HECKMANN CORPORATION PART I
Item 1. Business Heckmann Corporation is a services-based company focused on total water solutions for shale or “unconventional” oil and gas exploration. We also have a subsidiary that produces and distributes bottled water products in China. As such, we operate in two primary business segments: water solutions for energy development and bottled water products. Our water solutions for energy development segment, which we believe addresses the pervasive demand for diverse water solutions required for the production of energy, represented 33% of our revenue in 2010. This segment includes our water disposal, trucking, fluids handling, treatment and pipeline transport facilities, and water infrastructure services for oil and gas exploration and production companies. Our bottled water products segment represented 67% of our revenue in 2010.
Our water solutions for energy development segment is called Heckman Water Resources, or HWR. HWR currently operates a multi-modal water disposal, treatment, trucking, and pipeline transportation business in Texas and Louisiana serving customers seeking fresh water acquisition, temporary water transmission, or disposal of complex water flows in connection with shale gas hydraulic fracturing drilling, including fresh water for hydraulic fracturing, or “fracking”, operations, flowback water and produced brine waters.
On November 30, 2010, we completed the acquisition of Complete Vacuum and Rental, Inc. (“CVR”), a private oilfield produced water disposal and transport company based in Carthage, Texas, which now operates as an integral part of HWR. CVR currently owns and operates over 180 tractors and 200 trailers along with more than 500 frac tanks. In addition to transporting produced water and other waste water streams to its disposal sites, CVR transports fresh water for production and provides services for site preparation, water pit excavations, and remediation.
On January 31, 2010, HWR completed a 50-mile water transport pipeline, which at design capacity could dispose of up to 100,000 barrels of water per day. The pipeline is supported by a network of deep injection disposal wells which we believe is not only an efficient solution for our customers, but also provides HWR with a strategic competitive position.
On February 17, 2011, we announced that HWR has started construction on a pipeline expansion that will significantly increase its produced water disposal pipeline capacity in Louisiana. The expansion will supplement HWR’s 50-mile pipeline through the Haynesville Shale area with the addition of approximately 19 miles of significantly enlarged fiberglass pipe and increased pipeline capacity for salt water transportation and disposal. The existing 19-mile section of the eastern portion of the pipeline will be used to transport fresh water to current and new customers for shale well development.
The additional capacity is required to support any future extension of the pipeline further east into the Haynesville Shale area to accommodate our growing customer base. The expansion will also enable the construction of additional truck terminals. This important combination of local trucking and pipeline facilities will provide customers with convenient access to HWR’s disposal wells.
HWR also acquired 2 additional disposal well permits in the Eagle Ford Shale area in January 2011. HWR has commenced drilling those disposal wells and expects the well sites, and related transfer stations to commence initial operations by April 1, 2011. HWR is also currently in the process of acquiring or permitting additional wells and capacity in the Haynesville Shale and Eagle Ford Shale areas.
On February 4, 2010, we entered into a joint venture agreement with Energy Transfer Partners, L.P. (NYSE: ETP) operating under the name Energy Transfer Water Solutions, JV, LLC, or ETWS. Our joint venture with
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