August 21, 2017
U.S. Silica Holdings, Inc. announced that, on August 16, 2017, it finalized its $95.4 million acquisition of Mississippi Sand, LLC. The acquisition includes a plant in Festus, Mo., capable of producing 1.2 million tons of fine grade sand annually and can be expanded to produce 1.6 million tons per year with a modest capital investment. The plant, which is located 40 miles southeast of U.S. Silica’s Pacific, Mo. mine and plant, has over 30 million tons of high-quality frac sand reserves on 650 acres through a long-term lease agreement.
The distribution network is composed of five barge terminals and three rail terminals, two of which are unit train-capable, with a combined annual throughput of 2.2 million tons. The rail terminals have access to most of the major Class 1 railroads.
The acquisition also includes an approximately 1 million ton-per-year dry plant located near Seagraves, Texas, which is currently idled, but could be utilized in the future as part of U.S. Silica’s strategy in the Permian Basin.
“We’re very pleased with the addition of this new low-cost facility with high quality reserves and flexible logistics, which we believe will greatly complement our product offerings from Pacific,” said Bryan Shinn, president and CEO of U.S. Silica Holdings. “Pacific has some of the highest quality sand in our portfolio, one of the reasons why it operated at close to full capacity through the downturn. This acquisition will enable us to nearly double the size of our capacity from the area and take advantage of multiple modes of distribution to better serve our customers and enhance our competitive position in the marketplace.”
Mississippi Sand currently has five long-term contracts with both Oil Field Service and Exploration and Production companies that covers 80 percent of their capacity. The bulk of the contracts are take-or-pay agreements and run through the beginning of 2020.
“The acquisition of Mississippi Sand is a good use of our cash as it helps us further consolidate the frac sand space,” said Don Merril, executive vice president and CFO, U.S. Silica Holdings. “We plan to continue to use our strong balance sheet to fund value-added investments that will benefit our customers and other stakeholders.”