Soup To Nuts In Natural Gas

on June 06, 2011 at 12:45 PM

Consolidation continues in the natural gas industry as companies with access to funding leverage their position in new markets through both acquisition and organic growth.

Natural gas assets are still fairly priced for now in most North American producing regions, Rockwater Energy Solutions Executive VP and Chief Financial Officer Holli Nichols told Breaking Energy. Her Houston-based firm is planning to grow by acquisition and organic growth in North America over the next few years, before turning to international markets.

Rockwater, a newly established firm built through the combination of four existing natural gas service companies, in a deal that closed June 1, is set to grow quickly by leveraging its strong financial position and its access to diverse geographic markets and operational specialties, Nichols said.

Investment firm SCF Partners owned roughly three-quarters of four individuals firms in natural gas services and combined them under Rockwater Energy Solutions with the minority partners, largely management of the existing firms, still as part-owners. The firms include EnerMAX Services, Red Oak Water Transfer, Reef Services Holdings and Benchmark Performance Group.

The component firms are themselves built on acquisitions, Nichols said, so in most cases each unit’s strategy will remain a continuation of existing practices. The management at the individual firms will remain the same, with corporate leadership for Rockwater coming from various sectors while Nichols worked previously as CFO of generating firm Dynegy.

Each firm has close customer relationships in diverse geographic areas and in different operating specialties, Nichols said, and each firm can thereby leverage and “cross-pollinate” the efforts of their related firms to grow the overall business. Most natural gas service businesses remain fragmented, Nichols said, and Rockwater will be unique as a comparatively full-service “soup to nuts” natural gas service provider.

Rockwater is not marketing itself as a green firm, but Nichols said the company is responding ahead of regulation to safety concerns surrounding the impact of hydraulic fracturing, or fracking, to boost production. Piping water using the firm’s infrastructure helps keep trucks off the road, Nichols pointed out, and the company uses guar, a natural thickening agent, in its fracking fluid instead of more toxic chemicals.

Picture: Downtown Houston