Hi-Crush announced that it has entered into an amendment to a material contract with a customer and as a result has decided to restart production at its frac sand facility in Augusta, Wis., in order to meet the growing demand. It was also announced that the partnership completed the previously announced acquisition of the Blair facility on Aug. 31, 2016.
"We're very excited to be reopening the Augusta facility," said Bob Rasmus, chief executive officer of Hi-Crush. "Throughout the downturn, we have continued to run our Wyeville plant near its full capacity as we match our customer demand with our most efficient and lowest cost facilities. While there has been demand for certain grades of sand that would have fit the Augusta product mix and rail origin, order visibility was low and demand was below levels needed to justify producing from that facilty. The contract amendment we announced today provides the visibility and sustainability of demand to enable us to operate at the efficiencies and cost structure we require."
The Augusta facility is a 2.86 million tpy facility located in Wisconsin directly on a Union Pacific mainline. Its 41 million tons of reserves consist solely of high quality Northern White frac sand.
Augusta is 98 percent owned by the partnership, with the remaining 2 percent held by the Partnership's general partner, Hi-Crush Proppants LLC. The Blair facility is a 2.86 million tpy facility located directly on the Canadian National Railway.
Construction of the fully-integrated, unit-train capable Blair facility, with eight miles of rail track, was completed in March 2016, and includes approximately 120 million tons of 20/100 frac sand reserves located on 1,285 acres.
"With the completion of the Blair acquisition and restarting of Augusta, Hi-Crush is poised to capture long-term, profitable market share as we move forward into the recovery," said Laura Fulton, chief financial officer of Hi-Crush. "As of Aug. 31, 2016, the partnership had $111 million of liquidity, giving us the flexibility and opportunity to capture value in the recovery."
"We are proud of how our employees have performed throughout this downturn," Rasmus added. "Their commitment to service is a key element in maintaining the strong relationships we have forged with our customers as they continue to rely on Hi-Crush to meet their growing frac sand supply chain needs. The contract amendment we announced today is a good example of how these relationships have endured through the downturn and how they will expand in the recovery."