Fort Worth-based fracturing services provider FTS International said Wednesday it agreed to sell its proppant business and related logistics assets for an undisclosed price to Fairmount Minerals. It said it will contract with Fairmount for those services in the future and use the proceeds of the sale to pay down debt. Proppant, typically sand, is used in hydraulic fracturing to "prop" open fractures induced by pumping fracturing fluid into underground formations at high pressure.
"The transaction will include substantially all of FTSI's sand mines, raw sand processing plants, resin coating plants, railroad transload sites and various other properties and facilities," said the company, formerly known as Frac Tech. It will retain what it called its "last mile" trucking operations that carry proppant from loading sites to well sites.
FTS reported long-term debt of nearly $396 million as of March 31 and interest expense for the first quarter of about $8 million. Nearly all that debt is due after 2017. It earned $12.8 million in the quarter on revenue of $475 million, according to its latest regulatory disclosure related to its publicly traded debt. Its shares are privately held. In its first-quarter filing, it describes its proppant operation like this: "We produce from our own mines and processing plants much of the raw sand and resin-coated sand we use as proppants, and we transport most of the raw sand and other products to job sites by rail and truck using our distribution network." It listed the value of its proppant and chemicals inventory at $54.6 million as of March 31, but did not otherwise break out the size of its proppant operations.
Last year, Hi-Crush, a Houston sand provider, estimated the North American proppant market, including raw sand, ceramic and resin-coated proppants, at about 22 million tons in 2011. It said raw sand represented about 17 million tons of that, with demand expected to grow 7 percent annually through 2016. It put the value of the North American proppant market at $3.7 billion in 2011, citing a published report.
-- Jim Fuquay