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Hi-Crush Partners Reviews Second Quarter; Makes Acquisition

Hi-Crush Partners LP reported second quarter 2016 results and the completion of an acquisition.

Revenues for the quarter ended June 30, 2016, totaled $38.4 million on sales of 849,263 tons of frac sand. This compares to revenues in the first quarter of 2016 of $52.1 million on sales of 962,998 tons of frac sand.

The company said earnings before interest, taxes, depreciation and amortization for the second quarter 2016 was a loss of $3.4 million, compared to a loss of $44.7 million for the first quarter of 2016, which was negatively impacted by $33.7 million of goodwill impairment and $8.2 million of bad debt expense.

The sequential decline in sales volumes was attributable to the decline in overall industry demand for frac sand, the company said. Volumes declined month-over-month throughout the first quarter, reached a low in April, and increased monthly throughout the second quarter.

Approximately 49 percent of volumes were sold in-basin for the second quarter of 2016, a decrease from 59 percent in the first quarter of 2016 and from 58 percent in the second quarter of 2015 reflecting the mix in customer demand.

Average sales price per ton sold decreased to $45 per ton in the second quarter of 2016 from $54 per ton in the first quarter of 2016, reflecting the mix impact of decreased in-basin sales and modest additional declines in pricing during the quarter.

Of the 849,263 tons of frac sand sold during the second quarter of 2016, approximately 57 percent was produced and delivered from the Partnership's facilities, with the remainder being purchased primarily from our sponsor's Blair, Wis., facility.

Hi-Crush Partners LP also announced that it has entered into a contribution agreement with Hi-Crush Proppants to acquire the Blair plant from Hi-Crush Blair LLC, the entity that owns the raw frac sand processing facility. Blair has 1,285-acres of Northern White reserves, with a plant processing capacity of approximately 2.86 million tons of 20/100 frac sand per year.

Under the terms of the transaction, the partnership will pay cash consideration of $75 million to Proppants, issue 7,053,292 of common units, and pay up to $10 million of contingent earnout consideration. At the closing of the acquisition, the partnership will own all of Blair's membership interests. The acquisition is expected to close in September 2016, subject to regulatory approvals and other closing conditions.