Attached files
| file | filename |
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| EX-99.1 - EX-99.1 - Bison Merger Sub I, LLC | d428954dex991.htm |
| 8-K - FORM 8-K - Bison Merger Sub I, LLC | d428954d8k.htm |
 FMSA Kermit Presentation JULY 2017 Exhibit 99.2 |
 1 Forward-Looking Statements This presentation contains forward-looking statements. These statements can be identified by the use of forward-looking
terminology including “will,” “may,”
“believe,” “expect,” “anticipate,” “estimate,” “continue,” or other similar words. These statements discuss future expectations including company growth expectations, demand for our products, expectations regarding future prices, capacity
expansion plans, market trends, liquidity, transportation
services, commercial product launches and research and development plans and may contain projections of financial condition or of results of operations, or state other “forward-looking” information. These
forward-looking statements involve risks and
uncertainties. Many of these risks are beyond management’s control. When considering these forward-looking statements, you should keep in mind the risk factors, Management’s Discussion and Analysis of Financial Condition and Results of
Operations, and other
cautionary statements in the company’s SEC filings.
Forward-looking statements are not guarantees of future performance or an assurance that our current assumptions or projections are valid. Our actual results and plans could differ materially from those
expressed in any forward-
looking statements. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information or future events, except as required by law. FORWARD-LOOKING INFORMATION |
 Commitment to People, Planet & Prosperity Technology & Innovation Broad Product Portfolio Strengthened by new Kermit, TX facility Operational Scale & Efficiencies Extensive Distribution and Unit Train Capabilities Core Differentiators for Long-Term Value Creation FAIRMOUNT SANTROL 2 |
 Market Supply / Demand Dynamics INVESTMENT THESIS FMSA’s footprint will be well-suited to meet demand for both local/regional sands in the
Permian and highest quality Northern White Sand across all
basins Permian basin demand expected to grow
~15-20M tons in 2018 and reach ~45-50M
tons by end of 2018
A number of customers have shown interest
in sourcing fine mesh demand locally
Local Permian supply is largely finer grades
with majority 100 mesh
Estimated ~30-40M tons of in basin Permian
capacity to come on line by the end of 2018
Permian demand will be served concurrently
by new cost-effective Permian capacity (100
mesh in particular) as well as Northern
White and Texas Gold® products
Significant Permian demand for 40/70 as
well as vast majority of coarser grades will
continue to be served cost-effectively by
FMSA’s Northern White or Texas Gold®
Demand for finer grades will grow in other
key basins, which can also be efficiently
served by FMSA’s footprint and logistics
network
As FMSA’s I&R business grows it will
continue to consume more finer grades
particularly 100 mesh
MARKET FACTORS
FMSA THESIS
3 |
 Located in Winkler County, TX (Permian basin) near Kermit ~3,250 acres under lease with reserves of ~165M tons Fine mesh sand reserves (40/70 and 100 mesh), with ~75% 100 mesh PROPERTY FMSA Kermit Details Kermit low-cost facility further broadens FMSA’s extensive product portfolio
and allows Company to meet growing and changing market
demand Capacity of approximately 3 million annual tons of
frac sand Facility expected to be in operation by
beginning of Q2 2018 Manufacturing cost per ton in first
quartile of cost curve even with royalty MINE AND PRODUCTION
FACILITY
Total leasehold interest payments and capex between $100 million to
$110 million funded over next 12 months
Royalty structure, which includes water rights, on each ton sold from
plant that will average less than $3 with no minimum
royalty Financing expected to be through cash on hand
and/or operating cash flow FINANCING
Located between both Midland and Delaware basins
Easy access to existing roads
Significant water resources available on site
LOGISTICS
4 |
 FMSA Kermit Addresses Permian Sands’ Known Risks FMSA Kermit facility addresses known risks while positioning FMSA to capture growing Permian demand Roads Oil & Gas Infrastructure Sand Dune Lizard Location has easy access to Highway 115 and other major roads Evaluating habitat in line with our legacy sustainable development principles & practices Leased acreage contains contiguous mining space Utilities Power and water easily accessible FMSA Kermit Location FMSA Kermit Location FMSA Kermit Location 5 |
 Benefits from Expanded Capacity in Kermit |
 High-Purity Northern White Silica Sands Tier 2 regional sand Precured Resin- Coated Sand Highest strength Increased flowback protection Curable Resin- Coated Sand Highest flowback protection Increased strength Texas Gold® Frac Sand Tier 1 NWS 99.8% pure silica Expands Product Offerings for Nearly Every Well Design Proppant coating that enhances well productivity and operational efficiency through improved proppant transport and frac geometry optimization PRODUCTS/ APPLICATIONS Lower-cost, API-certified sand applications High-temperature / pressure wells where proppant needs extra strength & fines encapsulation Wells where flowback is a challenge Medium cost, delivers higher productivity versus regional sands In any well to optimize water, chemical and horsepower required to place the targeted proppant volume and mesh size RAW SAND Propel SSP ® RESIN-COATED SAND TRANSPORT TECHNOLOGY WELL PRESSURE (Based on 40/70 Up to 6,000 psi Up to 9,000 psi Up to 14,000 psi Up to 16,000 psi Dependent on underlying proppant Tier 3 local sand Lowest-cost option for wells in Permian basin Up to 8,000 psi Regional Frac Sand FMSA KERMIT BENEFITS 7 CHARACTERISTICS substrate) |
 Expands Capacity to Meet Growing Market Demand FMSA KERMIT BENEFITS Lease will add approximately 165 million tons of reserves to bring company total to nearly 900 million tons, allowing for long-term organic growth Locations, grade mixes and logistics capabilities provide flexibility to meet changes in market demand Regional / local sands expected to represent ~30% of active production capacity when Kermit is at full production capacity Re-opened Shakopee with expectations to be operational by end of Q3-17 Northern White Sand Mines 8 FAIRMOUNT SANTROL STATED ANNUAL RAW FRAC SAND CAPACITY (in millions of tons) |
 Expands Footprint in Key Basins Through Facilities and Terminals
FMSA Terminal
FMSA Mining & Processing
Unit Train Destination
Unit Train Origin (Mining &
Processing)
Coating Operation
New Kermit facility will strengthen
FMSA’s position in Permian basin
for tier 3 local sands
FMSA KERMIT BENEFITS
9 Canada |
 10 Strategic Location to Serve All of Permian Basin Oil & Gas Terminals Unit Train Destination FMSA Mining & Processing Well Site New FMSA Kermit facility is well- positioned to serve both the Delaware and Midland basins Delaware Basin Midland Basin FMSA KERMIT BENEFITS |
 Unique Opportunity for FMSA Local Permian supply strengthens FMSA’s position by adding a low-cost, in-basin solution
near the Delaware basin that complements our strong position in the
Midland basin Meets key success criteria for new supply in
the Permian basin including access to water, existing
roads and infrastructure, and contiguous reserves of quality sand Lease structure requires less upfront capital, provides a more variable cost structure
(through royalty on tons sold) and generates higher return on net
investment Finalizing customer contracts for the majority
of sand production from both Kermit and Shakopee with
possibility of prepayments from certain customers with long-term commitments FMSA KERMIT BENEFITS Flexibility of lease structure optimizes cash, which enables FMSA to
make investments to grow business and to prepay $50M of term
loans 11 |
 FMSA Kermit – Timeline for Delivery Q3 ‘17 Q4 ‘17 Q1 ‘18 Q2 ‘18 Lease and capital expenditures ~$70-75M Lease and capital expenditures ~$30-35M Total investment = $100M-$110M Finalized leasehold agreement Permits filed Equipment on order Customer contracts finalized Staffing Plant Plant Construction Plant operational by beginning of Q2 2018 Plant expected to be at full capacity by Q4 ‘18 12 |
 Industry Leader Well-Positioned for Growth WHY INVEST IN FMSA? Technology & innovation Broad product portfolio - strengthened by Kermit facility Operational scale & efficiencies Distribution & unit train capabilities Dynamic onshore completions activity Increased proppant intensity per well Increased operator focus on long-term well productivity and flowback mitigation Continued solid demand in I&R STRONG MARKET DRIVERS KEY LONG-TERM DIFFERENTIATORS AND VALUE CREATORS Commitment to People, Planet & Prosperity 13 |