The Simple Secret to America’s Shale Revolution презентация

has climbed by more than 3 million barrels per day to the highest levels in 25 years.

Much of that change has been from shale drilling

shale plays should increase by another 1.5 million barrels per day by 2020

Does not include shale gas or prospective plays

developing a better understanding of how shale wells produce over time, adjusting their operations along the way.


The largest impact on well performance has been the result of more proppant use

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2014: Wells per rig projected to increase 10% since 2012
Lateral lengths in the Bakken have doubled in past 5 years, similar figures from other basins
2009-2014: Companies have gone from single frac per well to as many as 40 frac stages per well
2013-2014: Average proppant used per well increased from 2,500 tons per well to 8,000 tons

10 years

Photo Source: NASA

you Need to Know:
Biggest sand producer: 8.2 million tons sand delivered in 2013

Contracts with largest oil services companies: Halliburton, Schlumberger, Nabors Industries

EBITDA CAGR greater than 33% over past 5 years.

Large supplier of industrial silica for specialty products (50% of volume shipped in FY 2013)

you Need to Know:
Quickly ramping up activity: Contract sales for 2015 at 4 million tons, 166% greater than FY 2013

Long term contracts in place: 5 year agreement with Weatherford, 6 year contract with Baker Hughes

EBITDA has grown 4.8 times since FY 2011 (founded in 2010)

Strong cash flow: Distribution coverage ratio of 1.15 for Q1 2014 pre- equity issuance

you Need to Know:
Production growing fast: 7.3 million tons of capacity brought online in 2 years, another 4 million awaiting permitting

Also has refined fuels distribution segment ( 76% of revenue, but 22% of operating income in Q1 2014, sand business growing faster than fuel segment)

Variable rate Master Limited Partnership: gives out 100% of distributable cash flow at end of quarter.

Big push into Canadian shale: Of three sand producers on list, only one with rail trans loading sites in Canada

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Oil Services specialist, designs products and services designed to optimize well productivity from hydraulic fracturing

Major producer of ceramic proppant



Why Ceramic?

in high-pressure environments (offshore drilling fields/ onshore depths greater than 10,000 ft) than sand

Need to Know:
Ceramic use taking off in certain geographies. Ceramic proppant as % of volume in Bakken has increased from <5% in 2008 to >40%.

Producing noticeable results in elsewhere. Ceramic wells have 20%-60% better 3 month production per lateral foot in Eagle Ford

Growing dividend by 16% annually since 2005

Currently limited by ceramic proppant manufacturing. 625,000 tons of ceramic production awaiting permits

proppant use in hydraulic fracturing likely means we will see strong demand for sand and ceramic proppant for several years to come. U.S. Silica, Hi-Crush, Emerge, and Carbo are all growing production fast, but demand is growing faster. This means that there is plenty of room for these companies to grow in proppant industry without too much risk of over capacity. All of these companies have stable, long term contracts in place and have been acquiring smaller players in industry to consolidate, so each are in a unique position to succeed over next several years.

Photo Source: NASA