Rock Products

JUN 2018

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www.rockproducts.com ROCK products • June 2018 • 19 FRAC SAND INSIDER Texas-based Emerge Energy Services LP said first-quar- ter total volumes sold increased 7 percent sequentially to a record 1.503 million tons in the first quarter; and net income of $1.5 million and diluted earnings per unit of $0.05 for the first quarter, compared to a net loss of $11.4 mil- lion, or $(0.38) per diluted unit for the three months ended March 31, 2017. For the three months ended Dec. 31, 2017, net income was $5.6 million, or $0.18 per diluted unit. First quarter 2018 results were negatively impacted by $6.7 million in one-time charges, which included a $3.9 million write-off of deferred financing costs relating to the reduc- tion of its revolving credit facility, a $1.7 million write-off of land owner agreements and related prepaid royalties, and $1.1 million of professional fees related to the refinancing in January 2018. "We are very proud of our performance in the first quarter as we overcame significant obstacles in the form of extreme winter weather and poor railroad service," noted Ted W. Beneski, chairman of the board of directors of the general partner of Emerge Energy. "The 7 percent sequential volume improvement is a testament to our newly enhanced rail shipping outlets and the positive strides made by our two Texas in-basin plants. This record-setting quarterly volume of more than 1.5 million tons sold in the first quarter rep- resents our ability to respond to a changing market, in both our production and logistics capabilities. We have increased our direct shipments on the BNSF railroad as the Canadian National continues to experience service issues. Our Kosse, Texas, facility also responded to strong demand with sub- stantially higher production compared to the fourth quarter, and the existing San Antonio production circuit contributed nicely during the quarter. "Our new San Antonio plant is now officially online as we started the dry plant earlier this week," Beneski noted. "We are very pleased that we beat our previously commu- nicated target start-up date of May 1st. We are now in the process of quickly ramping up the production to the name- plate capacity of 2.4 million tons per year as limited by our existing permit. We have applied for our new permit that will expand our capacity to 4.0 million tons per year, and we expect to receive this permit by year-end. "The demand for frac sand remains strong, and the market continues to face supply shortages due to constrained railroad service and construction delays for several new in-basin plants," Beneski concluded. "We are proud that we delivered on our construction timeline for the new San Antonio plant, and our customers value our dependability as they have signed new contracts. In response to the con- structive supply and demand picture, prices for frac sand increased in the first quarter, and we have implemented further price increases for the second quarter. Our new- ly-opened San Antonio plant will drive volume and margin growth while we expect the demand for northern white sand will remain resilient." Emerge Energy Sells a Record 1.5 million Tons in First Quarter CEO of Preferred Sands. "We take pride in our superior prod- ucts and customer service and are excited to partner with some of the largest oil and gas companies in the area as we continue our commitment to lowering costs and increasing production." Conveniently straddling Dewey and Blaine counties, the facil- ity will be located within five miles of two currently active rigs and within 75 miles of most major activity in the region. The site has access to major roads, water and utilities, and consists primarily of 40/70 and 100 mesh high-quality local in-basin supply. "This is a critical year for the frac sand industry, as sand usage is expected to increase significantly," O'Neill said. "As we continue our record of innovation, it is our goal to drive down costs for our customers through our localization strat- egy, which is centered on value-enhancing production and becoming the lowest cost-landed-at-well (CLAW) provider in the areas where we operate." With in-basin sand mines in south and west Texas, Preferred expects to grow by more than 9 million tons of in-basin capac- ity once Oakwood is up and running. These facilities, along with legacy plants in Nebraska and Arizona, which are operat- ing at or near effective capacity, allow the company to service exploration and production and oilfield service companies conveniently and cost-efficiently throughout North America. Preferred's innovative proppant solutions include Polymeric Proppants, an advanced downhole coated proppant technol- ogy designed for maximum production efficiency; FloPRO PTT proppant transport technology designed for superior proppant distribution; and DustPRO, a dust-prevention tech- nology designed to reduce airborne particles during all sand transfer points.

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