Energy Recovery Inc. (NASDAQ: ERII) took off like a rocket in Tuesday’s session following a new license agreement with one major oilfield company. Schlumberger Ltd. (NYSE: SLB) announced that it has signed a 15-year license agreement with Energy Recovery for exclusive rights to its VorTeq hydraulic pumping system.
Source: Thinkstock
The VorTeq hydraulic pumping system is the first hydraulic fracturing manifold (missiles) built to isolate hydraulic fracturing pumps from abrasive proppants that cause pump failure. Ultimately, it replaces the missiles traditionally used in hydraulic fracturing. In current operations, the missile routes water, proppants and chemicals downhole at treating pressures up to 15,000 psi.
Under the terms of the agreement, Schlumberger will pay a $75 million exclusivity fee immediately. Schlumberger also will pay two separate $25 million milestone payments subject to the Energy Recovery satisfying certain key performance indicators expected to occur in 2016. The agreement also includes continuing annual royalties for the duration of the license agreement subject to the company satisfying these performance indicators.
Joel Gay, president and CEO of Energy Recovery, said:
We are thrilled to be working with Schlumberger, the world’s largest oil field services company, and a leading supplier of technology associated with hydraulic fracturing solutions. We believe VorTeq is a paradigm shift for the hydraulic fracturing industry as it significantly reduces maintenance costs associated with pumping downtimes and provides considerable redundancy efficiencies.
ALSO READ: 9 Great Companies That Can Raise Dividends for a Decade
He added:
We believe this technology offers Schlumberger the immediate benefit of reducing wear and tear on its pumps, as well as reducing downtime. In the medium-term, we believe it provides Schlumberger additional savings associated with eliminating redundant equipment onsite. For a company in this market who wants to keep producing but needs to be mindful of costs, this technology tackles these challenges and delivers meaningful results.
So far in 2015, Energy Recovery has greatly underperformed the broad markets, but with a huge weakness in oil this is par for the course. As of Monday’s close, the stock is down 53% year to date and down 39% over the past 52 weeks. This current jump in the share price is very much welcome to say the least.
Shares of Energy Recovery were last seen trading up over 174% at $6.74. The stock has a consensus analyst price target of $2.90 and a 52-week trading range of $2.07 to $8.16.
Schlumberger shares were up about 1% at $74.98, with a consensus price target of $90.26 and a 52-week range of $66.57 to $100.54.
ALSO READ: 5 Big Oil and Gas Stocks Analysts Want You to Buy Now
Smart Investors Are Quietly Loading Up on These “Dividend Legends”
If you want your portfolio to pay you cash like clockwork, it’s time to stop blindly following conventional wisdom like relying on Dividend Aristocrats. There’s a better option, and we want to show you. We’re offering a brand-new report on 2 stocks we believe offer the rare combination of a high dividend yield and significant stock appreciation upside. If you’re tired of feeling one step behind in this market, this free report is a must-read for you.
Click here to download your FREE copy of “2 Dividend Legends to Hold Forever” and start improving your portfolio today.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
