Rock Products

FEB 2018

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18 • ROCK products • February 2018 FRAC SAND INSIDER Source Energy Services opened its first unit-train-capable delivery terminal for frac sand into the Western Canada Sed- imentary Basin (WCSB) as companies deploy bigger fracs for higher results, according to the Alaska Highway News. This allow Source to connect dedicated deliveries of frac sand from its mines in Wisconsin to Alberta. Frac sand demand in the WCSB is expected to increase by 28 percent this year and a further 31 percent to a total of 10.3 million tons in 2019, according to GMP FirstEnergy. The new facility expands Source's operations at Fox Creek, Alberta, Canada, where it opened its first terminal in 2015. The company now has eight frac sand delivery terminals in Alberta and Saskatchewan of varying sizes. A unit train capable terminal is also being built at Edson, Alberta. Source said it plans to spend between $10 million and $20 million of its 2018 budget of $50 million to $65 million on terminal expansion projects. The company will also spend $10 million to $15 million on development of additional sand delivery systems, $15 million to $20 million on production facilities, and $9 million to $12 million in mine development activities. Source reported a 255 percent increase in sand sales in the third quarter of 2017 compared to the third quarter of 2016, leading to net income of $3.0 million compared to a net loss of $12.3 million in the previous year period. Andeavor Acquires Rangeland Energy Andeavor announced that it has agreed to acquire 100 per- cent of the equity of Rangeland Energy II LLC. Rangeland owns and operates assets in the Delaware and Midland basins, including a recently constructed crude oil pipeline, three crude oil storage terminals and a frac sand storage and truck-loading facility. Andeavor plans to integrate the acquired 110-mile crude oil pipeline (with ultimate throughput capacity of 145,000 barrels per day) and crude oil storage terminals with its nearby Conan Crude Oil Gathering System, currently under construction. Once fully integrated, the combination of the two systems will provide producers access to multiple markets by con- necting to existing takeaway pipeline systems. The combined system also supports Andeavor's development of additional gathering systems in the area, as well as enhancing commer- cial opportunities by providing direct access to the Midland market hub. Andeavor expects the purchase price multiple to be approxi- mately nine times expected 2018 EBITDA and approximately six times expected 2019 EBITDA, including synergies. Andeavor expects to drop down the pipeline assets to Andeavor Logistics, LP at a later date. The acquisition, which is subject to customary closing conditions including regulatory approval, is anticipated to close early in the first quarter of 2018. Substantially all of Rangeland II's field employees will be invited to remain with the asset as employees of Andeavor. Smart Sand Completes Unit- Train-Capable Rail Facility Smart Sand Inc. announced that it has completed construc- tion of its unit-train-capable rail facility served by the Union Pacific Railroad in Byron Township, Wis. The company moved its first unit train from the expanded site via the Union Pacific Railroad on Dec. 26, 2017. "With construction completed, we now have the capacity for several hundred railcars and the option to ship unit trains on both the Union Pacific and Canadian Pacific railroads from our flagship Oakdale, Wis., mining operation," stated Charles Young, chief executive officer of Smart Sand. "As one of the first sand providers to recognize and respond to customer demands to move higher volumes in shorter timeframes, Smart Sand has been a pioneer in building unit train capability. "Our investment in the Byron location is another example of Smart Sand's commitment to superior logistics service for our customers," Young said. "Combined with the expected comple- tion of our previously announced drying capacity expansion by the end of March 2018, we believe that our Oakdale, Wis., operations are well positioned to take advantage of the improved flexibility, service reliability and freight pricing that rail competition will provide. We are confident that having these choices in rail carriers will allow us to remain com- petitive, while driving down costs and improving efficiency." Source Energy Opens First Unit-Train- Capable Delivery Terminal

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