Emerge Energy Services Announces In-Basin Sand Expansion into the Mid-Content Basin
June 05 2018 - 6:30AM
Fort Worth, Texas - June 5,
2018 - Emerge Energy Services LP ("Emerge Energy") today
announced an expansion of its in-basin sand presence by commencing
the development of a new mining and processing operation located in
Kingfisher County, Oklahoma. Emerge Energy's subsidiary, Superior
Silica Sands ("Superior"), signed a 25-year lease agreement that
encompasses mining rights on 600 acres of land located
approximately 60 miles northwest of Oklahoma City, Oklahoma.
Superior has also agreed to purchase 40 acres of adjoining land on
which the new wet and dry processing plants will be constructed.
Closing of the land purchase is subject to customary due
diligence.
Highlights
-
The Oklahoma plant will have a nameplate
capacity of 1.5 million tons per year; production is projected to
start by year end 2018.
-
The 600-acre mine site has an estimated 20
million tons of reserves, according to internal analysis; a
third-party engineering group will conduct an independent reserves
analysis.
-
Approximately 65% of the deposit consists of 100
mesh sand while the remaining 35% consists of 40/70; both products
meet API specifications for crush strength, according to
third-party test results - the 100 mesh product exhibits crush
strength of 8,000 psi and 40/70 exhibits 5,000 psi.
-
The total project is expected to cost $15
million; Superior will use existing equipment on hand for a portion
of the dry plant.
-
The project will be funded with the company's
current cash on hand and revolver availability; the project does
not change Emerge Energy's previously announced full year 2018
capital expenditures guidance of $70 million to $90 million.
-
Air and water permits will be filed with the
state of Oklahoma in the coming weeks; site construction is
expected to start by mid-June.
-
The property is located less than two miles from
US 81, a four-lane highway serving the Mid-Continent basin.
-
Rail service is available less than three miles
from the plant; Superior is evaluating nearby transload
opportunities to bundle northern white with local sand.
-
Long-lead time equipment has been ordered.
"We are excited to announce our third in-basin
frac sand operation with the addition of our new Oklahoma
facility," noted Rick Shearer, Chief Executive Officer of the
general partner of Emerge Energy. "Once the plant begins
production, we will have approximately 6.1 million tons per year of
in-basin production capacity, or 49% of our new 12.4 million tons
per year total capacity."
"Demand for in-basin fine mesh product is strong,
and we have validated the appetite for local Oklahoma sand with
several key customers operating in the Mid-Continent basin. We are
in the process of signing up customers under contract for the new
plant's capacity, and we expect to fully contract the plant's
capacity by year end. The Oklahoma market represents an
under-served basin for us currently, so there is little risk of
displacing our existing volume. In fact, potential new customers
are interested in bundling northern white 30/50 with the finer mesh
local sand. This works to our advantaged model as we are a leading
producer of both high quality northern white product and lower-cost
in-basin sand."
"The Mid-Continent basin continues to show
impressive growth during the current upswing in drilling and
completion activity. Third party research firms estimate that frac
sand demand for the basin will total over eight million tons in
2018 and over 10 million tons in 2019. The multiple oil-producing
layers of the SCOOP/STACK region make the Mid-Continent basin one
of the leading shale plays in the country. Of the 142 currently
active drilling rigs in the state of Oklahoma, approximately half
are located within a 75-mile radius of our property. Our site also
has advantaged logistics with close proximity to a major four-lane
US highway, and rail service is less than three miles from our
property. This gives us the flexibility of transloading our
northern white sand to a nearby terminal and bundling it with
in-basin product."
"We are proud of our efforts to transform Emerge
Energy from a northern white producer into a diversified frac sand
supplier of northern white and in-basin sand. Once again, we have
demonstrated our ability to develop highly attractive in-basin
projects with a budget that is often much smaller than our
competitors'. The new Oklahoma operation, the continued ramp up of
our San Antonio plant, and the sustained high interest in northern
white sand have us very excited about capitalizing on the strong
demand for all types of frac sand in this growth market."
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.
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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
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