One frac sand limited partnership, Hi-Crush is currently offering a 7. One of the largest private snd forex news companies is combining with one of the largest public companies: the resulting entity will list publicly later this year. While sand volumes are increasing, demand is subject to oil prices and the pace of drilling. Technical and process changes to hydraulic fracturing can be expected to eventually impact the pace of growth in sand demand.
The operations and prices of frac sand companies can be quite variable, as the five examples show here. Thus, investors will find it valuable to dig–so to speak–into frac sand company numbers. A key material in the hydraulic fracturing process is sand or proppant—used literally to prop open fractures in rock underground that allow hydrocarbons to flow and be produced. As it was discovered sand worked as well and was far cheaper than manufactured proppant in the large volumes needed, sand mines were opened in Wisconsin.
With its desirable size and shape characteristics, during 2017 Northern White sand was still used in about two-thirds of new wells. Wisconsin sand, last-mile transport for all sand, and in many cases, on-site storage. Under the tax regime that existed until recently, limited partnerships have been attractive structures for midstream operations like processing and transportation. But because the frac sand business includes midstream components, a mix of common stock and limited partnership structures predominates.
A sixth company is expected soon. In December 2017, Unimin announced it was acquiring Fairmont Santrol. The combined entity is expected to become a NYSE-traded public company later this year. It will have 45 million tons per year of sand capacity and over a billion tons of reserves. We can think about two groups and one factor that compete with these five-to-be-six companies. The second group comprises private frac sand companies: Vista Sand, Atlas Sand, Preferred Sands, Black Mountain Sand, and Alpine Silica. The competitive factor is the ever-changing technology of hydraulic fracturing, including experimentation with other processes, proppants, chemicals, and quantities of sand.
Market Capitalization, Stock Price, and Current vs. Current, Dividend, and Price-to-Earnings Ratios The current ratio measures liquidity and it is the ratio of a company’s current assets to its current liabilities. A current ratio does not include credit facilities or borrowing bases, so it is of interest but not definitive. CARBO Ceramics and Emerge Energy Services have non-applicable ratios since their most recently-reported earnings per share were negative. Liability-to-Asset and Short Ratios It is also worth seeing companies’ overall liability-to-asset ratios to determine their levels of financial flexibility. These range from conservative to aggressive. Another metric of investor sentiment is the ratio of shares held in short positions to floated shares.
Recommendations Based on these numbers, potential investors are encouraged to take a closer look at US Silica for its operations and diversification. Depending on individual tax needs and changes under the new law investors may want to consider Hi-Crush Limited Partnership for operations and its high yield of 7. Before deciding, investors should consider all factors in a company’s current operations, as well as its current and future earnings, strategies, and issues. These include a possible downturn in the crude oil market, additional supply from several new mines, and changes in technology or operations that reduce the use of sand in hydraulic fracturing. While you’re here, consider subscribing to Econ-Based Energy Investing, a Seeking Alpha Marketplace platform.
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