors. Heckmann Corp. also owns a minority interest in water pipeline supplier Underground Solutions, Inc. – less