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What’s ahead for Frac Sand Producers?

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Stocks have fallen YTD

Frac sand producers Emerge Energy Services (EMES) and Hi-Crush Partners (HCLP) rose nearly 44% and 16%, respectively, over the last 12-month period. Since the beginning of 2017, Hi-Crush Partners has fallen 33%, while Emerge Energy Services has fallen 13%. The stocks followed crude oil prices, which have fallen 12% YTD (year-to-date).

Fairmount Santrol Holdings (FMSA) has fallen 59% YTD, while U.S. Silica Holdings (SLCA) has fallen 33% during the same period. In comparison, the SPDR S&P 500 ETF (SPY) (SPX-INDEX) has risen 9% YTD. In this series, we’ll discuss Emerge Energy Services and Hi-Crush Partners’ recent operational performance. We’ll also discuss the key factors that might drive the stocks in the future.

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Crude oil prices

The above graph compares the stock performance of Fairmount Santrol Holdings, U.S. Silica Holdings, Hi-Crush Partners, and Emerge Energy Services during the past year.

Hi-Crush Partners is an integrated producer, transporter, marketer, and distributor of high-quality monocrystalline sand—a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells.

Emerge Energy Services mines, produces, and distributes silica sand. Silica sand is a key input for oil and gas wells’ hydraulic fracturing.

Since the demand for frac sand directly depends on drilling activity, frac sand stocks tend to have a high correlation with crude oil prices.

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