Select Sands Corp. announced operational and financial results for the third quarter of 2018 The company is reporting that it:
• Sold 81,626 tons of frac and industrial sand during third quarter of 2018, with the decrease in frac sand demand from second quarter of 2018 levels primarily driven by an accelerated slowdown in well completions in the Permian Basin as a result of temporary takeaway capacity constraints, exploration and production budget exhaustion for 2018 and in-basin supply additions.
• Generated revenue of $4 million and gross profit of $0.7 million in the third quarter of 2018, as compared to $9.5 million and $3 million, respectively, in the second quarter of 2018.
• Reported a net loss of $0.1 million, or $0.00 per basic and diluted share, in the third quarter of 2018 versus net income of $1.6 million, or $0.02 per basic and diluted share, in the preceding quarter.
Zig Vitols, president and chief executive officer, commented, “Along with other frac sand producers in the industry, we were not immune to the widespread disruptions that impacted demand during the third quarter. Given this backdrop, we quickly took the necessary steps to manage costs and preserve working capital, including moving to single shift operations to ensure optimal control of overhead. As one would expect, this has been a difficult situation for our employees and contract-personnel and I want to thank them for their continued assistance and hard work.”
Vitols concluded, “Given the strong underlying long-term fundamentals of the North American oil and gas industry, we view the decrease in demand faced by frac sand producers as transitory in nature. While it is difficult to estimate the specific timing, we currently expect market conditions to improve in early 2019, as budgets for E&P operators reset and well completion activity accelerates. We also anticipate further expansion of off-take capacity in the Permian, which will improve pricing differentials and thereby drive more activity in the region. Given the high-quality silica offerings we produce and our strategic location near key oil and gas basins in the United States, in this improved environment we expect to return to full rate production. In addition, we will be in a better position to move forward with the Independence property expansion project, which will increase our production capacity to one million tons per year – a 67 percent increase over current capacity – and significantly lower the cost profile of our overall operations.”