Frac sand companies report rising revenues as prices soar

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Published: Thursday, 14 December 2017

A sharp rise in frac sand prices boosted margins at Emerge Energy Services and Hi-Crush in the third quarter of 2017.

Frac sand miners Emerge Energy Services and Hi-Crush Partners reported soaring profits in July-September 2017, as prices for the proppant rallied.

Emerge Energy Services reported that total volumes sold were up by 6.3% quarter-on-quarter, to 1.5 million short tons, compared with just 493,000 tons in July-September 2016.

Emerge did not announce per-ton sand prices, but said that prices were up from the previous quarter, with costs falling and margins improving.

The increase in profitability came even before production geared up at Emerge’s new facilities, particularly the San Antonia site in Texas in the United States, which saw its first shipments in the quarter, totaling 16,000 tons.

This Texan sand is better placed to compete in the main fracking heartland of the Permian basin.

Emerge reported net revenues of $103.22 million, compared with $21.15 million a year ago, although profits were $5.01 million, due to the sale of discontinued operations in the third quarter of 2016.

Hi-Crush Partners also reported rising sales, at 2.46 million tons, compared with 1.08 million tons over the same period last year.

The profitability of sand sales at Hi-Crush rose thanks to higher prices averaging $68 per ton, up from $43 per ton a year ago, with profit of $19.39 per ton, compared with $3.50 a year ago.

And Hi-Crush expects sales to increase to to 2.7-2.9 million tons in the fourth quarter of 2017, with pricing increasing throughout the year.

Hi-Crush reported revenues at $167.6 million, compared with $46.6 million in the third quarter of 2016, while profit was reported at $29.8 million, compared with a net loss of $11.7 million a year ago.

The sand provider reports third-quarter revenues up by 150%, thanks to "robust" demand from the oil and gas industry.

US Silica has forecast that demand for frac sand will go as high as 100 million short tons in 2018, as proppant use per well increases.

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Mark A Wilson, 2015