Ever since Emerge Energy Services(NYSE: EMES) IPO back in 2013, its shares have been on a journey that looks an awful lot like the flight of Icarus. The company's business, which held so much promise, flew a little too close to the sun, and when oil and gas activity in the United states started to fall on slumping prices, Emerge's wings were clipped. Now the stock is trading 73% down from its peak back around August of last year.

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EMES data by YCharts.

I'm sure that investors who bought at the top don't want to speak of Emerge Energy ever again. But for those who can look at the situation a little more dispassionately, it may be worth asking if buying Emerge Energy's stock today is a good idea. After all, that 10% distribution yield looks pretty tempting.

Let's take a look at the bull and bear cases for Emerge to see whether buying Emerge's stock today is a worthwhile investment.

The bear case
A major reason why someone would want to buy shares of Emerge Energy Services in the first place is because it pays a pretty generous distribution. However, unlike most distributions that are set by a management rate, Emerge's distribution is a variable rate, where all cash available for distribution at the end of each quarter is divided up among its unitholders. From a business perspective, this makes a bit of sense because it allows a company to have flexible payments in a cyclical industry. 

The obvious drawback to this is that, for investors, down times like this mean that payments will be lower, and there aren't a lot of promising signs that sand demand is going to pick up very quickly. According to the most recent U.S. rig count survey from Baker Hughes, total rigs in the field are still on the decline. Granted, there are a lot of wells that have been drilled, but have yet to be completed, which will give Emerge and its competitors a decent amount of work to keep the lights on; but the continued decline in rig activity suggests that those distributions from Emerge will be in decline for a little while longer.

The bull case
In all honesty, there aren't a lot of great things to say in the near term for Emerge Energy Services, or any other frac sand producer, because of the things mentioned above. However, if you're willing to look beyond the short-term weaknesses of today's market, there is still quite a bit to like about companies that have their futures tied to hydraulic fracturing. 

There are two major components to keep in mind when thinking about hydraulic fracturing and oil and gas production in the United States. One is that there are still many places left to drill for oil and gas. According to a survey conducted by Enterprise Products Partners last year, there are decades worth of drilling left to do domestically.

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Source: Enterprise Products Partners Investor Presentation.

One could argue that many of these drilling locations are not as lucrative as they were when oil was at $100 per barrel; but this is the other key thing to keep in mind. Companies are still drastically improving well economics as they hone the process of hydraulic fracturing. This process of accessing shale is still a relatively new one, and there likely are still some efficiencies to be gained when drilling a well. As these costs come down, many of those locations that may have taken $100 per barrel a few years ago could be accessed economically at much less.

Because Emerge is much more interested in drilling activity than in actual oil prices, seeing companies improve well economics and turn a wider swath of drilling locations into profitable ventures bodes very well for the company, and could translate to greater sand demand. Because Emerge is one of the lower-cost providers in the space, it will likely be one of the first companies to see some gains as drilling activity starts to pick back up again.

Investor takeaway
Looking at Emerge Energy Services during the short term is akin to looking into a well. Somewhere, there's a bottom, but it's still hard to see because drilling activity in the U.S. is still on the decline.

However, investors who can see beyond today's less-than-awesome oil and gas market can find reasons to believe that Emerge will be well positioned to take advantage when drilling activity in the U.S. recommences. For investors who have a strong stomach and a view for the long term, Emerge may be worth having on your radar.

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Tyler Crowe owns shares of Enterprise Products Partners.

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