Houston-based Hi-Crush Partners purchased a recreation area formerly known as The Dunes at Kermit, in Kermit, Texas, and has started preparing the site for frac sand production.
Hi-Crush is in the process of constructing an on-site processing plant capable of producing 3 million tpy. Total cost for construction of the Kermit production facility is expected to be in the range of $45 million to $50 million, with an in-service date planned during the third quarter of 2017.
Formerly one of the largest recreational areas in the Southwest, the 1,200-acre property is expected to yield sand for 25 to 30 years. In the near term, the Hi-Crush project is expected to create about 70 jobs.
Hi-Crush also announced that it has completed its previously announced series of purchase agreements, including the acquisition of Permian Basin Sand Company LLC, the acquisition of the Whitehall facility, the acquisition of the remaining 2 percent additional interest in Hi-Crush Augusta LLC and additional properties located near the Whitehall facility.
Total consideration for these acquisitions was $340 million in cash and 3,438,789 newly issued common units, exclusive of contingent earnout consideration associated with the Whitehall transaction. Hi-Crush also said that underwriters have exercised its full overallotment option on its previously completed public offering of common units.
“We are extremely excited to complete these acquisitions, which collectively, significantly advance our leading position as a complete provider of a full range of raw frac sand and related services,” said Robert E. Rasmus, chief executive officer of Hi-Crush Partners. “Construction is underway on our new 3 million-tpy production facility in the heart of the Permian Basin, with completion expected late in the third quarter of 2017. Once complete, Hi-Crush will own and operate approximately 13.4 million tons of total frac sand capacity, which coupled with our industry-leading logistics network including our PropStream last-mile logistics solution, position Hi-Crush to serve the growing needs of our customers and the industry overall.”