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Hi-Crush (HCLP) Inks Frac Sand Deal With Chesapeake Energy

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Hi-Crush (HCLP) Inks Frac Sand Deal With Chesapeake Energy

Hi-Crush's (HCLP) latest deal addresses Chesapeake's demand for Northern White frac sand and related proppant logistics requirements.

Hi-Crush Partners LP HCLP inked a new, long-term frac sand supply deal for the in-basin purchase of Northern White frac sand.

The move will support Chesapeake Energy Corporation CHK and its completions program in the Marcellus and Powder River Basins. Additionally, Chesapeake will utilize one PropStream container crew and associated logistics. Based on demand, the company has the option to expand.

According to Hi-Crush, the deal will address Chesapeake’s demand for Northern White frac sand and related proppant logistics requirements. It also affirms the strength of the company’s logistics network and success in partnering with producer customers.

Hi-Crush’s shares have slumped 48.6% in the past three months compared with the industry’s decline of 1.2%.

 



The company delivered profit of $26.5 million or 29 cents per share in third-quarter 2018, down from $29.8 million or 32 cents in the year-ago quarter. Adjusted earnings came in at 36 cents, which beat the Zacks Consensus Estimate of 31 cents.

Revenues jumped roughly 27.7% year over year to $214 million. The figure marginally surpassed the Zacks Consensus Estimate of $212.4 million.

Hi-Crush witnessed rapid change in market conditions in the frac sand sector during the third quarter, which led to declines in well completion activity and frac sand demand. The change also affected the market for Northern White pricing and volumes, which is expected to continue in the fourth quarter.

The partnership expects total sales volumes for the fourth quarter in the range of 2.3-2.5 million tons. Notably, total volumes sold in the fourth quarter are likely to be affected by persistent weakness in completions activity along with typical seasonal slowdowns. The partnership expects completions activity to increase in 2019 along with improving demand and supply dynamics for frac sand.

Hi-Crush Partners LP Price and Consensus

 

Hi-Crush Partners LP Price and Consensus | Hi-Crush Partners LP Quote

Zacks Rank & Stocks to Consider

Hi-Crush currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked stocks in the basic materials space are Methanex Corporation MEOH and The Mosaic Company MOS, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 25.7% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have rallied 57.9% in the past year.

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