Basic Energy Services, one of my most favorite positions, is reporting Q1 earnings after the close.

The stock is up ~80% since the start of the year. Accordingly, it is being afforded a little break today, while longs lock in some gains.

Cain Hammond Thaler will not be among the profiteers, as he is resting self-assuredly in his 9th floor office, indifferent to the prospect of a BAS sell off. Cocky, even.

Natural gas spot pricing is back to $4.70. That is a huge rebound from the mighty flush out that first put the natural gas sector on ice. Since which time, BAS and strengthened their corporate entity, engaging in buy outs and solidifying the balance sheet.

Let’s see what they can do.

Comments »

HCLP just amended another supply agreement to jack up the amount of sand one of their customers is obligated to buy every month. This is the third one this year.

Per MarketWatch:

Houston, Texas – April 8, 2014 – Hi-Crush Partners LP (NYSE: HCLP), or Hi-Crush, today announced the entry into of an amendment to the supply agreement between Hi-Crush Operating LLC, a subsidiary of Hi-Crush, and FTS International, LLC, or FTSI, a leading provider of well completion services. The amendment significantly increases the number of committed volumes under the agreement, extends the term of the supply agreement and requires FTSI to pay a specified price for a specified minimum volume of frac sand each month. “Hi-Crush is excited to further extend and strengthen our relationship with FTSI by entering into this amendment,” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “We consider FTSI a valuable partner as we continue to expand our market presence, and fulfilling our customers’ needs is a top priority for Hi-Crush.”

And when they say “requires FTSI to pay a specified price for a specified minimum volume of frac sand each month.”…question? Do you suppose that would mean a higher “specified price”?

I would suppose it would.

This follows the news yesterday that HCLP was going to have themselves an offering to completely buy out any competing interests in their Augusta facility.

Read here:

Houston, Texas – April 8, 2014 – Hi-Crush Partners LP HCLP +2.31% (“Hi-Crush” or the “Partnership”) announced today that it has entered into a contribution agreement with Hi-Crush Proppants LLC (the “Sponsor”) to acquire certain equity interests in Hi-Crush Augusta LLC (“Augusta”), the entity that owns the Sponsor’s raw frac sand processing facility located in Augusta, Wisconsin. As previously announced, Hi-Crush acquired a preferred interest in Augusta on January 31, 2013.

“We are delighted to announce this acquisition, which we expect to be immediately accretive,” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. “With this transaction, we will double the Partnership’s production capacity to 3.2 million tons per year. The Augusta plant has a current capacity of 1.6 million tons of coarse Northern White frac sand per year. Beyond that, we have the capability to expand the Augusta plant by an additional 800,000 tons per year and have started the process to obtain the permits required for this expansion. The expansion will bring total rated capacity at the Partnership to 4 million tons per year. We expect the expanded capacity to come on-line in the second half of 2014.”

Under the terms of the transaction, the Partnership will pay cash consideration of $224.25 million. At the closing of the acquisition, the Partnership’s preferred equity interest in Augusta (currently providing $3.75 million in distributions per quarter) will be converted into common equity interests in Augusta, and the Partnership will own 98% of Augusta’s common equity interests. “We expect that the acquisition of common equity interests in Augusta will contribute more than $30 million of incremental annual EBITDA to the Partnership, before any expansion to the Augusta plant,” said Mr. Rasmus. The acquisition is expected to close by mid-May 2014, subject to regulatory approvals and other closing conditions. In connection with the acquisition, Hi-Crush expects to refinance its existing revolving credit facility.

We need to follow the sand. Where the sand goes, the profits will go also. No buyouts – if these guys enter into a cash offer for my units on my behalf, I’m going to blow a gasket.

These moves are going to double HCLP’s revenue immediately. That will play into the hand of existing investors as bigger operations allow the executives of HCLP to leverage their logistics operations and gain market share.

I’m not even going to look to see if HCLP is paying top dollar premium on this deal – I’ll spare you the time, the answer is “I don’t care.”

This trend in the economy is only growing. These guys survived Aubrey McClendon blowing up the natural gas sector, and together with targeted well services like BAS, they’re going to dominate.

The shares aren’t even phased at the announced dilution yesterday to pay for the acquisition. Have a look.

Here’s the tagline:

HCLP – This Shit Is Going Higher

Comments »

HCLP announced another 3 year supply agreement after the close yesterday; this time with US Well Services. Like the other, this agreement locks in US Well Services to purchase a minimum amount of frac sand from HCLP each month.

Per the CEO of HCLP:

“We believe that U.S. Well`s commitment underscores the strength of our extensive logistics network of rail-served terminals in the northeast,” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. “Certainty of supply is critical in today`s market. Our customers need to have access to high-quality frac sand, when and where they need it, and Hi-Crush provides this certainty.”

I spoke with a gentleman in the comments section of another post on this subject just the very day – he had asked why I don’t love SLCA.

Both HCLP and SLCA are laudable enterprises worthy of a look (and probably a buy). But HCLP’s strategy resonates with me. Their insistence on building their business with logistics in mind – as much as supply deposits – is a distinguishing strength which I respond to.

HCLP is up more than 3% today on the news. This is exactly the kind of activity that will lead HCLP to continue to grow revenues at 100% annually. It’s difficult to put a price on this sort of activity – I’m a believer and think a business like HCLP is still advantageously priced for this growth as opposed to, say, a TSLA.

But I’m also sitting on a mid to high- $20’s cost basis, so take that for what it’s worth.

Next stop, $50.00.

Comments »

Check out Basic Energy Services, up another 4.5%, flirting with $27.00 as it steadily pounds its way to $30.00.

HCLP is playfully tagging along, after the doldrums took it down back below $40.00 this week. And well it should – they’re in the same industry after all. What’s good for BAS is great for HCLP.

Uranium is slack and UEC is dying (very small position). CCJ is back to it’s old range, and I am saddened by that.

But this is a buying opportunity make no mistake of that.

Comments »

The run higher continues, with CCJ and BAS both up over a percent again today. AEC and NRP are trading flat. UEC is north of 4% gains, but it’s small so no one cares.

HCLP is down, naturally. That’s my pick for March madness; so it has to be the lone skunk of my portfolio. Not to worry, not to worry. Just as soon as any chance of personal glory is off the table, it too will continue the run higher, making me a silent, very non-public, fortune.

Can’t give me marketable material that easily, now can we?

Just sit back and enjoy the show. The indices no longer matter to me. Rather, the public storytelling is shifting into my corner now. This is the Atomic Year, the Fracking Year – financial journalists need something to yap about, and my assets will be it.

And accordingly, that makes this the Thaler Year.

Comments »

BAS, HCLP, APC, CHK, COP…let’s be clear here, if it has to do with energy extraction, it is running hot and long. The natural gas plays are especially sweet here, and BAS and HCLP are making you rich, if you’ve been playing with me.

On Friday HCLP and BAS both bleed out and I was worried. But today, they’re right back where they started and there’s not a cloud in the sky.

If this keeps up, it will just be a matter of time before the major publications, scared of looking out of the loop, start putting out pieces declaring natural gas to be “in”, flooding small money retiree accounts and speculative, low-information traders into the sector.

I’m not missing out on the excessive gains this time. My trades tend to be wildly profitable anyway, but I can’t help but notice that just after I check the door, that’s when the really stupid offers start coming in. Why it happened in RGR just last year.

This time around, I will be the recipient of my 12X PE stock getting bid to 40X FPE stupid levels by your local college Bachelor of Arts student, making investment decisions with his tuition money based off Motley Fool articles. I’m so deep in profits on these positions and the story is so good, it’s just worth my time to wait.

Comments »