FOTB: Power Surge; Watford City business owner guided oil field services company to multi-million dollar merger
WATFORD CITY -- When Mark Johnsrud bought PowerFuels in 2005, he employed 40 people.
Today, the Watford City-based oil services company has more than 1,100 workers, and Johnsrud expects to close on a multi-million dollar merger this year that will make him the CEO and majority shareholder of a publicly-traded company, Heckmann Corp.
Dick Heckmann, who will serve as executive chairman of Heckmann Corp., gives Johnsrud a lot of credit for seeing the needs of North Dakota's oil industry and the skills to manage the company that grew rapidly with the boom.
"I think that he saw the shale development coming before virtually anybody else did on the service side," Heckman said. "He had the guts to borrow the money from the bank and put his money where his mouth was."
The services that PowerFuels provides include:
r Hauling crude oil.
r Hauling, storing and disposing of fluids used in hydraulic fracturing, or "fracking."
r Renting oil field equipment.
Johnsrud, a graduate of Fargo North High School and North Dakota State University, said his workforce essentially doubled in size every year since he bought it.
"Year over year, it just kept growing," Johnsrud said.
PowerFuels has locations in Watford City, Dickinson, Minot, Williston, Tioga, Stanley and Beach.
The company has assets that include 500 tanker trucks, 19 salt water disposal wells with more wells in the permitting phase and 2,500 tanks for hydraulic fracturing.
Heckmann said he's amazed that Johnsrud built his company without any partners or private investors.
"I don't think I've ever met anybody that essentially started from scratch," said Heckmann, whose company offers similar services in all other major U.S. shale oil producing areas except the Bakken.
Under terms of the merger that should be complete by the end of the year, Heckmann will pay $125 million in cash and 95 million shares of the company's common stock. Heckman, traded on the New York Stock Exchange under the symbol HEK, also will assume about $150 million in PowerFuels' debt.
Johnsrud will be the majority shareholder with 38 percent of the combined company, with the next largest shareholder owning about 8 percent.
By joining forces, PowerFuels will be able to offer more environmental services as well as work with customers in other shale basins, Johnsrud said. As the industry evolves, companies are becoming more and more interested in recycling and reusing fluids and other environmental services, Johnsrud said.
As CEO of the combined company, Johnsrud expects to be in North Dakota about 25 percent of the time, at a new company headquarters in Scottsdale, Ariz., about 50 percent of the time, and on the road traveling about 25 percent of the time.
Johnsrud has roots in Watford City, where his grandparents lived. After NDSU, Johnsrud earned a master's degree in economics from Texas A&M University and worked as a senior executive for several financial services firms before his return to Watford City.
As the boom heated up and housing became scarce, PowerFuels constructed apartments for workers in Watford City and is in various stages of providing opening housing in Tioga, Dickinson and Minot, and working to acquire land in Williston, Johnsrud said.
Heckmann said the foresight in providing housing is an example of why Johnsrud is successful.
"All great entrepreneurs think differently than the rest of us," Johnsrud said. "He certainly is one that does."