Select Sands Updates Business Plan Amid COVID-19

Select Sands Corp. announced a business update in response to the global COVID-19 pandemic. In order to combat the spread of COVID-19 governments worldwide have enacted emergency measures including travel bans, legally enforced or self-imposed quarantine periods, social distancing and business and organization closures. These measures have caused material disruptions to businesses, governments and other organizations resulting in an economic slowdown and increased volatility in national and global equity and commodity markets.  

Select Sands is continuing operations both in Arkansas, where product is mined, processed and shipped, as well as in George West, Texas, where its 100% owned subsidiary, Select Sands America Corp., operates a transload facility supplying product to the Eagle Ford Basin.

Select Sands’ largest customer has recently curtailed frac operations and temporarily halted receipt of sand shipments in the Eagle Ford Basin due to the current situation. The company is working closely with the customer and looks forward to the resumption of shipments as conditions improve. Given the current environment, Select Sands has adjusted its employee staffing levels at the George West Transload Facility and will operate with a minimal crew in the near term to serve operational needs as appropriate.

The company’s previously announced project designed to optimize and consolidate processing assets to improve cost efficiencies is continuing in Arkansas.

The Plant Reconfiguration Project includes installation of dry-processing equipment at the company owned Diaz Rail Facility, thereby increasing process efficiency by reducing inter-plant transportation costs. Dry processing at Diaz will immediately save approximately 16 miles of interplant transportation and over one hour in transload logistics.  

In addition, Select Sands has implemented a program to increase its owned truck fleet as conditions improve. On a per mile basis, costs savings are estimated to be approximately 25% compared to outside contract trucking.  

Once completed, product will be mined and wet processed at the company’s Sandtown Quarry near Cave City, Ark., and transported to Diaz near Newark, Ark., where it will be dried, stored and shipped. Diaz also hosts rail loading.  

The completion of the Plant Reconfiguration Project will result in reducing load/unload events by half. As previously announced, all the above referenced facility improvements for Diaz and the Plant Reconfiguration Project are being funded by a secured bank loan.

Amid the COVID-19 pandemic, the company has been pursuing relief through the Families First Coronavirus Response Act and the Paycheck Protection Program offered through the Small Business Administration.  

The company will provide further information with respect to these relief efforts once details are known. Similar to other businesses, to supplement its financial position Select Sands has been successful in delaying certain payments to creditors.

Select Sands is revising its sales volume expectations for its Northern White Sand product offering for the first quarter of 2020 to approximately 59,000 tons and is rescinding its previous guidance for second quarter sales volumes.

Select Sands President and CEO Zig Vitols remarked, “These are unprecedented times and I am truly appreciative of how our collective employee base has responded and kept operations going during this challenging time. With the temporary hold on shipments the company is taking the opportunity to redirect the workforce to largely focus on the Plant Reconfiguration Project. With the re-assignments, management sees the prospect bringing expected cost optimization benefits online before shipments resume as the backdrop for the oil and gas industry improves.”

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