This Week’s Market Buzz

• Hi-Crush Partners reported third quarter 2018 results. Revenues for the third quarter of 2018 totaled $214 million on sales of 2,775,360 tons of frac sand. This compares to $248.5 million of revenues on sales of 3,037,504 tons of frac sand in the second quarter of 2018. “The third quarter experienced a rapid change in market conditions in the frac sand sector,” noted Robert E. Rasmus, chairman and chief executive officer of Hi-Crush. “This change, attributable to declines in well completion activity and therefore demand for frac sand, impacted the market for Northern White volumes and pricing, which we expect to continue in the fourth quarter. The accelerated pace of slowdown in well completion activity, combined with supply additions and build-up of inventories in-basin, resulted in lower pricing for Northern White sand across all basins.”

• Source Energy Services announced that sand volumes in the third quarter of 2018 increased by 220,469 metric tons, or 43 percent, compared to the volume of sand sold in the third quarter of 2017. The company said that while commodity prices remain favorable, WCSB exploration and production companies have been impacted by very wide differentials and an unpredictable operating environment. These factors have led to a significant slowdown in completion activity in the fourth quarter of 2018. Source expects that E&P companies will conservatively manage their remaining 2018 capital spending programs given these conditions.

• Revenue in Eagle Materials’ Oil and Gas Proppants segment was $19.1 million, a decline of 13 percent, reflecting lower net sales prices partially offset by a 2 percent increase in frac sand sales volume. “Our improved sales volume reflected sales activity from our new drying plant in Illinois, which was operational for the full quarter,” the company noted. “During the quarter, pricing for our frac sand came under pressure as overall frac sand demand declined, primarily in the Permian Basin, where oil pipeline capacity limitations have reduced completion activity leading to excess frac sand in the marketplace. It is unclear how long these market conditions will persist. The second quarter’s operating loss of $7.9 million included $9.4 million of depreciation, depletion and amortization.”

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