Rock Products

FEB 2019

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24 • ROCK products • February 2019 www.rockproducts.com FRAC SAND INSIDER Source Energy Services said it has con- fidence that its 2019 sales volumes should improve from those seen in 2018 due to the addition of Montney and Duvernay customer contracts that help provide a broader customer base and more balanced sales port- folio, refreshed capital budgets from E&P companies and continued positive economics for Montney and Duvernay production. While commodity prices remain favor- able, exploration-and-production companies have been impacted by very wide differentials and an unpredictable operating environment, the company said. These factors led to a significant slowdown in completion activity in the fourth quarter of 2018. Sand volumes in the third quarter of 2018 increased by 220,469 metric tons (Mt), or 4 percent, compared to the volume of sand sold in the third quarter of 2017. Source's sand revenue increased in the third quarter of 2018 by $37.6 million, or 60 percent, com- pared to the third quarter of 2017. This increase in revenue was attributable to the increase in sand sales volumes as well as a 12 percent increase ($14.63 per Mt) in average realized sand price. In the third quarter of 2018, Source's sand revenue decreased by $10.5 mil- lion, or 10 percent, when compared to the second quarter of 2018, primarily due to a 10 percent decrease in sand volumes (83,080 Mt), partially offset by an increase ($1.07 per Mt) in the average sales price. The increase in the average price and decrease in sales volumes were primarily due to the decrease in the quantity of mine gate sales in the third quarter of 2018. Sales volumes were also negatively impacted by lower than anticipated activity levels in the WCSB in the third quarter of 2018 During the third quarter of 2018, rev- enue from wellsite solutions increased by $4.5 million, compared with the third quarter of 2017 primarily due to increased trucking activity associated with the increased sand sales vol- umes. Wellsite solutions revenue also increased by $1.2 million in the third quarter of 2018, compared with the second quarter of 2018, primarily due to the deployment of the fourth Sahara unit in April 2018 and the fifth Sahara unit in August 2018 while trucking rev- enue was virtually unchanged despite the decrease in sand sales volumes. Vista Makes a Case for Oklahoma Operation Representatives of one of the five com- panies already committed to mining frac sand in and around the community of Fay, Okla., told Custer County, Okla., commissioners that their firm plans to be in the area where Dewey, Blaine and Custer counties come together for 35 years, so they'll be good stewards of the land and its resources, including underground water, according to the Clinton Daily News. Vista Proppants and Logistics LLC was represented by four spokesmen, including Chief Executive Officer Gary Humphreys and Director of Technical Services Joe Drew. Humphreys said the company started 15 years ago as a trucking business and is now into mining sand. Its sand oper- ation will be in western Blaine County and southeastern Dewey County, but some of the roads that its trucks will use will be in northeastern Custer County, hence Vista's desire to talk with commissioners there. The company plans to mine 200 tph of sand, or about 1 million tpy, from the Fay area. Humphreys said his company has approximately 20 trucks of its own but it also will be using outside con- tractors. He also said it plans to employ about 70 people in the area with hourly workers paid $17 to $30 an hour and salaried workers paid $65,000 to $80,000 annually, with benefits. Humphreys noted that Vista's mining operation would be virtually non-stop, running 24 hours a day, 365 days a year. The company will be providing tempo- rary housing for employees, he said. Commissioner Kurt Hamburger of Weatherford, Okla., who was just elected chairman of Custer County commissioners for the next year, said he and his fellow commissioners – Wade Anders and Lyle Miller of Clinton, Okla. – wanted to be open to economic development and "anything that adds jobs for local people is key." However, Hamburger said they also have to be conscious of the environment and county roads. Source Energy Services Looks Ahead

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