Proppant in a blender tub. Atlas Energy Solutions is acquiring all of Hi-Crush’s Permian Basin proppant production assets and North American logistics operations. (Source: Shutterstock)
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.
Recommended Reading
Element Six, Master Drilling Announce Tunnel Development Partnership
2025-02-19 - Element Six and Master Drilling will deliver a diamond-enabled solution designed to increase tunneling development speed, reducing costs and minimize the environmental impact of tunnel construction.
Pair of Large Quakes Rattle Texas Oil Patch, Putting Spotlight on Water Disposal
2025-02-19 - Two large earthquakes that hit the Permian Basin, the top U.S. oilfield, this week have rattled the Texas oil industry and put a fresh spotlight on the water disposal practices that can lead to increases in seismic activity, industry consultants said on Feb. 18.
E&P Seller Beware: The Buyer May be Armed with AI Intel
2025-02-18 - Go AI or leave money on the table, warned panelists in a NAPE program.
PrePad Tosses Spreadsheets for Drilling Completions Simulation Models
2025-02-18 - Startup PrePad’s discrete-event simulation model condenses the dozens of variables in a drilling operation to optimize the economics of drilling and completions. Big names such as Devon Energy, Chevron Technology Ventures and Coterra Energy have taken notice.
Aris CEO Brock Foresees Consolidation as Need for Water Management Grows
2025-02-14 - As E&Ps get more efficient and operators drill longer laterals, the sheer amount of produced water continues to grow. Aris Water Solutions CEO Amanda Brock says consolidation is likely to handle the needed infrastructure expansions.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.