Atlas (AESI) to Buy Proppant Production Assets in a $450M Deal
Atlas Energy Solutions Inc. AESI, a market leader in the proppant and logistics industry, announced the purchase of Hi-Crush Inc.'s Permian Basin proppant production assets and North American logistics operations in a deal worth $450 million.
By combining Atlas’ Dune Express logistics with Hi-Crush’s Oncore + Pronghorn logistics, the acquisition will help expand the former’s logistic capabilities.
The companies stated that the buyout will combine two of the largest holders of premium giant open dune sand reserves and resources in the Permian Basin, which is located in the Southwestern United States and is an area of strategic importance to oil producers in the country.
The deal is set to be financed in upfront cash and Atlas common stock worth $150 million and $175 million, respectively. The company will also pay $125 million in deferred cash payments via a seller’s note.
On a pro-forma basis, the production capacity of the combined company is expected to reach 28 million tons, of which 80% is already under contract for 2024. The acquired assets are also anticipated to contribute between $110 million to $125 million in Adjusted EBITDA in 2024.
The combined operations of both companies are expected to yield more than $20 million of annual synergies by 2026. The transaction is expected to be immediately accretive to cash flow per share and earnings per share (EPS). The acquisition is also anticipated to generate increased free cash flows and provide improved shareholder returns.
The deal is scheduled to be finalized before the end of the first quarter of 2024.
Zacks Rank and Key Picks
Currently, AESI carries a Zacks Rank #3 (Hold).
Investors might want to look at some better-ranked stocks in the energy sector, such as Energy Transfer LP ET, Archrock Inc. AROC and Repsol REPYY. While both Energy Transfer and ArchRock presently sport a Zacks Rank #1 (Strong Buy), Repsol carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. With a pipeline network extending more than 125,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.
Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Repsol is a global multi-energy company, involved in exploration and production activities as well as refining and marketing petroleum products. The company is also actively involved in transitioning toward cleaner and more sustainable energy solutions. Recently, it announced the expansion of its network of renewable fuel refilling stations in Europe, demonstrating its commitment to a sustainable energy model.
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Energy Transfer LP (ET) : Free Stock Analysis Report
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Atlas Energy Solutions Inc. (AESI) : Free Stock Analysis Report
