U.S. Silica: The Likely Winner In The Frac Sand Cycle
Richard Zeits • 11 Comments
Richard Zeits • 11 Comments
Wed, Nov. 9, 5:36 PM
Wed, Nov. 9, 5:10 PM
- U.S. Silica (NYSE:SLCA) -4.1% AH after announcing a 9M-share public offering, with an underwriters option to purchase up to an additional 1.35M common shares.
- SLCA says it plans to use the proceeds to fund general corporate purposes, including potential acquisitions of complementary businesses or assets.
Mon, Nov. 7, 9:12 AM
Fri, Nov. 4, 4:44 PM
- U.S. producers of fracking sand are raising prices due to stronger demand, as companies such as U.S. Silica (NYSE:SLCA), Fairmount Santrol (NYSE:FMSA), Emerge Energy Services (NYSE:EMES) and Hi Crush Partners (NYSE:HCLP) said they enjoyed increased business during Q3.
- Sand companies, which had idled half of the ~125K frac sand cars in service in 2014 after oil plunged, have pulled thousands of rail cars out of storage thanks to improved demand, Reuters reports, citing recent earnings calls and interviews.
- HCLP had just over 600 rail cars in storage at the end of Q3, down from 1,900 six months ago, CFO Laura Fulton said this week on its earnings conference call.
- "Our customers are talking about actually adding some crews even in Q4 and certainly adding crews into Q1 2017," EMES CEO Rick Shearer in his company's earnings call yesterday. "We're very bullish, going forward, that our volumes and our pricing will continue to build.”
Thu, Nov. 3, 4:36 PM
Wed, Nov. 2, 5:35 PM
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Fri, Oct. 14, 1:11 PM
- U.S. Silica (SLCA -2.1%) and Halliburton (HAL +0.2%) say they moved a record breaking unit train carrying nearly 19K tons of white frac sand from Illinois to Texas.
- The companies say the train - which went along a BNSF rail line from Ottawa, Ill., to HAL’s South Texas Sand Plant in Elmendorf, Tex. - took five days to assemble and was the largest unit shipment of its kind.
- The companies say unit train delivery, leveraging their combined logistical assets, is the most efficient and cost effective way to deliver high volumes of sand in the time constraints required.
Wed, Sep. 7, 3:17 PM
- U.S. Silica (SLCA +0.8%) is added to the U.S. Focus List at Credit Suisse, which argues that the company is in the “right place [at the] right time" to capitalize on frack and completion intensity through the course of the cycle.
- Credit Suisse says sand stocks should replace land drillers this cycle as the most levered to a recovery in North American activity, as it expects sand demand in 2018 to eclipse the demand level of 2014, while its rig count forecast is ~25% below the upper end of the consensus range, implying further potential upside for sales, margins, and the stock price.
- The firm says SLCA's acquisitions this year of a regional sand mine and supplier, and one of the leading last-mile logistics technology companies, were accretive and establish the company as the most aggressive acquirer of reserves and give it a first-mover advantage in the all-important last-mile logistics space.
Wed, Sep. 7, 3:03 AM
- Don't expect too much out of Q3 oil services results, Credit Suisse says. "While an impressive move off the bottom, the U.S. horizontal rig count is still only 31% of its 2014 average. Not going down anymore is fabulous. But it doesn’t translate into doing well very quickly."
- Still, CS says investors should be more aggressive in buying stocks that miss earnings estimates.
- Firm notes that the focus on efficiency continues. "Sand has replaced land rigs as the under-utilized fixed-cost-base leveraged play on the recovery." Recommends SLCA and HCLP.
- Says that technology and a more efficient client base makes HAL the top “demographic” play over SLB in the near term.
- "BHI and WFT are self-help stories in different stages of improvement, but both have reasons to be in energy portfolios. Manufacturing is challenged with its focus on deepwater, which drives FET as our top pick in the group."
Wed, Aug. 10, 6:55 PM
- The frac sand industry likely will be among the first in the oilfield supply chain to tighten in an upcoming oil and gas recovery, Barclays says.
- Barclays initiates coverage of U.S. Silica (NYSE:SLCA) with an Overweight rating and a $50 price target, saying the company is well positioned for the first stage of a recovery, while Fairmount Santrol (NYSE:FMSA), which the firm rates Equal Weight with a $9 target, may prove stronger later in the cycle.
- The firm says SLCA and FMSA are both high quality companies but are separated by their market positioning and capital structures; in an industry ripe for consolidation, SLCA is the natural consolidator, leveraging its strong balance sheet to pursue accretive M&A, enhancing an already balanced portfolio of low-cost complementary assets.
- FMSA has more exposure to premium proppants through its coated product portfolio, which eventually will recoup lost share and provide a margin tailwind, but later in the cycle, Barclays says.
Tue, Aug. 2, 4:53 PM
Mon, Aug. 1, 5:35 PM
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Mon, Jul. 25, 9:05 AM
Mon, Jul. 18, 5:53 PM
- U.S. Silica (NYSE:SLCA) agrees to acquire the NBR Sand regional frac sand unit of privately held New Birmingham Inc. for ~$210M.
- SLCA says the Tyler, Tex., business operates a single sand mine and plant that has the capacity to produce ~2M tons/year of fine-grade frac sand.
- SLCA expects the acquisition to generate EPS accretion of $0.20-$0.30 in 2017.
Fri, Jul. 15, 12:59 PM
- Fairmount Santrol (FMSA -19.8%) is nearly 20% lower after preliminary Q2 earnings, revenues and adjusted EBITDA all miss estimates, but analysts sees potential weakness in shares.
- Tudor Pickering analysts say the results should not be too surprising given that the U.S. onshore rig count is down 25%-30% Q/Q, and the firm says it retains its Buy rating for FMSA as a preferred oil service name for an "impending” energy market upturn.
- RBC, which rates FMSA at Outperform, still likes the company for strong forecasted volume growth driven by increasing proppant intensity, and sees potential for pricing power, share gains, potential capital structure M&A as the energy cycle matures.
- Jefferies rates FMSA only at Hold, saying the revenue miss may suggest some combination of greater pricing pressure, “negative mix shift” in which the firm sees “less resin coated proppant and a lower percentage of in-basin sales.”
- Also: SLCA -2.5%, HCLP -4.5%, EMES -5.9%, CRR -1.1%.
Thu, Jul. 14, 6:28 PM
- Frac sand producers are lower AH after Fairmount Santrol (NYSE:FMSA) pre-announces larger than expected Q2 losses and weaker than expected revenue.
- FMSA forecasts a Q2 EPS loss of $0.56-$0.58 on revenue of $113M-$115M, vs. analyst consensus for a $0.12/share loss on $136.7M in revenue.
- FMSA sees overall volumes sold during Q2 of 1.9M-2M tons vs. 2.1M tons in Q1 and 2.2M tons in the year-ago quarter, due to "increased pressures" on all proppant volumes, particularly within its coated proppant offerings.
- FMSA -12.5% AH, EMES -4.3%, HCLP -2.5%, SLCA -1%.