U.S. Silica to buy frac sand producer Cadre Services for $98M

U.S. Silica (NYSE:SLCA) +3.1% AH after agreeing to acquire regional frac sand producer Cadre Services for $98M.

Cadre operates a single frac sand mine and plant, with recently expanded annual capacity of ~800K tons/year; SLCA says the mine has more than 65 years of high-quality reserves.

SLCA expects the deal to be accretive to adjusted EPS by $0.11-$0.13 in 2015.

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Comments (6)
  • Philip Marlowe
    , contributor
    Comments (1625) | Send Message
    Looks like a good deal. Forward price/EBITDA is 4.7. Sounds very good for a growing profit asset. Trailing price/ebitda is 7.6 which is far less than SLCA's. Also, this mine is plugged into the Permian which seems to be the place to be considering permian oil can actually be exported nowadays. So one can expect good growth from this property despite the low purchase price.
    16 Jul 2014, 06:07 PM Reply Like
  • 27975573
    , contributor
    Comments (404) | Send Message
    Just the start here.....
    Regional frack sand plays make cost sense.


    Athabasca Minerals (OTCPK:ABCAF)


    They are in northern Canada....with the find of lighter crude in the
    area; and expansion of fracking....they could be next.


    Long (OTCPK:ABCAF).
    16 Jul 2014, 06:20 PM Reply Like
  • Not_Quite_Pheidippides
    , contributor
    Comments (419) | Send Message
    What do you think of the valuation on this deal, then? They're paying $84M (after subtracting tax assets) for a permitted and operational mine, 800,000 tons / year, and a truck drive away from the Permian Basin. Athabasca has a market cap circa $90M (in USD), the mine isn't operational or fully permitted yet, capacity has been estimated about 500,000 tons / year, and it has to be trucked to the railyard for transshipment. Don't get me wrong -- ABM / ABCAF has been a fantastic investment over the last year if you've made it -- but either SLCA got a heck of a deal, ABM is overpriced, both, or I'm missing something entirely.
    17 Jul 2014, 11:59 AM Reply Like
  • 27975573
    , contributor
    Comments (404) | Send Message


    Your general thinking is correct; SLCA got a good deal.
    ABCAF is a fully functioning aggregate company; thus the valuation.


    The frack sand should be gravy on top of full-bore construction activity
    in Alberta. I was up there last year; activity everywhere.


    Long ABCAF
    17 Jul 2014, 12:10 PM Reply Like
  • T-time
    , contributor
    Comments (1005) | Send Message
    27975573 - seems you are not alone in this thinking recently. Unbelievable volumes in ABCAF since June have me wondering.... someone knows something... I suppose we are waiting for Canadian approval. Either way, frack sand stocks have done very well. HCLP is well positioned too (Lower PE than US Silica) and EMES hired the former executive of SLCA to run the sand division. Lots of plays. I like the ABCAF spec play. Can't decide what I like better, frack sand or uranium!
    16 Jul 2014, 06:42 PM Reply Like
  • 27975573
    , contributor
    Comments (404) | Send Message
    t time.....


    I am playing both; with a lean toward the sand.
    I learned of ABCAF over year ago when I vacationed up there.


    Oil sands are not the only story going on; there have been
    conventional oil finds also.


    I am buying more ABCAF on 10% pull-backs.


    Good Luck.
    16 Jul 2014, 06:49 PM Reply Like
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