Houston, Texas, September 12, 2016 - Hi-Crush Partners LP (NYSE: HCLP), "Hi-Crush" or the "Partnership", announced today that it has entered into an amendment to a material contract with a customer and, as a result, has decided to restart production at its frac sand facility in Augusta, Wisconsin in order to meet the growing demand. It was also announced that the Partnership completed the previously announced acquisition of the Blair facility on August 31, 2016.
"We're very excited to be reopening the Augusta facility," said Bob Rasmus, Chief Executive Officer of Hi-Crush. "Throughout the downturn, we have continued to run our Wyeville plant near its full capacity as we match our customer demand with our most efficient and lowest cost facilities. While there has been demand for certain grades of sand that would have fit the Augusta product mix and rail origin, order visibility was low and demand was below levels needed to justify producing from that facilty. The contract amendment we announced today provides the visibility and sustainability of demand to enable us to operate at the efficiencies and cost structure we require."
The Augusta facility is a 2.86 million ton per year facility located in Wisconsin directly on a Union Pacific mainline. Its 41 million tons of reserves consist solely of high quality Northern White frac sand. Augusta is 98 percent owned by the Partnership, with the remaining 2 percent held by the Partnership's general partner, Hi-Crush Proppants LLC. The Blair, Wisconsin facility is a 2.86 million ton per year facility located directly on the Canadian National Railway. Construction of the fully-integrated, unit-train capable Blair facility, with 8 miles of rail track, was completed in March 2016 and includes approximately 120 million tons of 20/100 frac sand reserves located on 1,285 acres.
"With the completion of the Blair acquisition and restarting of Augusta, Hi-Crush is poised to capture long-term, profitable market share as we move forward into the recovery," said Laura Fulton, Chief Financial Officer of Hi-Crush. "As of August 31, 2016, the Partnership had $111 million of liquidity, giving us the flexibility and opportunity to capture value in the recovery."
"We are proud of how our employees have performed throughout this downturn," Mr. Rasmus added. "Their commitment to service is a key element in maintaining the strong relationships we have forged with our customers as they continue to rely on Hi-Crush to meet their growing frac sand supply chain needs. The contract amendment we announced today is a good example of how these relationships have endured through the downturn and how they will expand in the recovery."
Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Hi-Crush's reserves, which are located in Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit www.hicrushpartners.com.
Some of the information in this news release may contain forward-looking statements. Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "may," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush's reports filed with the SEC, including those described under 1A of Hi-Crush's Form 10-K for the year ended December 31, 2015 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any litigation, claims or assessments, including unasserted claims; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush's forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Marc Silverberg, ICR Inc.