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Page 20 of 43

Read online @ B A K K E N O I L B I Z . C O M / d i g i t a l - j o u r n a l 21 Non-Metallic, Non-Corrosive Capillary Tubing Manufactured with a specific purpose in mind; Longer Production Cycles Along with Healthy Profits. Maximize Production Enjoy Healthy Profits Excellent Burst Performance Outstanding Chemical Resistance Superior Flexibility Abrasion Resistance Temperature Resistance Will Not Pit, Crack or Corrode Functional in Harsh H2S Environments Up to 25% Post Industrial Recycled Content Contact Inplex now to find out how you can save time and money with Injectorplex tubing! Smart Sand (stock symbol: SND). These four leaders produce about 55 percent of the country's fracking sand. That's up from about 40 percent in 2014. There's been some consolidation in the industry. Like oil compa- nies falling on hard times and merging, so too did the sand companies. SLCA is the largest. Investors in SLCA shares have been taken on a wild ride over the last sev- eral years. The stock traded below $12 a share in 2012, then soared to more than $70 in 2014 as the oil boom peaked. When oil prices fell, they took the stock price of SLCA down too, sending it falling to around $15 a share. How- ever, in recent months the oil market has im- proved. Oil prices are up. West Texas Intermedi- ate has traded around $50 a barrel. The stock of SLCA made its way to almost $60 in Febru- ary before dropping once again. Recently it has traded in the neighborhood of $40 a share. Its "beta" is 2.03, which mean it's twice as volatile as the overall stock market. Last year SLCA generated revenue of about $560 million. However, it lost $41 million. That's down from a profit of $121 million dur- ing peak boom year of 2014. The other leading sand companies followed the same path. Soar- ing in 2014, crashing the following year, recov- ering in 2016, then dropping from recent highs to their current prices. With sand selling for about $25 a ton, profits are illusive. At $30 a ton, it's a different story. At that point, sand companies turn profitable. However, most analysts believe prices are likely to move up about 60 percent, to $40, over the next 18 months. If they're right, compared with last year, the four companies would generate much higher revenue this year and next. Possi- bly doubling at all but SND. In 2018, they may return to profitability. RISK VS REWARD As good as that seems, the question in- vestors want answered is what the high- er sand prices will do for the prices of these stocks? One leading brokerage firm believes the four stocks will outperform the overall stock market over the next 12 months. However, two other research firms believe the stocks are overvalued and should be sold. Hence, as always, when it comes to the stock market, the way forward is as uncertain and cloudy as ever. Nevertheless, we have a president who wants the energy industry to grow and prosper. That counts for a lot. ■ Chris Bischof is the Executive Editor of the Bakken Oil Business Journal. Previously he worked as a securities analyst and financial writer. He lives in New York City. Chris can be reached at THE SANDS ➤ continued, from pg 20

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