Seeking Alpha

As frack sand demand takes off, so do stock prices of sand producers

  • Frackers are expected to use nearly 95B pounds of sand this year, up nearly 30% from 2013 and up 50% from forecasts made just a year ago; as demand for the fracking sand takes off, sand prices are surging and the stock prices of sand producers are on the rise.
  • It can take 4M pounds of sand to frack a single well, but several companies are experimenting with using more after finding that the output of wells is up to 30% higher when they're blasted with more sand; ~20% of all onshore wells are now being fracked with extra sand, but the technique could expand to 80% of all shale wells, according to RBC analysts.
  • U.S. Silica (NYSE:SLCA) expects demand for sand will be at least 25% higher than supply for the rest of this year; it already has raised prices for some frack sand and plans to start charging 10%-20% more for the top-of-the-line Northern White sand.
  • Hi-Crush Partners (NYSE:HCLP) is predicting another 5%-10% increase in sand prices before year's end; the company recently signed seven new long-term contracts at higher prices and for greater volumes with oilfield service firms.
  • Frack sand producer Emerge Energy (NYSE:EMES) was last year's most successful public offering, with a share price that has shot up 558% since its debut.
Comments (15)
  • jobehro
    , contributor
    Comments (193) | Send Message
     
    Any one of these three are winners but watch out for "tracking" restrictions. Oh, keep your eye on that Canadian outfit ABCAF and their discovery.
    5 Aug, 12:46 PM Reply Like
  • Michael Woolf
    , contributor
    Comments (61) | Send Message
     
    I agree. Another one to compare it to is Carbo Ceramics. I am long on SLCA and HCLP and am kicking myself for not getting in on EMES
    5 Aug, 12:48 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3553) | Send Message
     
    Interesting you mentioned Carbo Ceramics. I hadn't checked it out in a while and wow, what a huge, sudden drop!!!

     

    Anyone follows it who can give me the gist of the reason?
    6 Aug, 01:40 PM Reply Like
  • Michael Woolf
    , contributor
    Comments (61) | Send Message
     
    http://seekingalpha.co...
    This is a link to a breaking news saying that well one of its largest customers cut back on ceramic use, as described in the title. This could be a reason for the drop.
    6 Aug, 02:52 PM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3553) | Send Message
     
    That would explain it. Thanks Michael! :)

     

    Makes me wonder if this may not be a buying opportunity as it was with HCLP when they had a problem with a big customer.

     

    Aaah! The days when HCLP yielded 14%!!
    6 Aug, 04:14 PM Reply Like
  • 27975573
    , contributor
    Comments (289) | Send Message
     
    YES, YES, and YES.
    Have made money on all these.....$$$$

     

    Now moving some money to Athabasca Minerals (OTCPK:ABCAF).
    They will be providing sand to the new fracking along the Alberta
    and British Columbia boundary shale discoveries.

     

    Looking for one of the above to purchase this small supplier, for a
    presence in Canada.
    5 Aug, 12:47 PM Reply Like
  • Rockefeller2012
    , contributor
    Comments (118) | Send Message
     
    At this time, there are no users of Athabasca's possible frac sand and no announcements that I'm aware of indicating users, contracts, or sales. An economic assessment is not even completed yet. There have been discussions with some users but there is no indication that said users have expressed any interest. There are no logistics or transload facilities in place.

     

    At this time, any use of Athabasca's possible frack sand is years away.
    5 Aug, 03:03 PM Reply Like
  • 27975573
    , contributor
    Comments (289) | Send Message
     
    Agreed!
    In the meantime; the aggregate portion of the company will supply
    road and pipeline bases. Add in facilities for processing; rail bed lines.....
    and I can wait for the sand.

     

    Still long ABCAF
    5 Aug, 03:41 PM Reply Like
  • jobehro
    , contributor
    Comments (193) | Send Message
     
    Fracking not tracking. SA's program corrects over our typing thinking we have misspelled.
    5 Aug, 12:49 PM Reply Like
  • harball
    , contributor
    Comments (259) | Send Message
     
    ABM is a good idea, but those who want a 10-bagger option on frac sand in Canada should go for CPS. They have higher grade silicia sand compared to ABM and they already have 43-101.
    5 Aug, 01:23 PM Reply Like
  • dex160
    , contributor
    Comments (2) | Send Message
     
    Thanks for the recommendation. What exchange does CPS trade on? What is a 43-101?
    5 Aug, 03:50 PM Reply Like
  • ghrcap
    , contributor
    Comments (117) | Send Message
     
    How much premium for Northern White?
    5 Aug, 02:14 PM Reply Like
  • Hendershott
    , contributor
    Comments (1560) | Send Message
     
    Demand for pressure pumping is also taking off; PTEN, HAL, CJES.
    5 Aug, 10:02 PM Reply Like
  • 27975573
    , contributor
    Comments (289) | Send Message
     
    As well as USA Compression.
    6 Aug, 10:06 AM Reply Like
  • DividendInvestorLA
    , contributor
    Comments (3553) | Send Message
     
    On USA Compression, I used to be long, but the technicals look so awful, I sold off a few days ago. I'd use caution as long as the chart doesn't look better, even as I agree with the overall potential of the sector.
    6 Aug, 01:57 PM Reply Like
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