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’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.
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.