Atlas Energy Solutions to Buy Hi-Crush, Consolidating Permian Services

Atlas Energy Solutions has entered into a definitive agreement to acquire all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations. The cash-and-stock transaction is valued at $450 million, Atlas said in a Feb. 27 press release.

The deal effectively connects Atlas’ Delaware Basin logistics offering with Hi-Crush’s in the Midland Basin. The combination also unites two of the largest holders of premium giant open dune sand reserves and resources in the Permian.

Deal consideration consists of $150 million in up-front cash, $175 million in Atlas common stock and $125 million in deferred cash payments.

Pro forma, Atlas’ production capacity is expected to be about 28 million tons. About 80% of pro forma 2024 production capacity is contracted, which Atlas said would accelerate free cash flow generation and shareholder returns.

Atlas said that, taking into account Hi-Crush’s contracts, the company expects 2024 sand prices to average between $26 per ton and $28 per ton.

“Assuming just over three quarters of contribution from Hi-Crush, we expect 2024 adjusted EBITDA to range between $425 [million] to $475 million,” Atlas said in the press release.

For the year, capex will range between $335 and $360 million, including growth capex between $285 million and $305 million. About $220 million will be spent on the construction of the Dune Express—a 42-mile electric conveyor system for sand delivery running from Kermit, Texas, to New Mexico.

The acquired assets are expected to contribute $100 million to $125 million in 2024 adjusted EBITDA. Atlas estimated the deal would be immediately “double-digit accretive” to cash flow per share and earnings per share.

The company expects to realize more than $20 million in annual synergies by 2026.

Bud Brigham, Atlas executive chairman and CEO, said combining with Atlas and Hi-Crush’s teams, technologies and best practices should constructively benefit shareholders.

“It also furthers our goal to lead the industry in transitioning the Permian, already the premier producing region in the country, to becoming the most efficient and livable energy manufacturing center in the world," he said.

Hi-Crush CEO Dirk Hallen called the deal a “winning combination [that] will be transformative for our industry, employees, customers and shareholders.”

Piper Sandler & Co. is serving as lead financial adviser to Atlas. Goldman Sachs & Co. LLC is also advising Atlas. Vinson & Elkins LLP is serving as legal adviser in association with the transaction.

Moelis & Co. is serving as exclusive financial adviser to Hi-Crush. Baker Botts LLP is serving as legal adviser in association with the transaction.