Fort Worth-based FTS to sell frac sand operations

Posted Wednesday, Jul. 24, 2013  comments  Print Reprints

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Fort Worth-based FTS International, which provides hydraulic fracturing services, said Wednesday it has agreed to sell its proppant business and related logistics assets for an undisclosed price.

Proppant, typically sand but sometimes tiny ceramic beads, is used in hydraulic fracturing to “prop” open fractures induced by pumping fracturing fluid into underground formations at high pressure. Millions of pounds can be used on a single well.

FTS said it will contract with the buyer, Ohio-based Fairmount Minerals, for proppant services in the future. It will use the proceeds of the sale to pay down debt, which stood at nearly $400 million as of March 31, according to a recent filing with the Securities and Exchange Commission.

Fairmount says its Santrol unit is one of North America’s largest proppant providers. It operates a distribution terminal in Cresson, between Fort Worth and Granbury, to serve the Barnett Shale.

According to its website, FTS operates two sand mines, in Central Texas and Missouri, and sand processing plants at those sites and two Wisconsin sites. It sells raw sand and resin-coated sand, which is designed to resist crushing under pressure.

“The transaction will include substantially all of FTSI’s sand mines, raw sand processing plants, resin coating plants, railroad transload sites and various other properties and facilities,” said FTS, formerly known as Frac Tech. It will retain what it called its “last mile” trucking operations that carry proppant from loading sites to well sites.

FTS, based in downtown Fort Worth, earned $12.8 million in the first quarter on revenue of $475 million, according to the SEC filing, which is related to its publicly traded debt. Its shares are privately held.

FTS reported long-term debt of nearly $396 million as of March 31 and interest expense for the first quarter of about $8 million. It faces no near-term repayment crunch, with almost none of the debt due prior through 2017, according to the SEC filing.

It listed the value of its proppant and chemicals inventory at $54.6 million as of March 31, but did not otherwise break out the size of its proppant operations.

Jim Fuquay, 817-390-7552 Twitter: @jimfuquay

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