Superior Silica Sands LLC (SSS), a subsidiary of Emerge Energy Services LP, announced that it has completed the acquisition of approximately 94 million tons of high-quality northern white silica sand reserves in Jackson County, Wis., from a subsidiary of Performance Technologies LLC (PTL), which is wholly owned by Seventy Seven Energy Inc.
The assets acquired include certain owned and leased land; sand deposit leases and related prepaid royalties; and transferable mining and reclamation permits. In consideration for the assets, PTL and SSS amended and restated the existing supply agreement between the parties and entered into a new sand purchase option agreement that provide PTL with a market-based discount on sand purchased from SSS. At the closing of the transaction, SSS also reimbursed PTL for certain capital expenditures associated with the assets.
Under the new agreements with PTL, SSS has the option to supply the contracted tons from its existing footprint of northern white sand operations or construct a new sand mine and dry plant in Jackson County, Wis. Given the current challenging market conditions for proppant demand, SSS will defer the construction of the new facility until the North American oil and gas markets improve.
“PTL has been a valued customer of SSS for several years, so consummating a transaction with them made strong strategic sense,” commented Rick Shearer, president and CEO of SSS. “This transaction not only provides SSS with an increase to its high-quality sand reserves but also strengthens our position in the market place with a leading pressure pumper across a number of shale plays in North America. We look forward to working more closely with PTL by supplying them a reliable base of high-quality frac sand and newly expanded technologically-driven prop pants.”