FREDERICK, Md., Aug. 16, 2017 /PRNewswire/ -- U.S. Silica
Holdings, Inc. (NYSE: SLCA) announced today that it has acquired
Mississippi Sand, LLC, a leading, low-cost frac sand mining and
logistics company based in St. Louis,
Mo. for $95.4 million in cash.
The transaction closed earlier today.
The plant, located in Festus,
Mo., is capable of producing 1.2 million tons annually of
mostly fine grade sand. Nearly two-thirds of its total production
is 40/70 mesh that is in the highest demand today from customers.
The plant can be expanded to 1.6 million tons of production per
year with a modest capital investment. Mississippi Sand controls
over 30 million tons of high-quality frac sand reserves on 650
acres through a long-term lease agreement. The facility is located
40 miles southeast of U.S. Silica's Pacific, Mo. mine and plant.
Mississippi Sand's distribution network is composed of five
barge terminals and three rail terminals, two of which are unit
train-capable, with a combined annual throughput of 2.2 million
tons. The terminals serve many of the top basins, including the
Mid-Continent, Marcellus/Utica,
Eagle Ford, Fayetteville, Haynesville, Permian and the DJ basins.
The plant enjoys some of lowest landed costs in the industry to the
Haynesville and the Northeast through highly efficient barging.
Currently, approximately 70% of the facility's volumes are being
sold into these two basins. Mississippi Sand's rail terminals have
access to most of the major Class 1 railroads, offering further
optionality on origin and destination pairings.
The acquisition also includes an approximately one million
ton-per-year dry plant located near Seagraves, TX. The plant is currently idled
but could be utilized in the future as part of U.S. Silica's
in-basin strategy in the Permian.
"We're very pleased with the addition of this new low-cost
facility with high quality reserves and flexible logistics, which
we believe will greatly complement our product offerings from
Pacific,'' said Bryan Shinn, president and chief executive
officer. "Pacific has some of the
highest quality sand in our portfolio, one of the reasons why it
operated at close to full capacity through the downturn," he
explained. "This acquisition will enable us to nearly double the
size of our capacity from the area and take advantage of multiple
modes of distribution to better serve our customers and enhance our
competitive position in the marketplace.'' Shinn also noted that
like Pacific, Mississippi Sand has
the flexibility to sell some of its products to Industrial and
Specialty Products customers as well.
Mississippi Sand's high quality products and efficient logistics
have resulted in a strong customer base. The company currently has
5 long-term contracts in place with both Oil Field Service and
Exploration and Production companies covering over 80% of their
stated capacity. The bulk of the contracts are take-or-pay
agreements and run through the beginning of 2020.
U.S. Silica will use cash on hand to fund the acquisition. The
transaction is expected to be accretive to the Company's earnings
per share in the third quarter of 2017. "The acquisition of
Mississippi Sand is a good use of our cash as it helps us further
consolidate the frac sand space,'' said Don
Merril, executive vice president and chief financial
officer. "We plan to continue to use our strong balance sheet to
fund value-added investments that will benefit our customers and
other stakeholders.''
Cowen and Company acted as the sole financial advisor to
Mississippi Sand.
About U.S. Silica
U.S. Silica Holdings, Inc., a member of the Russell 2000, is a
leading producer of commercial silica used in the oil and gas
industry, and in a wide range of industrial applications. Over its
117-year history, U.S. Silica has developed core competencies in
mining, processing, logistics and materials science that enable it
to produce and cost-effectively deliver over 260 products to
customers across our end markets. The Company currently operates
nine industrial sand production plants and eight oil and gas sand
production plants. The Company is headquartered in Frederick, Maryland and also has offices
located in Chicago, Illinois and
Houston, Texas.
U.S. Silica Holdings, Inc.
Michael Lawson
Vice President of Investor Relations and Corporate
Communications
(301) 682-0304
lawsonm@ussilica.com
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SOURCE U.S. Silica Holdings, Inc.