Smart Sand Inc. announced that based on its assessment of increased demand for its products, particularly fine mesh sand, the company has decided to increase the wet and dry plant processing capacity at its Oakdale facility in order to produce up to approximately 4.4 million tons of raw frac sand per year.
“We have also decided to expand rail and logistics infrastructure in Wisconsin to support this potential increase in customer demand,” the company said. “Additionally, we continue to evaluate other proposed projects and related expenditures, such as investments in transload facilities located in the shale operating basins, in light of customer demand and energy market trends. There can be no assurance, however, that all or any of these initiatives will be executed or that the results therefrom will be materially beneficial to our financial performance.”
The company said it currently in discussions with certain existing and prospective customers in the pressure pumping, exploration and production industries to enter into long-term, take-or-pay agreements with minimum volume commitments, particularly for finer mesh sand.
“We also have experienced a recent increase in interest for recurring spot sales in the open market and have conducted some spot sales on a select basis,” the company said. “If we were to enter into any such long-term agreement or conduct additional spot sales, the additional volumes we sell could be material to our performance and prospects. We can provide no assurance, however, that we will be able to enter into any of these agreements or complete any such sales. Entry into the long-term contractual agreements is subject to, among other things, agreement on the purchase price for our frac sand and the negotiation and execution of definitive documentation, and entry into spot sales is subject to agreement on the terms of any such sale.”