To rewind a bit, WTTR went public back on April 21 to little fanfare. In fact, its IPO was downsized to 8.7 million shares from 10.6 million and the deal priced at $14, below the $15-$18 expected range. As some may recall, oil prices began to tumble lower in late April, which certainly provided a headwind to its IPO. For those unfamiliar with WTTR, the company provides water services to oil exploration and production companies -- particularly those engaged in hydraulic fracturing. Therefore, its business is exposed to commodity price risk. With that in mind, it's not surprising then that shares have been creeping higher as oil prices have rebounded over the past week or so.
For some more background on the company, WTTR sources and transfers water by using permanent and temporary pipelines to use in drilling and completion activities. It has operations in core areas of all major shale plays in the United States, including the Permian Basin, Bakken, Eagle Ford, Marcellus, Utica, Haynesville, Rockies (DJ Basin, Niobrara Shale and Powder River Basin) and other Mid-Continent basins (Woodford, Barnett, Fayetteville, Granite Wash and Mississippian). In particular, it has established a strong position in the Permian Basin, which is presently its largest operating region, and where it expects producers to invest significant capital as commodity prices continue to recover from recent lows.
WTTR's inventory of water sources is a key competitive advantage and enables it to offer customers reliable access to the volume of water essential for fracking operations. The company has spent the past five or more years obtaining water sources and has secured permits or long-term access rights to approximately 1.5 billion barrels of water annually from currently in excess of 350 sources, a number which varies over time, including large scale sources such as the Brazos, Missouri, Navasota, Ohio, Poudre, Rio Grande, Sabine, San Antonio, South Platte and Washita Rivers.
Taking a look at the financials, total revenue declined 44% year/year to $302.4 million in FY16. The decrease was primarily attributable to a decline in completion activities and a decrease in average annual rig count of 48% during 2016 compared to 2015 due to a low commodity price environment. Loss from operations widened significantly to ($298.9) million from ($68.8) million in FY15. However, it's important to note that in FY16, WTTR took a $139 million impairment charge on good will, and, a $60 million impairment charge on property and equipment. If using Adjusted EBITDA, the results look much better at $17 million in FY16. It also generated positive cash flow of $5.1 million during the year. Finally, looking at the balance sheet, as of December 31, 2016, WTTR had cash and equivalents of $140.0 million and no long term debt, on a pro forma basis.