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U.S. Silica (SLCA -5%) is downgraded to Hold from Buy at Jefferies on valuation, as shares have...

  • Thursday, January 10, 10:26 AM ET
    U.S. Silica (SLCA -5%) is downgraded to Hold from Buy at Jefferies on valuation, as shares have jumped 40% since Sept. 30. While the firm remains supportive of SLCA's business fundamentals, it is not willing to get more aggressive with assumptions for capacity growth and SLCA's ability to retain 50%-plus gross segment margins over the long term.
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    They don't know what they are talking about. Once their resin coating facility is up and running those types of plants print money. Raw sand goes for $50.00 per ton and resin coated sand goes for $400.00 per ton.
    10 Jan, 11:31 AM Reply Like
  •  
    They way I understand it though... the resin coated sand is primarily used in deeper (higher pressure) wells. SLCA's recent strength seems to be because they offer the "best of the cheap stuff" used in lower capex shallow drilling (which a lot of drillers have concentrated on since the $80-90 oil).

    Longer term the resin coated will be a great addition. I'm just not sure what the demand is like at current oil prices.
    10 Jan, 04:36 PM Reply Like
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