HCLP’s recent performance

Emerge Energy Services (EMES) and Hi-Crush Partners (HCLP) both reported strong 2Q17 results. Hi-Crush Partners sold 2.1 million tons of sand in the quarter, representing a 53.0% rise over the previous quarter. It expects strong results in 3Q17 with a 14.0%–24.0% sequential growth in volumes.

Analyzing Frac Sand Volume Growth for HCLP and EMES

The above graph shows Hi-Crush Partners’ volumes sold over the last three years. “Growth in sand demand, combined with increasing prices throughout the quarter, resulted in $23 million of distributable cash flow. Frac sand fundamentals continue to be positive, particularly for fine mesh sand, and execution continues to be critically important,” said Robert E. Rasmus, CEO (chief executive officer) of Hi-Crush Partners, in the company’s 2Q17 earnings release.

Nearly 64.0% of Hi-Crush Partners’ volumes were sold in-basin in 2Q17. That’s lower than 69.0% in 1Q17 but higher than 49.0% in 2Q16. The average sales price was $64 per ton in 2Q17 compared to $60 per ton in 1Q17 and $45 per ton in 2Q16. Sustained tightness in the demand and supply of frac sand contributed to the rise in prices.

Analyzing Frac Sand Volume Growth for HCLP and EMES

EMES expects high volume growth

Emerge Energy Services’ frac sand volumes rose 11.3% from 1.3 million tons in 1Q17 to 1.4 million tons in 2Q17. As the above graph shows, EMES projects total volume growth of 93.0% CAGR (compound annual growth rate) over two years.

Strong volume growth contributed to positive DCF (distributable cash flow) for the two MLPs after several quarters of negative flows. Let’s analyze the DCF and capital expenditure trend for Emerge Energy Services and Hi-Crush Partners in the next part of this series.

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