More Interesting Comments From TPH’s “Energy Thoughts”

• Sand demand per well still rising – yesterday HAL noted they saw a decline in sand pumped per well q/q Q2’17.  The Q2 proppant data we analyzed begs to differ…indicates (industry-wide) sand/well continues to climb  (OIH $25) – While Q2 U.S. completions data is still incomplete and HAL’s customer mix could have come into play, the basin by basin sand demand data we see indicates proppant/well +5% in the Eagle Ford, +5% in the Midland, +25% in the Bakken (not a typo), and -3% in the Delaware.  Focusing on the top 9 operators in each basin shows proppant demand per well up across all 4 basins mentioned above (generally to a greater degree vs. the overall data). As an example, the top operator data shows Delaware proppant loading up 8% q/q…just a guess but this could indicate smaller players in the historically logistically disadvantaged play could have struggled to get their hands on sand to some degree during the Q while larger players were able to ramp sans issues.  Interesting to note that outside of the Bakken, lateral length appeared to be the main driver of the sequential Q2 proppant/well increase.

• What are the sand stocks pricing in? – they appear to be pricing in $25-30/ton frac sand prices, which is ~40-50% below vs. current minegate price and about the same delta as contracts for Permian frac sand at the mine (OIH $25) – Despite Northern White and regional frac sand players signing long-term sand contracts for ~$45/ton+, sand stocks seems to be baking in a super ugly pricing outlook.  We forecast frac sand prices of ~$53/ton in 2018 and ~$45/ton 2019 given our bullish demand tilt; however, should sand prices end up more in the $35-$40 per ton long-term ballpark, we believe FMSA would be a $6-13/sh stock (at $45-$50 per ton it would be a $10-$19/sh stock), SLCA would be a ~$35-$58/sh stock (at $45-$50 per ton it would be a $45-$75/sh stock), and we think similarly steep upside exists for SND. Feels like we’re banging our heads against the wall at this point, but the stock drubbing feels well overdone in our view, unless we sit in a $40/bbl (or lower) crude oil world going forward.

AGENDA - NOV 18

  • Frac Sand Equipment Expo Begins 9:00 am
  • Exhibitor Setup for Frac Sand Conference 1:00 pm
  • Frac Sand Equipment Expo Ends 4:00 pm
  • Speaker/Sponsor Reception at Frac Sand Equipment Expo 4:00 pm

AGENDA - NOV 19

AGENDA - NOV 20

  • Networking Breakfast in Exhibit Hall 8:00 am
  • General Sessions with Breaks in the Exhibit Hall 8:30 am
  • Conference Closes 12:00 pm
  • Exhibit Hall Beak Down & Move-Out 12:00 pm
  • Conference Golf Outing 1:00 pm

SPONSOR ADD-ONS

  • Frac Sand Equipment Expo 20'x40' Space $3,500
  • VIP Dinner on November 19th $7,500
  • Coffee Mugs SOLD
  • Notebook SOLD
  • Speaker/Sponsor Reception on November 18th SOLD
  • Conference Mobile App $3,000
  • Day 1 Kick-Off SOLD
  • Day 2 Kick-Off $3,000
  • Lanyard SOLD
  • Networking Lunch on November 19th SOLD
  • Networking Reception Glasses SOLD
  • Day 1 Morning Break (Video ad) $2,500
  • Day 1 Afternoon Break (Video ad) $2,500
  • Day 2 Morning Break (Video ad) $2,500
  • Day 2 Afternoon Break (Video ad) $2,500
  • Case Study 1 $2,500
  • Case Study 2 $2,500
  • Charging Station $2,500
  • Printed Program $2,500
  • Conference Wifi SOLD
  • Golf: Water Bottles SOLD
  • Golf: Hosted Hole (Beverage Station & Contest) $3,700
  • Golf: Hats $3,500
  • Golf: Cigars $3,200
  • Golf: Divot Tools $3,200
  • Golf: Balls $3,200
  • Golf: Towels $3,200

The Frac Sand
Summer Happy Hour

Event Registration – $25