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EMES Emerge Energy Services

We are a publicly-traded limited partnership formed in 2012 by management and affiliates of Insight Equity.  We are engaged in the business of mining, processing, and distributing silica sand, a key input for the hydraulic fracturing of oil and gas wells.  We conduct our operations through our subsidiary SSS, and we believe our SSS brand has name recognition and enjoys a positive reputation with our customers. Our principal offices are located at 5600 Clearfork Main Street, Suite 400, Fort Worth, Texas 76109. Our telephone number is (817) 618-4020 and our website address is www.emergelp.com.

Company profile

Ticker
EMES
Exchange
CEO
Richard J. Shearer
Employees
Incorporated
Location
Fiscal year end
SEC CIK
Subsidiaries
Emerge Energy • Superior Silica Sands LLC ...
IRS number
900832937

EMES stock data

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Calendar

21 May 20
26 Oct 21
31 Dec 21

Data for the last complete 13F reporting period. To see the most recent changes to ownership, click the ownership history button above.

13F holders
Current Prev Q Change
Total holders 0 0
Opened positions 0 0
Closed positions 0 0
Increased positions 0 0
Reduced positions 0 0
13F shares
Current Prev Q Change
Total value 0 0
Total shares 0 0
Total puts 0 0
Total calls 0 0
Total put/call ratio
Largest owners
Shares Value Change
Largest transactions
Shares Bought/sold Change
IFP Advisors 0 0

Financial report summary

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Risks
  • Even if a Chapter 11 plan of reorganization is consummated, we may not be able to achieve our stated goals and continue as a going concern.
  • Upon emergence from bankruptcy, our historical financial information may not be indicative of our future financial performance.
  • Delays in the Chapter 11 Cases may increase the risks of our being unable to reorganize our business and emerge from bankruptcy and increase our costs associated with the bankruptcy process.
  • The Plan may not become effective.
  • In certain instances, a Chapter 11 case may be converted to a case under Chapter 7 of the Bankruptcy Code.
  • We may be subject to claims that will not be discharged in the Chapter 11 Cases, which could have a material adverse effect on our financial condition and results of operations.
  • The pursuit of the RSA has consumed, and the Chapter 11 proceedings will continue to consume, a substantial portion of the time and attention of our management, which may have an adverse effect on our business and results of operations, and we may face increased levels of employee attrition.
  • Upon emergence from bankruptcy, the composition of our board of directors will change significantly.
  • The Plan and any other plan of reorganization that we may implement will be based in large part upon assumptions and analyses developed by us. If these assumptions and analyses prove to be incorrect, our Plan may be unsuccessful in its execution.
  • We may not have sufficient available cash to pay any quarterly distribution on our common units.
  • The amount of our quarterly cash distributions, if any, may vary significantly both quarterly and annually and will be directly dependent on the performance of our business. Unlike most publicly traded partnerships, we do not have a minimum quarterly distribution or employ structures intended to consistently maintain or increase distributions over time.
  • The board of directors of our general partner may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us to make any distributions at all.
  • We have a history of losses and may continue to incur losses in the future.
  • Our operations are subject to operating risks that are often beyond our control and could adversely affect production levels and costs.
  • Our insurance may not cover or be adequate to offset costs associated with certain events, claims and litigation, and there can be no assurance that insurance coverage will continue to be available in the future on terms that justify its purchase.
  • We may be adversely affected by decreased demand for frac sand or the development of either effective alternative proppants or new processes to replace hydraulic fracturing.
  • We may be adversely affected by a reduction in horizontal drilling activity or the development of either effective alternative proppants or new processes to replace hydraulic fracturing.
  • A large portion of our sales is generated by a few large customers, and the loss of our largest customers or a significant reduction in purchases by those customers could adversely affect our operations.
  • Any material nonpayment or nonperformance by any of our key customers could have a material adverse effect on our business and results of operations and our ability to make cash distributions to our unitholders.
  • Our long-term contracts may preclude us from taking advantage of increasing prices for frac sand or mitigating the effect of increased operational costs during the term of our long-term contracts, even though certain volumes under our long-term contracts are subject to annual fixed price escalators.
  • The credit risks of our concentrated customer base could result in losses.
  • Certain of our contracts contain provisions requiring us to meet minimum obligations to our customers and suppliers. If we are unable to meet our minimum requirements under these contracts, we may be required to pay penalties or the contract counterparty may be able to terminate the agreement.
  • We must effectively manage our production capacity.
  • We may record impairment charges on our assets that would adversely impact our results of operations and financial condition.
  • Failure to maintain effective quality control systems at our mining, processing and production facilities could have a material adverse effect on our business and operations.
  • We face significant competition that may cause us to lose market share and reduce our ability to make distributions to our unitholders.
  • Our cash flows fluctuate on a seasonal basis and severe weather conditions could have a material adverse effect on our business.
  • Diminished access to water may adversely affect our operations and the operations of our customers.
  • We may be unable to grow successfully through future acquisitions, and we may not be able to integrate effectively the businesses we may acquire, which may impact our operations and limit our ability to increase distributions to our unitholders.
  • Our ability to grow in the future is dependent on our ability to access external growth capital.
  • Our debt levels may limit our flexibility in obtaining additional financing, pursuing other business opportunities and paying distributions.
  • If we are unable to generate enough cash flow from operations to service our indebtedness or are unable to use future borrowings to refinance our indebtedness or fund other capital needs, we may have to undertake alternative financing plans, which may have onerous terms or may be unavailable.
  • Our current operations and future growth may require significant additional capital, and the amount and terms of our indebtedness could impair our ability to fund our capital requirements. The DIP Facility may be insufficient to fund our cash requirements through emergence from bankruptcy.
  • Despite our current level of indebtedness, we may still be able to incur more debt. This could further exacerbate the risks associated with our current indebtedness.
  • Our ability to manage and grow our business effectively may be adversely affected if we lose management or operational personnel.
  • Inaccuracies in our estimates of mineral reserves could result in lower than expected sales and higher than expected costs.
  • Our operations are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties.
  • Government action on climate change could result in increased compliance costs for us and our customers.
  • Mine closures entail substantial costs, and if we close one or more of our mines sooner than anticipated, our results of operations may be adversely affected.
  • Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related regulatory action or litigation could result in increased costs and additional operating restrictions or delays for our customers, which could negatively impact our business, financial condition and results of operations and cash flows.
  • We are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on numerous aspects of our operations.
  • We and our customers are subject to other extensive regulations, including licensing, protection of plant and wildlife endangered and threatened species, and reclamation regulation, that impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations.
  • A failure in our operational and communications systems, loss of power, natural disasters, or cyber security attacks on any of our facilities, or those of third-parties, may adversely affect our financial results.
  • Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors.
  • Insight Equity owns the majority of and controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates, including Insight Equity, have conflicts of interest with us and limited duties, and they may favor their own interests to the detriment of us and our common unitholders.
  • Our general partner limits its liability regarding our obligations.
  • Our partnership agreement replaces our general partner’s fiduciary duties to holders of our common units with contractual standards governing its duties.
  • Our partnership agreement restricts the remedies available to holders of our common units for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.
  • Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.
  • Our general partner interest or the control of our general partner may be transferred to a third party without unitholder consent.
  • An increase in interest rates may cause the market price of our common units to decline.
  • We may issue additional units without your approval, which would dilute your existing ownership interests.
  • Our general partner has a call right that may require you to sell your units at an undesirable time or price.
  • Your liability may not be limited if a court finds that unitholder action constitutes control of our business.
  • Unitholders may have liability to repay distributions that were wrongfully distributed to them.
  • As a result of the delisting of our common units on NYSE, our common units are currently traded on over-the-counter markets, which could adversely affect the market liquidity of our common units and harm our business.
  • If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our units.
  • Our tax treatment depends on our status as a partnership for federal income tax purposes. If the IRS were to treat us as a corporation for federal income tax purposes, which would subject us to entity-level taxation, then our cash available for distribution to our unitholders would be substantially reduced.
  • The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
  • The Chapter 11 Cases could have significant adverse tax consequences to our unitholders.
  • Our unitholders’ share of our income is taxable to them for federal income tax purposes even if they do not receive any cash distributions from us.
  • If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to our unitholders.
  • If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us, in which case our cash available for distribution to our unitholders might be substantially reduced.
  • Tax gain or loss on the disposition of our common units could be more or less than expected.
  • Tax-exempt entities and non-U.S. persons face unique tax issues from owning our common units that may result in adverse tax consequences to them.
  • We treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.
  • We prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first business day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge aspects of our proration method, and, if successful, we would be required to change the allocation of items of income, gain, loss and deduction among our unitholders.
  • A unitholder whose common units are loaned to a “short seller” to affect a short sale of common units may be considered as having disposed of those common units. If so, he would no longer be treated for federal income tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition.
  • We may become a resident of Canada and be required to pay tax in Canada on our worldwide income, which could reduce our earnings, and unitholders could then become taxable in Canada in respect of their ownership of our common units.
Management Discussion
  • Sand revenues decreased by $50.7 million primarily due to a 11% decrease in total volumes sold resulting from a shift in mix away from higher-priced terminal sales and a slowdown in well completion activities in the second half of 2018.  FOB plant sales volumes increased 15% compared to a 44% decrease in the higher-priced, terminal sand sales.  Terminal sales as a percentage of total volumes sold decreased from 44% in 2017 to 28% in 2018.  Revenue per ton decreased to $63.78 in 2018 compared to $65.84 per ton in 2017, due to lower northern white volumes sold, shift in mix away from higher-priced terminal sales and a decline in northern white prices.
  • Our cost of goods sold consists primarily of direct costs such as processing plant wages, royalties, mining, purchased sand, and transportation to the plant or to transload facilities, as well as indirect costs such as plant repairs and maintenance.  Our direct costs of producing sand increased with our higher sales but was offset by decreased logistic costs.  The most significant components of the $46.4 million decrease from 2017 to 2018 are:
  • Depreciation, depletion and amortization decreased by $2.3 million mainly due to higher depletion expense in 2017 as mines were open the full year compared to 2018 when we shut down our Wisconsin mines early.  This decrease was offset by the addition of our San Antonio facility in 2018.
Content analysis
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Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability
H.S. sophomore Good
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