I’ve been keeping up on earnings for my companies as they post, but I haven’t quite had the spare time to translate everything I’m thinking into posts. It’s been a rapid series of reports and not quite enough time to write out my thoughts on the subject.
Rest assured, if there had been any big deviations from the plans, I’d tell you.
As HCLP has been a particularly precious position and given how closely I’m tracking, it merits special consideration.
The company guided in on revenues and missed on earnings (depending on who you ask). But neither of that matters. This is what is actually important:
The company continues to see rapid increases in demand for product. Tonight, in addition to reporting earnings, they also announced another amended contract that, and I quote, “…significantly increases the annual committed volumes under the agreement signed in March and extends the term by two more years.”
No, you’re not seeing things. HCLP just amended this same contract two months ago. I guess realities on the ground have already changed so much that they were afforded the luxury of re-renegotiating.
I look at the last press release from March, where they announced the original amendment to the Weatherford contract, which was to be in place for a further three years, at a specified (then higher) volume of sand, for a higher price.
So two months later, that contract has become a five year contract for even higher volumes.
Yes I do like the sound of that. You can bank on these developments flowing through the natural gas producers and well servicing sectors soon enough. High demand for sand means high demand for gas.
Natural gas inventory is at eleven year lows and there is lingering concern that adverse weather this year could put real pressure on refilling storage. This would translate to pressure on users for higher prices and alleviate much of the residual pessimism surrounding natural gas from 2011.
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