Release Highlights
- New seven-year agreement with a leading
STACK E&P operator (“Operator”) for proppant transloading
service supporting Operator’s development activity in the STACK
play
- Construction for new Kingfisher
Facility to commence in August, the first independent, high-speed,
unit-train capable transload facility dedicated to the STACK/SCOOP;
located directly on Union Pacific Railroad line covering 300 acres
in central Oklahoma
- First proppant delivery scheduled for
January 2018; initial unit train loop with 30,000 tons of silo
storage scheduled for mid-2018
- Discussions underway with other major
customers for potential long-term agreements utilizing the
Kingfisher Facility
- Increased mobile proppant management
system delivery and capital expenditure guidance for 2017
- Conference call is scheduled for
Thursday, August 3, 2017 at 3:30 p.m. Central Time (4:30 p.m.
Eastern Time)
Solaris Oilfield Infrastructure, Inc. (NYSE:SOI)
(“Solaris”), a leading manufacturer and provider of patented mobile
proppant management systems for oil and natural gas well sites,
today announced a major new customer contract in connection with
Solaris’ strategic expansion to integrate transloading logistics
with its existing operations. Under the agreement, Operator will
provide minimum quarterly proppant volumes through the new facility
that Solaris is developing in Kingfisher, Oklahoma (the “Kingfisher
Facility”). The proximity of Solaris’ Kingfisher Facility to the
STACK/SCOOP plays, coupled with Solaris’ well site mobile proppant
management systems, will allow Solaris’ customers to further
streamline their supply chain and reduce well completion costs.
Solaris is also engaged in discussions with other large acreage
holders and service providers in the STACK/SCOOP interested in
establishing similar long-term agreements at the Kingfisher
Facility.
The Kingfisher Facility will be located central to the
STACK/SCOOP plays and will be the first independent, unit-train
capable, high speed transload facility in Oklahoma. The Kingfisher
Facility will initially provide proppant transloading services, but
will also have capacity to provide transloading services for other
drilling and completion related consumables.
The Kingfisher Facility will help operators and service
companies reduce logistics costs by virtue of its high-volume
capacity and proximity to well sites. Proppant volumes have been
rising – even as commodity prices have fluctuated over the past
several years – largely driven by improved well productivity from
greater proppant loadings. The STACK/SCOOP are already among the
most economic oil basins for operators in the U.S. and the
Kingfisher Facility will further improve well economics that
support added investment by customers – spurring incremental
demand.
Greg Lanham, CEO of Solaris commented, “Since the formation of
Solaris, our focus has been helping customers streamline supply
chains to drive down costs. Our industry-leading well site proppant
management systems allow customers to better manage proppant
inventory levels at the well site and last mile trucking. The
Kingfisher Facility is a natural extension of our business, as we
expand one step further through the supply chain and continue to
facilitate the flow of increasing volumes of proppant across the
industry.”
Lanham continued, “We are excited about forming a long-term
partnership with an important tenant at the facility – a strong
endorsement that reaffirms our growth strategy. The new seven-year
agreement is a milestone contract adding significant revenue
backlog and improving the visibility of future earnings. We
anticipate other customers will also seek long-term agreements tied
to the new facility. The STACK/SCOOP have yielded fantastic
individual well results – as E&P companies transition toward
large-scale development, we expect the need for high-capacity
infrastructure will increase throughout the basin.”
More About the Kingfisher Facility
The Kingfisher Facility will be located on a 300-acre parcel of
land, directly on the Union Pacific Railroad. Solaris has secured a
30-year land lease with the State of Oklahoma and has started
ordering long-lead construction items in anticipation of breaking
ground in August 2017. The facility is designed to service multiple
large volume customers with dedicated storage and unit train loop
tracks, as well as direct rail-to-truck transloading.
To support Operator’s committed volumes, Solaris is commencing
Phase One construction, which will consist of an 8,000 foot
unit-train loop, 30,000 tons of high efficiency silo storage and an
additional 18,000 feet of rail sidetrack. The vertical silo storage
will consist of six (6) silos with individual capacity of 5,000
tons per silo. Solaris estimates that the Operator’s contracted
minimum volumes represent less than 50% of the operational capacity
of the Phase One infrastructure.
Estimated capital investment for Phase One totals approximately
$40 million and will be funded from available cash raised in
connection with Solaris’ recent initial public offering. This
investment includes capital expenditures related to engineering and
site preparation, as well as rail and silo construction that is
scheduled to be completed by August 2018.
The contracted minimum annual revenue upon completion of Phase
One is approximately $13.0 million. Direct costs of transloading
services are expected to be approximately 30% of revenue. Any
additional volumes above the contracted minimum will increase
revenue.
Potential future capital expenditures at the Kingfisher Facility
would coincide with additional customer commitments, which could
require increased rail and storage capacity. These investments are
expected to be funded from available cash and future cash
flows.
Revised Outlook
Solaris currently has 48 mobile proppant management systems in
its fleet, all of which are deployed to customers. Solaris
continues to manufacture additional systems in its manufacturing
facility and has increased selective outsourcing of subcomponents
to accelerate the build schedule.
In connection with the increased outsourcing efforts the outlook
for system deliveries for the remainder of the year has been
increased. The revised end of year system count has increased to 68
to 72 systems from 60 to 64 systems.
Solaris has also revised its 2017 capital expenditure guidance
to $75 million to $95 million, which includes the anticipated
capital required at the Kingfisher Facility in 2017 and the
increased system deliveries.
Conference Call Details and Presentation
Solaris will host a conference call to discuss additional
details regarding the Kingfisher Facility on Thursday, August 3,
2017 at 3:30 p.m. Central Time (4:30 p.m. Eastern Time). To join
the conference call from within the United States, participants may
dial (866) 807-9684. To join the conference call from outside of
the United States, participants may dial (412) 317-5415. When
instructed, please ask the operator to be joined to the Solaris
Oilfield Infrastructure, Inc. call. Participants are encouraged to
log in to the webcast or dial in to the conference call
approximately ten minutes prior to the start time. To listen via
live webcast, please visit the Investor Relations section of the
Company’s website, www.solarisoilfield.com.
An audio replay of the conference call will be available shortly
after the conclusion of the call and will remain available for
approximately seven days. It can be accessed by dialing (877)
344-7529 within the United States or (412) 317-0088 outside of the
United States. The conference call replay access code is 10111195.
The replay will also be available in the Investor Relations section
of the Company’s website shortly after the conclusion of the call
and will remain available for approximately seven days.
Solaris has also uploaded a corporate presentation on the
Investor Relations section of the Company’s website which provides
an overview of Solaris and additional information regarding the
Kingfisher Facility.
About Solaris Oilfield Infrastructure, Inc.
Solaris Oilfield Infrastructure, Inc. (NYSE:SOI)
manufactures and provides patented mobile proppant management
systems that unload, store and deliver proppant at oil and natural
gas well sites. These patented systems are deployed in many of the
most active oil and natural gas basins in the United States,
including the Permian Basin, the Eagle Ford Shale and the
STACK/SCOOP. Solaris’ new high-capacity transload facility being
built in Kingfisher, Oklahoma will serve customers with operations
in the STACK/SCOOP. Additional information is available on the
Solaris’ website, www.solarisoilfield.com.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Examples
of forward-looking statements include, but are not limited to,
statements we make regarding the outlook for the construction and
operation of our new Kingfisher Facility, current and potential
future long-term contracts and our future business and financial
performance. Forward-looking statements are based on our current
expectations and assumptions regarding our business, the economy
and other future conditions. Because forward-looking statements
relate to the future, by their nature, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. As a result, our actual results may differ
materially from those contemplated by the forward-looking
statements. Factors that could cause our actual results to differ
materially from the results contemplated by such forward-looking
statements include, but are not limited to the factors discussed or
referenced in our filings made from time to time with the SEC.
Readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.
Factors or events that could cause our actual results to differ may
emerge from time to time, and it is not possible for us to predict
all of them. We undertake no obligation to publicly update or
revise any forward-looking statement, whether as a result of
new information, future developments or otherwise, except as may be
required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20170802006324/en/
Solaris Oilfield Infrastructure, Inc.Kyle Ramachandran, (281)
501-3070Chief Financial OfficerIR@solarisoilfield.com
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