Rock Products

NOV 2014

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Page 15 of 61 ROCK products • NOVEMBER 2014 12 Eagle Materials Inc. has entered into a definitive agreement to acquire CRS Proppants LLC and its subsidiaries, includ‐ ing Great Northern Sand LLC (CRS Proppants), an estab‐ lished supplier of high‐quality northern‐white frac sand to the energy industry. The transaction aligns well with Eagle Materials' growth strategy, according to the company. CRS Proppants' opera‐ tions are highly complementary with Eagle Materials' exist‐ ing frac sand operations. CRS Proppants operations include: • A northern‐white frac sand mine and processing facility in Wisconsin that is currently being expanded from ap‐ proximately 1 million to 2 million tpy capacity. • Existing long‐term sales contracts with targeted cus‐ tomers for approximately 85 percent of the 2 million tpy of capacity. • UP rail‐based trans‐load network from the mine into the Permian and other target basins. • A highly experienced operating, sales and logistics team. The cash purchase price of approximately $225 million is subject to adjustments for working capital and other items, and will be funded by operating cash flow and borrowings under Eagle's bank credit facility. Revenues, EBITDA and earnings before income taxes from continuing operations for the nine‐months through Sept. 30, 2014, for CRS Prop‐ pants were $64.7 million, $12.2 million and $8.7 million, re‐ spectively. The acquisition is expected to be immediately accretive and synergies of $5 million are expected to be realized within the first 12 months. The acquisition will roughly double Eagle's frac sand production capacity and expand Eagle's frac sand reserves. Steven Rowley, Eagle Materials' president and chief execu‐ tive officer, said, "The acquisition represents another key step in Eagle's growth strategy for the frac sand business. We are building a low delivered‐cost frac sand supply‐ system that will serve a number of targeted shale plays with the highest‐quality northern white sand. This acqui‐ sition will enable us to immediately serve the Permian basin, in particular, with increased production, while cre‐ ating synergies with our other operations in Texas that are currently serving the Eagle Ford with sand from our Illi‐ nois mine." Under the definitive agreement, the acquisition is subject to certain customary conditions, including clearance under the Hart‐Scott‐Rodino Act. The company currently expects that the acquisition will close during Eagle's third fiscal quarter of the current year. Eagle Materials Acquires CRS Proppants Fairmont Santrol Gets Favorable Permit Ruling Fairmount Santrol announced that it has received a favor‐ able permit ruling that gives the company the option to ex‐ pand the sand mining, processing and coating capacity of its Wedron, Ill., operation. The permit ruling from the Illinois Environmental Protec‐ tion Agency provides the company with flexibility to expand the facility's current sand capacity from 4.4 million tpy by up to an additional 3.5 million tons and also allows for in‐ creased coating capacity for its value‐added products. Fairmount Santrol, formerly Fairmount Minerals, manufac‐ tures a full line of sand and sand‐based products. The We‐ dron facility is one of the company's largest and most successful in terms of serving broad customer needs and bringing new products to market. "This opportunity at our Wedron facility fits well with our growth strategy, which is focused on increasing sand capac‐ ity, developing industry‐leading resin and coating technolo‐ gies, expanding our logistics network, and continuing our commitment to sustainable development – all in a thought‐ ful and fully integrated manner," said Jenniffer Deckard, president and chief executive officer of Fairmount Santrol. "Securing the favorable permit ruling now gives us the flex‐ ibility to move quickly to increase capacity based on cus‐ tomer demand and also reinforces our long‐standing commitment to the Wedron community." Oilfield services providers Halliburton Co. and Baker Hughes Inc. are stockpiling sand to protect themselves against rising costs and are buying more railcars to transport the haul. That is good news for the nation's frac sand producers. Halliburton, one of the world's largest provider of fracking services, is more than doubling its railcar fleet and capacity for sand terminals. It had about 3,500 railcars under man‐ agement as of June 30. Oilfield services provider Baker Hughes said that it had sig‐ nificantly increased the number of its railcars and is buying more sand under contract, which helps buffer it against price rises. Halliburton, Baker Hughes Stockpiling Sand

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