Preferred Sands LLC, Radnor, Pa., will spend more than $200 million to buy “substantially all the assets” of Winn Bay Sand LP, including operations in Blair, Wis., and Hanson Lake, Saskatchewan, Canada. The move is designed to aggressively capture a bigger share of the lucrative market for sand used in hydraulic fracturing of oil and natural gas wells.
The privately held company founded by Michael G. O'Neill is reportedly one of the largest frac-sand producers in Canada and one of the top three in the United States. The company did not disclose the size of the reserves it acquired from Winn Bay Sand, which is affiliated with the Ochapowace First Nation, a Canadian Indian tribe.
Winn Bay Sand acquired 3,082 acres of leases in the Hanson deposits in 2004, according to media reports. Preferred Sands did not disclose how it will finance the deal. Mergers & Acquisitions Journal reported in November that the company was seeking a $430 million senior secured credit facility to pay for an acquisition, buy out minority investors and refinance existing debt.
Preferred Sands got into the frac-sand business in 2007 with the acquisition of an 80 million-ton reserve in Nebraska. The demand for special sand used as “proppant” in hydraulic fracturing has soared along with the drilling boom in formations like Pennsylvania's Marcellus Shale. The company later acquired mines in Arizona and Minnesota and has the capacity to produce 2.1 million tons of sand a year.