US Silica expects frac sand demand to rise further next year
Published: Thursday, 07 December 2017
United States-based sand company US Silica reported record earnings before interest, taxes, depreciation and amortization (Ebitda) of $96.7 million in the third quarter of 2017. The information was published in a report that came out after the close of trading on Monday November 6.
It cited "robust demand" for the company’s frac
sand - used in the hydraulic fracturing process to extract
oil and gas - as the main reason for the increased earnings,
as well as record profitability for industrial silica sand.
Third-quarter revenues at the company rose by about 150%
"Robust market demand in our oil and gas business, coupled
with record profitability from our Industrial and Specialty
Products segment, drove an exceptionally strong performance in
the third quarter that led to a record adjusted Ebitda for the
total company," president and chief executive officer Bryan
US Silica reported a 15% quarter-on-quarter increase in
volumes of frac sand sales, to a record 3.1 million tonnes,
with nearly total capacity utilization. Prices rose by 5%
month-on-month, the company said, although it did not specify
the current or previous price.
Rival frac sand miner Hi-Crush last week reported
third-quarter sand prices at $68 per short ton, compared with
$43 per ton a year ago. Sand prices are highly dependent on
location, however, with much higher prices quoted to Industrial
Minerals for cargoes sold close to fracking facilities in
US Silica issued an upbeat forecast for future frac sand
demand in the fourth quarter, although it warned that the
increase would be "restrained by some frac crews extending
their holiday time off, plant downtime due to planned
maintenance, and brief outages for capacity expansion work at a
The frac crews are third-party operators so their holidays
are beyond US Silica’s influence.
Prices are expected to rise over the October-December
period, US Silica said, but again would not give details of
what these would be.
And in 2018, total industry frac sand demand is expected to
rise to 90-100 million tons, if drilling rig numbers remain
steady, thanks to a 15-20% increase in proppant use per well.