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Hi-Crush Partners report 3Q18 results

Published by , Assistant Editor
Dry Bulk,

Yesterday, Hi-Crush Partners LP (Hi-Crush) reported its 3Q18 results. Revenues for the third quarter of 2018 totalled US$214.0 million on sales of 2 775 360 t of frac sand. This compares to US$248.5 million of revenues on sales of 3 037 504 t of frac sand in the second quarter of 2018. The limited partners' interest in net income was US$26.5 million for the third quarter of 2018, resulting in US$0.30 basic and US$0.29 diluted earnings per limited partner unit.

Earnings before interest, taxes, depreciation and amortisation adjusted for earnings from equity method investments and loss on extinguishment of debt (Adjusted EBITDA) was US$50.6 million in 3Q18, compared to US$81.5 million for the second quarter of 2018. Distributable cash flow attributable to the limited partners for the third quarter of 2018 was US$40.0 million compared to US$66.6 million for the second quarter of 2018. There was no distributable cash flow attributable to the holder of the incentive distribution rights (IDRs) for 3Q18, compared to US$7.8 million for the second quarter of 2018.

"The third quarter experienced a rapid change in market conditions in the frac sand sector," said Robert E. Rasmus, Chairman and CEO of Hi-Crush.

“This change, attributable to declines in well completion activity and therefore demand for frac sand, impacted the market for Northern White volumes and pricing, which we expect to continue in the fourth quarter. The accelerated pace of slowdown in well completion activity, combined with supply additions and build-up of inventories in-basin, resulted in lower pricing for Northern White sand across all basins. We remain committed to our Mine. Move. Manage. operating strategy and to expanding our frac sand logistics solutions offering. We believe our focus on logistics will differentiate Hi-Crush and continue to benefit unitholders, particularly as the market rebounds in 2019 due to operator budget resets and the alleviation of takeaway capacity constraints in the Permian Basin.”

3Q18 results

Revenues for the third quarter of 2018 totaled US$214.0 million, compared to US$248.5 million for the second quarter of 2018. The decrease was driven by lower pricing and reduced volumes. Lower pricing resulted from the slowdown in demand for frac sand that emerged during the third quarter of 2018, due to decreased well completions as E&Ps reduced activity during the quarter.

The decline in demand was exacerbated by the start-up of new in-basin volumes in the Permian. Average sales price declined to US$64/t in 3Q18, compared to US$70/t in 2Q18. The reduced sales volumes sequentially reflect lower activity levels experienced during the third quarter, but were partially mitigated by sales made directly to operators and through our PropStream integrated last mile logistics service. Of the total sales volumes reported in 3Q18, 24% were sold at the wellsite through PropStream, compared to 20% in 2Q18. Volumes sold directly to E&Ps represented 40% of the total in the third quarter of 2018, compared to 31% in the second quarter of 2018. Both sales volumes through PropStream and sales volumes sold direct to E&Ps also increased on an absolute basis in the third quarter.

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