Emerge Energy Services LP announced additional details regarding its previously announced development of a new mining and processing operation located in Kingfisher County, Okla.
Emerge Energy’s subsidiary, Superior Silica Sands, signed a 25-year lease agreement that encompasses mining rights on 600 acres of land located approximately 60 miles northwest of Oklahoma City. Superior has also agreed to purchase 40 acres of adjoining land on which the new wet and dry processing plants will be constructed. Closing of the land purchase is subject to customary due diligence.
• The Oklahoma plant will have a nameplate capacity of 1.5 million tpy; production is projected to start by year-end 2018.
• The 600-acre mine site has an estimated 20 million tons of reserves, according to internal analysis; a third-party engineering group will conduct an independent reserves analysis.
• Approximately 65 percent of the deposit consists of 100 mesh sand while the remaining 35 percent consists of 40/70; both products meet API specifications for crush strength, according to third-party test results – the 100 mesh product exhibits crush strength of 8,000 psi and 40/70 exhibits 5,000 psi.
• The total project is expected to cost $15 million; Superior will use existing equipment on hand for a portion of the dry plant.
• The project will be funded with the company’s current cash on hand and revolver availability; the project does not change Emerge Energy’s previously announced full-year 2018 capital expenditures guidance of $70 million to $90 million.
• Air and water permits will be filed with the state of Oklahoma in the coming weeks; site construction is expected to start by mid-June.
• The property is located less than two miles from US 81, a four-lane highway serving the Mid-Continent basin.
• Rail service is available less than three miles from the plant; Superior is evaluating nearby transload opportunities to bundle northern white with local sand.
• Long-lead time equipment has been ordered.