Hi-Crush Partners announced that the board of directors of its general partner has declared a cash distribution of $0.475 per unit on all common and subordinated units, or $1.90 on an annualized basis.
"Market conditions resulting from reduced industry sand demand and pricing worsened this quarter with further price reductions and even lower demand," said Laura Fulton, chief financial officer of Hi-Crush. "Our management team, along with the board of directors, determined that a reduction to the quarterly cash distribution was prudent as we do not expect a rebound in sand demand or pricing until 2016. We are expecting the remainder of 2015 to be challenging with continued uncertainty in the level of well completion activity, which is a key driver of sand demand. We expect to maintain the distribution at this level for the remainder of 2015."
Hi-Crush paid distributions of $2.40 per unit on all common and subordinated units for 2014 and $0.675 per unit for the first quarter 2015.
"Our decision today to reduce our distribution to the minimum quarterly distribution level was a difficult one, but reflects our updated outlook for 2015 operating and financial performance. With our strong balance sheet, we could pay the distribution at the previous levels," said Robert E. Rasmus, co-chief executive officer, "however, we believe this is the time to preserve capital and invest in the company. We continue to believe the fundamentals for increased frac sand demand over the long-term are in our favor, but the recovery to previous demand and pricing levels will take longer than previously thought."
Hi-Crush also announced that cash capital expenditures in 2015 were $40 million during the first half of the year including some spending carried over from 2014 projects. The remaining capital expenditures for 2015 are expected to range between $10 million and $15 million, principally spending on new distribution facilities.