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West Virginia company poised for increasing demand in natural gas
Lori Wolfe/The Herald-Dispatch
Ed Burns is the president of Energy Services of America Corporation is located at 100 Industrial Lane in Huntington.
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February 13, 2010 @ 10:00 PM
JEAN TARBETT HARDIMAN
The Herald-Dispatch
HUNTINGTON -- It's the right time, Ed Burns said.
Four well-established businesses -- three contractors and a pipeline firm -- are now working together under the umbrella of a new company, Energy Services of America Corp. And Burns, the president and chief executive officer of the new company, thinks they're poised to take advantage of changing times as the country pursues new forms of energy.
Their focus is natural gas.
The companies include S.T. Pipeline Inc. of Clendenin, W.Va.; Contractors Rental Corporation and C.J. Hughes Construction, both of Huntington; and Nitro Electric Co. in Nitro.
Combined, the acquisition companies can do production, transmission and distribution pipelines, and "With the president's demand for more dependence on natural gas than conventional forms of energy," there will be more projects out there, Burns said.
He and his subsidiary companies are looking to tap into the business coming from extraction of natural gas from the Marcellus shale of the Appalachian Basin, which covers New York state, Pennsylvania and West Virginia. It's been reported to have between 200 and 400 trillion cubic feet of natural gas. According to reports, the drilling process to reach that gas is a work in progress to ensure safety of the environment. But Energy Services is hoping to be the company that helps transport the natural gas, rather than drill it.
The federal government has stressed that natural gas is more environmentally friendly than some alternatives, Burns said. And it's less invasive for property owners because pipes are underground, said Skip Holley, president of Contractors Rental.
The gas in the Marcellus Shale could meet energy needs for this country for several years, Burns said.
"For it to be accessible to users on the East Coast, you have to have pipelines," he said. "There are some, but not nearly enough and not in the places that they're drilling.
"There will always be work on maintaining lines, but we feel we're in the right place and the right time to capitalize on this growing demand."
Opportunities for growth are to the south, he said, and Huntington is a great position because of its central location in the Mid-Atlantic.
Stimulus dollars also are out there now for projects to extend water and sewer lines, which should be good for the business also, Burns said.
Projects already under the new company's belt include work on a pipeline for Marathon that stretched 142 miles from Kenova to Columbus, Ohio. "We didn't install it, but we did clean up and do landscaping," Burns said.
They have a number of other projects going on throughout the region, Burns said.
Energy Services of America was founded in 2006, but was late getting its legs because of the stall in the economy in 2008.
It's coming together for the business, and it turned profitable in the fiscal first quarter of 2010. According to the company, it earned $637,563, or 5 cents per share, in the period that ended Dec. 31 after losing $2.2 million, or 18 cents per share, in the same period a year earlier.
Revenue dipped to $30 million, from $33.7 million a year earlier. Losses on two jobs by S.T. Pipeline subsidiary were to blame for the bad start to fiscal 2009, but the company says it avoided those problems at the start of the current fiscal year.
"We've had our struggles because it's a strange environment to work in," Burns said. But he expects 2009's revenue levels of about $100 million to double in 2010.
Energy Services of America has $35 million in equipment at market value, and its number of employees is seasonal, ranging from 300 to 1,000. One plus for the company is that employees have impressive experience installing pipelines in mountainous terrain, Burns said, with the foremen and supervisors averaging about 20 years in their field.
Lane Ferguson heads Nitro Electric, which has worked with Toyota, Hitachi and Special Metals, among others, and Dwight Randolph heads up C.J. Hughes, which has worked with Mountaineer Gas and Marathon Oil and others.
Jim Shafer started S.T. Pipeline in 1984 and has extensive experience, including work on the Alaska Pipeline, Burns said. His company has done for businesses such as Dominion Resources.
Holley of Contractors Rental has done work as far as South America, and his company has worked with Columbia Gas and Spectra Energy.
Burns has a background in public accounting and banking. He was a controller at The Herald-Dispatch some decades back.
Marshall Reynolds is the chairman of the board. Reynolds is the chief executive officer of Champion Industries, which owns The Herald-Dispatch.
Being part of Energy Services of America is a good opportunity to expand and be part of a group, Holley said. There are synergies that can help in financing jobs, getting larger-capacity jobs and getting better prices on liability insurance.
It's just a matter of choosing the right types of projects, Burns said.
"If we do this right, we'll have a company that can succeed into the future and provide opportunities for growth for all our companies," he said. |
