Laura Fulton, the CFO of Hi-Crush Partners LP (HCLP), Interviews with The Wall Street Transcript

Wall Street Transcript

67 WALL STREET, New York - May 16, 2014 - The Wall Street Transcript has just published its Oil & Gas: Master Limited Partnerships Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Increasing Demand for Midstream Assets - U.S. Energy Infrastructure Build Out - Emerging Shale Plays - Outlook for Natural Gas Liquids - Oil and Gas Investing - Shale Production Growth

Companies include: Hi-Crush Partners LP (HCLP) and many more.

In the following excerpt from the Oil & Gas: Master Limited Partnerships Report, the CFO of Hi-Crush Partners LP (HCLP) discusses company strategy and the outlook for this vital industry:

TWST: You recently acquired a facility in Augusta, Wisconsin. Please tell us about that and why it was a good deal for the company.

Ms. Fulton: The way that the partnership works is that we have a sponsor entity that typically will incur the risk associated with constructing a new mine facility. They will take the time to de-risk that facility by making sure that it operates through the winter season, when we have to shut the wet plant down, and then make sure we can bring the wet plant up and back into operation. So the sponsor, Hi-Crush Proppants, developed the Augusta facility, and right now with the demand that we're seeing for frac sand, we need that production capacity in the partnership. So the acquisition of it was from our parent company, the sponsor essentially.

It really has been - I think - a great step in the growth of the company to add that production capacity into the partnership, because the Augusta facility has strong contracts associated with it for the sale of the sand, but it's also fully utilized because there is so much demand for sand. We sell that sand either directly to our customers at the plant or through our distribution network to the customers.

TWST: Does the company expect to be an active acquirer going forward? What's the overall growth strategy?

Ms. Fulton: There are many avenues to growth for the company, and that's what makes this business so exciting. One is just growing organically through producing more sand from the existing facilities that we have, expanding the capacity of those facilities and then also the greenfield development of new facilities. Our sponsor is currently constructing a third production facility near Whitehall, Wisconsin, and that will be a 2.6 million-ton production facility that will be up and running before the end of 2014. So just expanding our production facilities is one way to grow.

Also, expanding our distribution network. We have a dominant position in the Marcellus and the Utica with distribution terminals that can deliver the sand to the customers in that shale basin. We're building a facility in Big Spring, Texas, right in the middle of all the action in the Permian Basin. We look to expand distribution terminals throughout all the different shale basins, and that's another avenue to serve our customers and help grow the business that way. In addition, we can acquire more distribution terminals from other operators or acquire other production facilities from other sand companies. There are a lot of smaller entities that are interested in selling their business to a larger company, like ourselves, because we are the ones that have the relationships with the oilfield service companies and the ability to sell that sand, and they are realistically having trouble doing that since they don't have all the logistics capabilities as well.

And then the final avenue for growth is more growth at the sponsor level, through drop-downs into the partnership. This Whitehall facility that's being built right now is a very visible avenue to growth for the partnership itself through that drop-down potential from the sponsor.

TWST: What is your financing strategy for acquisitions and expansions?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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