Oasis Petroleum Inc. (OAS), Halliburton Company (HAL): Is Nuverra Environmental Solutions Inc (NES) Really Going to Go Under?

Page 2 of 2

Dark horse for a liquidity infusion
Something investors need to keep in mind is that one reason why Nuverra has over half a billion dollars in debt is because it gave CEO Mark Johnsrud a very nice check to acquire Power Fuels from him. In addition to 95 million shares, Johnsrud received $125 million in cash, which could come in handy down the road.

Think about it this way, with 260 million shares outstanding Johnsrud owns more than 40% of the company. While he does have that $125 million to fall back on, it is highly unlikely that he’ll want to see the more than $200 million in equity he has in Nuverra to simply evaporate in a liquidity crisis. If a liquidity crisis does arise, Johnsrud is in the position to personally step in and help to bail out the company.

Final Foolish thoughts
There is no denying that the numbers Nuverra has produced this year aren’t pretty. It’s easy to deduce that those numbers will continue, or get worse, however, it is just as easy to see the other side of the story. A default is not the slam dunk that the numbers can be made to portray. That’s because there are catalysts and other possibilities, including its banks cutting it more slack, that could nullify those concerns. The bottom line here is that the catalysts that attracted me to Nuverra Environmental Solutions Inc (NYSE:NES) in the first place, namely the need for an environmental solutions provider to improve the image of fracking has not changed. This is why I’m inclined to continue to stick with the stock as I just don’t see the same liquidity event taking this ship under anytime soon.

The article Is Nuverra Really Going to Go Under? originally appeared on Fool.com and is written by Matt DiLallo.

Fool contributor Matt DiLallo owns shares of Nuverra Environmental Solutions . The Motley Fool recommends Halliburton. The Motley Fool owns shares of Nuverra Environmental Solutions and has the following options: long January 2014 $4 calls on Nuverra Environmental Solutions and short January 2014 $3 puts on Nuverra Environmental Solutions.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.



Page 2 of 2