Select Energy Services, Inc. (WTTR) stock prices were up by 10.99% as of market close on May 7th, 2021, bringing the price per share up to USD$6.87 at the end of the trading day.
Improvements in Consolidated Financials
WTTR’s Oilfield Chemicals segment led the revenue improvement experienced during the first quarter of 2021 that saw an 8% increase in consolidated revenue growth. As compared to the last quarter of the fiscal year 2020, Q1 2021 exhibited increases in overall industry activity, despite challenging winter storm weather conditions in February. The overall margin performance for the first quarter was negatively impacted by the supply chain disruptions and a loss of almost a week’s worth of revenue.
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Factors Facilitating Growth
The company is expecting continued constructive activity growth through the rest of 2021, based on steadying commodity prices. As the government continues to roll out vaccines with the aim of universal immunizations, WTTR expects the economy to stabilize, resulting in further growth. Also facilitating future growth are the governments provision of strong economic support during the pandemic and the demand for oil continuing to improve steadily.
Strong Forecasts
Based on the strength of the first quarter of the fiscal year 2021 and promising broader economic developments, WTTR forecasts revenues generated in the second quarter of the year to be between USD$160 to USD$170 million. After the unfortunate weather-related compressions experienced by Adjusted EBITDA margins in the first quarter of 2021, reports are expected to recover in the second quarter to a range of 5-7%.
WTTR Collaborates with Partners
The company has also recently entered into a partnership with two blue-chip operators in the core of the Permian Basin. The collaborative efforts of the partners will see the construction and operation of two water recycling facilities, supported by long-term contracts. Both projects commenced operations in Q1 2021 and have reported promising initial reports.
Collaborative Projects
The projects will serve to streamline customers’ water logistics, resulting in a reduction of costs to help facilitate achieving ESG targets. This will be done primarily by reducing the environmental impact through reduced fresh water usage and reduced waste disposal. This progress has been consolidated by the further commercialization of the water facilities. An additional two customers are contracted to send volumes during Q2 2021, with the additional pull through of various service lines relate to the water facilities.
Future Outlook for WTTR
In conjunction with the strong reports of the company’s start to the fiscal year 2021, continued success is scaffolded by government measures during the pandemic, as well as by improving market dynamics. Current and potential investors are hopeful that WTTR can continue to leverage the resources at its disposal to usher in significant and sustained increases in shareholder value.
