Entrepreneurs

Kevin Cumming

CumminKevin

Expedition Water Solutions – http://www.expedition-water.com/

  • Idea Generation, business plan development and Fundraising – Expedition Water Solutions was founded in December 2013 to address the need for additional oilfield wastewater handling and disposal/recycling in the DJ Basin (north of Denver).  I became knowledgeable about this aspect of the oilfield services industry through my work with another company, and what I observed in the DJ Basin was that i) there was one 800-lb gorilla in the space that was pushing customers around and the oil and gas operators there were hungry for a new competitor to enter the market and ii) the regulatory environment in Colorado was somewhat of a barrier to entry, which is why new market entrants weren’t lining up to build facilities.  I found an operating partner with deep experience in the DJ Basin and who was widely recognized as the best person to build and operate oilfield wastewater facilities, and importantly, he knew how to navigate the various regulatory agencies to get things done.  We put together a business plan and leveraged my energy investment banking and energy private equity network to set up meetings with a variety of capital providers.  After a number of meetings and false starts, we struck a deal with Platform Partners (a Houston-based middle-market private equity firm) to back us for $15 million (enough to build three oilfield wastewater facilities in the target area).
  • Pre-Revenue – We spent much of 2014 building the business.  On the operational front, we had to source locations (buy land), get them permitted, constructed, and operational, hire employees, etc.  On the business development front, it was my job to meet with every oil and gas operator in the DJ Basin, and even those who were located in Denver engaged in operations in other basins.  It was a busy time!  But our investment thesis was proving to be correct, and even prior to having our first facility operational, we were able to get several contracts in place with oil companies to deliver their oilfield wastewater to our facilities.
  • Operational at last! – In January 2015, more than a year after starting the company, our first facility was finally operational.  The aforementioned 800-lb gorilla (competitor) tried their best to bully their existing clients into long-term contracts, but a number of oil and gas operators managed to hold out and wait for our arrival.  Consequently, we had volumes from the very first day of operations.   Since that time, we’ve completed our second and third facilities, and despite rig count dropping off throughout 2015 in response to the very low oil prices, the volume coming into our facilities rose to the point that Expedition now has ~50% market share, the facilities are operating at max capacity, and the management team is mulling various expansion alternatives (basically new facilities vs. enhanced capacity at existing facilities).
  • Conclusion – Expedition Water Solutions is one of the few examples of an oilfield company that has thrived (despite the overall downturn in the energy industry).  The success (so far!) of Expedition has truly been a team effort!  It’s an excellent case study of a solid business plan that was executed by highly qualified management team working with patient and supportive capital providers.  The company is now expanding through acquisition into the Powder River Basin with a recent acquisition of a company that operates five facilities there, and other basins are being reviewed for possible expansion.
  • Note: Kevin wanted to clarify his ongoing role with the company.  Kevin developed the investment theme, wrote the business plan and sourced the capital from Platform Partners.  Kevin also brought in his operating partner, Jim Goddard.  Kevin and Jim worked this project together as co-founders for all of 2014 and were the only two on the payroll for quite some time!  However, at the end of 2014, Kevin was invited to join Juniper Capital II (a private equity firm focused on oil and gas investment opportunities in the Lower 48) as a founding Partner at the firm.   So in Q4-2014, Kevin hired his replacement to handle all of the day-to-day responsibilities that Kevin had been managing.  Kevin maintains his investment in the company and a Board seat, but Kevin’s co-founder (Jim Goddard) and the person Kevin hired to replace him (Zach Neal) have been running the day-to-day operations of the business since Q1-2015.
Expedition Water Solutions
BBA  2000
BBA Entrepreneurs Archive