Hi Shoobity, thanks for the write up.
I couldn't find any reference in your note to SOI's ownership structure: "As the sole managing member of Solaris LLC, Solaris Inc. operates and controls all of the business... login to read the rest
Great discussion here. Rasputin- I think we talked to the same group as I got verbatim bullet points.
Here are my comments...
Useful life
Shoobity cites a useful life of 5-7 years in the write up. SOI’s 10-k... login to read the rest
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I'll let rasputin respond but just to throw in my take:
Yes on pricing deterioration during the downturn. However, that also means at that point they can significantly reduce their capex (the way NOV does) during... login to read the rest
Re: Re: thoughts from a friend who knows the name well
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Thank you for sharing by the way. I realize those are not your arguments. I'm just trying to assess the strength of the moat and so far I'm not seeing it.
Re: thoughts from a friend who knows the name well
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Agreed that rational capital allocators deserve a premium int the OFS space.
Agreed they have the best product, but what sustainable competitive advantages do their products have? I agree EOG is a thought leader. I also agree... login to read the rest
You bet. No, of course I would not like the business more if it had lower margins. I think what matters is whether the current margins are sustainable, or if they are a temporary phenomenon... login to read the rest
I'd be interested to hear if anyone has talked to the drillers / E&Ps about whether they actually want an all-in-one solution or not? The company is telling me that the industry is actually asking... login to read the rest
Btw Snarfy - in my last comment when I'm talking about maintaining margins I'm talking about during this upcycle in energy. I agree with your comments that in a downturn like 2015/2016 where drilling activity... login to read the rest
Snarfy, thank you for the thoughtful response. This is what VIC is all about! Healthy debates about the investment merits of certain companies. I hadn't really thought through the replacement cost argument, which likely lowers... login to read the rest
Snary - I don't think EP's would have much hesitation changing. The logistics of sand is a huge topic that everyone in the oilfield is very focused on. And although it is a low cost... login to read the rest
Thanks for actively engaging in discussion. I have spent the last day or so working on this and I'll be frank it has some of the telltale signs of being a short (at some point),... login to read the rest
I'll also just note that where these systems are much better are the multi-well drill pads because the silos can hold much more sand. If you are going to just drill one well on the... login to read the rest
Boxes hold less sand vs. silo... the box system takes up to 3 employees to manage the system vs. SOI @ 1 employee. Box system also requires additional heavy lift equipment (large forklift)... SOI system... login to read the rest
Shoobity - most of the work we have done suggests that the market is moving toward boxed solutions. The operators we talk to say that they are faster and cheaper than SOI. I think HCLP,... login to read the rest
Thanks for reading snarfy and bluewater. This is certainly not a Google type of moat but it's also not a Poseidon Concepts fraud either. This is not something you want to own through the next... login to read the rest
exactly. 60% margins for a basic service? after my first read through I was wondering if this is the newer sand version of poseidon concepts. we are due for another one of those...
I'd love to hear your thoughts on whether SOI has any sustainable competitive advantages. I agree it looks cheap, but I would want to understand clearly whether this is an investment or a trade. The... login to read the rest
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