U.S. Silica Holdings’ Sand Volumes Are on the Rise

SLCA’s segments

U.S. Silica Holdings’ (SLCA) operations are divided into two segments—Oil & Gas Proppants and Industrial & Specialty Products.

The Oil & Gas Proppants segment provides frac sand for use in oil and gas wells. The Industrial & Specialty Products segment provides sand for a range of industrial applications, such as glassmaking and chemical manufacturing.

U.S. Silica Holdings’ Sand Volumes Are on the Rise

U.S. Silica’s Oil & Gas Proppants segment contributed 63% of its 2017 pro forma profits, including contributions from EP Minerals, with the remaining 37% coming from the Industrial & Specialty Products segment.

The image above shows the contribution of the two segments to U.S. Silica’s profits. It also shows a breakdown of the Industrial & Specialty Products segment’s revenue. The segment provides U.S. Silica some diversification compared to Hi-Crush Partners (HCLP), which caters only to the oil and gas industry.

U.S. Silica Holdings’ Sand Volumes Are on the Rise

Frac sand volumes

U.S. Silica’s sand volumes for its Oil & Gas Proppants segment have been on an upward trend for the last several quarters. The graph above shows the amount of sand sold in tons in the Oil & Gas Proppants segment.

For the third quarter, U.S. Silica expects sand volumes in the Oil & Gas Proppants segment to rise 20%–25% driven by new capacity in West Texas and its Brownfield expansion projects becoming fully operational. The company expects that up to 80% of these volumes will be sold under long-term agreements.

Next, let’s see if higher volumes have translated into higher earnings for U.S. Silica Holdings.