What downturn?
As oil and natural gas companies struggled to survive the downturn in the energy sector, Energy & Environmental Services has been on a spending spree.
As much of the oil and natural gas industry shrank and struggled to survive the worst downturn in three decades, Oklahoma City-based Energy & Environmental Services has been on a spending spree, buying companies and office space and positioning itself to grow as the industry recovers.
EES last month completed a reverse merger of Oklahoma City-based Enerlabs, using the purchase to become publicly traded.
“The reverse merger gave us a vehicle to be aggressive,” said Leon Joyce, EES’s senior vice president of sales. “This is the time of opportunity. We’ll be able to move into the market and industry we weren’t in.”
The company over the past few years has bought both office and lab space, moving out of the buildings it had rented previously. EES’s nearly 30 employees are distributed among the company’s Oklahoma City headquarters, a chemical plant, a coating facility and a microbe facility in Oklahoma, along with an international sales office in Houston.
Historically an oil field chemicals company, EES executives said they plan to use the recent expansion and the new access to the stock market to help expand into other industries.
‘Not just oil and gas’
“As our chemical coatings business grew, (CEO) Mel (Smith) wanted to diversify into other areas because of the ebb and flow of the oil and gas market,” Joyce said. “We wanted to expand and generate other revenue streams. We can make chemicals that can go into the oil patch, industrial applications and agriculture. Our coating goes wherever there’s corrosion. It’s not just oil and gas.”
The company’s main product is a chemical powder that can be added to the water, sand and chemical mix used during hydraulic fracturing operations. EES’s chemical is designed to protect the well and pipe by reducing corrosion deep below ground.
“The Permian was our bread-and-butter volume business in 2013,” Joyce said.
In recent years, the company has expanded into six divisions, largely variations on its chemical applications.
The company now also manufactures and sells enzymes and chemicals that are designed to eliminate odors and help cattle process food properly, with applications in agriculture, industry, sewage treatment, boating and household cleanup.
Diversification is essential to the company’s longterm success, Joyce said.
“In the oil business, it doesn’t slow down — it shuts off,” he said. “Living in Oklahoma is cyclical. How many of our large oil and gas businesses had to file for bankruptcy. Others shut their doors and went away. We understand that is part of the nature of the beast. It’s very important for a manufacturing facility like ours to not just be in the oil patch.”
The company expanded into enzymes after hiring microbiologist Todd Jelinek as executive vice president about five years ago.
“When I first came on, we had an enzyme product we were using in the oil patch. We’re doing so many other things now,” Jelinek said.
While the company is expanding rapidly, the new applications all are somewhat related, he said.
“We’re not trying to get too far-fetched,” Jelinek said. “These products are used in the oil field, but they can be applied in other areas.”
Besides diversifying in product offerings, EES also is diversifying in customer base. The company has expanded with new contracts in Mexico and Asia.
While the company is diversifying and expanding, the executives are careful not to expand too quickly, Joyce said.
“It’s a 10-year diversification. We’ve been about this since 2007, looking for avenues, looking for markets,” he said.