Emerge Energy Services LP to Acquire Local Sand Operation for $20 million
April 17 2017 - 6:00AM
Fort Worth, Texas -
April 17, 2017 - Emerge Energy Services LP ("Emerge Energy")
today announced the closing of a transaction to acquire Osburn
Materials, a local sand producer based outside of San Antonio
Texas, for approximately $20 million.
Highlights
- The transaction was funded with a new $40 million
term loan, and Emerge Energy used remaining proceeds after
transaction fees and expenses to repay outstanding borrowings under
its revolving credit facility. Houlihan Lokey Capital, Inc. served
as exclusive placement agent in connection with the debt
financing.
- Osburn Materials is located approximately 25
miles south of San Antonio, Texas. It currently produces and sells
sports sands and building products but does not yet serve the
energy markets.
- Osburn Materials has over 80 million tons of sand
reserves as of the effective date of the acquisition, according to
internal estimates. The sand reserves, which consist mostly of
40/70 and 100 mesh, meet API specifications for all grades.
- Emerge Energy will host a conference call on
Wednesday, April 19, 2017 at 4:00 p.m. C.T. to discuss the
transaction and Osburn Materials in greater detail.
- First quarter 2017 results will not be discussed
during the call; however, the first quarter 2017 volumes sold
totaled approximately 1,251,000 tons.
Commentary
"This transformative acquisition of a local sands
operation accomplishes one of our key strategic goals," commented
Ted W. Beneski, Chairman of the Board of Directors of the general
partner of Emerge Energy. "Osburn's reserves, located near the
heart of the Eagle Ford basin, will be highly desirable for frac
sand purposes, as the sand is high quality and
logistically-advantaged. Since we funded the acquisition with a new
term loan, we avoided further dilution to our unitholders."
Rick Shearer, Chief Executive Officer of the
general partner of Emerge Energy, added, "We are very excited about
what Osburn Materials will contribute during the next chapter for
Emerge Energy. Although not currently selling into the energy
markets, Osburn Materials has API-spec, strategic reserves that
will bolster our presence in local sands and balance our portfolio
of northern white to local sands. Amongst the many competitive
advantages that Osburn Materials brings, the logistics component is
vitally important. The site will offer direct trucking to the
wellsite for Eagle Ford basin demand, and on site rail access to
the Union Pacific mainline offers low-cost transportation into the
Permian basin."
"Osburn Materials currently has production
capacity for 600,000 tons per year of wet sand and 300,000 tons per
year of finished dry sand," continued Mr. Shearer. "However, we
have created a plan to upgrade the Osburn site into a much larger
operation across three phases. With the existing equipment in
place, we expect that the dry plant will be able to produce at a
rate of 300,000 tons per year once we are fully staffed for 24/7
operations in less than 30 days. We have initiated the permit
amendment process for a phase two expansion to 600,000 tons per
year with minimal capital expenditures, and our phase three
expansion will consist of a full scale three million ton per year
operation. We are targeting early Q4 for the completion of phase
two, and, depending on market conditions, phase three could be
completed by mid-2018."
Conference Call
Emerge Energy is hosting a conference call on
Wednesday, April 19, 2017 at 4:00 p.m. C.T. to discuss the
transaction and Osburn Materials. A slide presentation will be
posted to the company's website under the investor relations
section. Callers may listen live to the presentation, which will be
followed by a question and answer segment, by dialing (855)
850-4275 or (720) 634-2898 and entering passcode 9097098. An audio
webcast of the call will be available at www.emergelp.com within
the Investor Relations portion of the website under the Webcasts
& Presentations section. A replay will be available by audio
webcast and teleconference for seven days following the conclusion
of the call. The replay teleconference will be available by dialing
(855) 859-2056 or (404) 537-3406 and the reservation number
9097098.
About Emerge Energy Services LP
Emerge Energy Services LP (NYSE:
EMES) is a growth-oriented limited partnership engaged in the
business of mining, producing, and distributing silica sand, a key
input for the hydraulic fracturing of oil and natural gas wells,
through its subsidiary Superior Silica Sands LLC.
Forward-Looking
Statements
The presentation contains certain
statements that are "forward-looking statements." These
statements can be identified by the use of forward-looking
terminology including "may," "believe," "will," "expect,"
"anticipate," or "estimate." These forward-looking statements
involve risks and uncertainties, and there can be no assurance that
actual results will not differ materially from those expected by
management of Emerge Energy. When considering these
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in Emerge Energy's Annual
Report on Form 10-K filed with the SEC. The risk factors and
other factors noted in the Annual Report could cause actual results
to differ materially from those contained in any forward-looking
statement. Except as required by law, Emerge Energy does not
undertake any obligation to update or revise such forward-looking
statements to reflect events or circumstances that occur after the
date hereof. The internal estimate of Osburn Materials' sand
reserves is based on surveying, drill core analysis and other tests
performed by Emerge Energy's geology and engineering staff. This
estimate has not been reviewed by its independent reserve engineers
and may be revised following ownership of the property. By its
nature, this estimate is more speculative than proved or probable
reserves and subject to greater risk that such reserves will not be
realized.
PRESS CONTACT
Investor Relations
(817) 618-4020
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Emerge Energy Services LP via Globenewswire
EMERGE ENERGY SERVICES LP (NYSE:EMES)
Historical Stock Chart
From Mar 2024 to Apr 2024
EMERGE ENERGY SERVICES LP (NYSE:EMES)
Historical Stock Chart
From Apr 2023 to Apr 2024