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Emerge Energy (EMES) at 52-Week Low: More Trouble Ahead?

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On Sep 24, oilfield services provider Emerge Energy Services LPEMES fell to a 52-week low of $11.12. The units of the partnership declined another 6.5% in the after-hours trading session to $11.00. The fall can be attributed to the announcement that the partnership has withdrawn its previously declared distribution guidance.

Emerge Energy Services has had a rough year and the weak crude pricing environment has taken a toll on its financials. Units of the partnership have tanked nearly 90% in the past year. Emerge Energy Services has failed to meet earnings estimates in three of the trailing four quarters and has an average negative surprise of 8.79%.

More Trouble Ahead?

Emerge Energy Services' Sand segment provides silica sand, which is used in fracking. As such the company is highly exposed to the weakness in commodity prices.

The downturn seems far from over for Emerge Energy Services. The partnership has withdrawn the earlier announced distribution guidance for 2015. Moreover, it does not plan on providing any new guidance. The partnership stated that this withdrawal is because of the difficult market conditions for its Sand and Fuel segments due to the prolonged weakness in oil and natural gas prices .

With commodity prices anticipated to remain weak for a greater part of next year, more trouble lies ahead for the firm.

Emerge Energy Services had announced a cut in its second-quarter distribution earlier this year. The quarterly distribution of 67 cents per unit marked a 43% year over year decline and 33% sequential decrease. Despite this cut, the current distribution reflects a yield of about 23%. The amount is significantly large considering the current market conditions. Hence, this increases pressure on the already challenged financials of the firm.

Zacks Rank and Other Key Picks

Currently, Emerge Energy Services carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the broader energy sector are Tesoro Corporation TSO , Northern Tier Energy LP NTI and Alon USA Partners, LP ALDW . All these stocks sport a Zacks Rank #1 (Strong Buy).

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TESORO CORP (TSO): Free Stock Analysis Report

EMERGE ENRG SVC (EMES): Free Stock Analysis Report

NORTHERN TIER (NTI): Free Stock Analysis Report

ALON USA PTNRS (ALDW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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