As proppant loads increase and laterals get longer in the Lower 48, Mammoth Energy Services Inc. is growing its sand volumes, announcing Thursday it has secured a multi-year take-or-pay sand contract with a third-party service provider.

Oklahoma City-based Mammoth agreed to supply to an undisclosed operator 720,000 tons/year of sand for several grades of sand (20/40, 30/50 and 40/70) over three years beginning Oct. 1. The deal is expected to generate $90-100 million in total revenue over the contract period, assuming it delivers all of the contracted volumes.

“Executing this take-or-pay contract for 720,000 tons/year of sand at attractive pricing will provide for a predictable cash flow stream over the next three years,” CEO Arty Straehla said. “As we have previously announced, we intend to utilize approximately half of our 4 million tons/year (mty) of annual sand production in direct support of our pressure pumping operations with the remainder sold through potential contracted sales or into the spot market.”

Last month Mammoth completed two big transactions, including the $35.25 million acquisition of Denver-based sand supplier Chieftain Sand and Proppant LLC. Also in May Mammoth completed its takeover of Sturgeon Acquisitions LLC, which owns Taylor Frac LLC, Taylor Real Estate Investments LLC and South River Road LLC, as well as Stingray Energy Services LLC and Stingray Cementing LLC. The all-stock deal is valued at $133.8 million.

Taylor Frac, considered the linchpin of the Sturgeon transaction, is a major sand supplier in Appalachia; it owns a 700,000 ton/year sand mine and processing plant in Taylor, WI, with 37.1 million tons of recoverable reserves, 73% of which is fine sand grades. The Taylor facility is undergoing an expansion to 1.75 mty by the end of this year at a cost of $23 million.

The newest contract for sand “secures placement, at attractive margins, for roughly half of the 1.5 mty capacity of our Chieftain Sand mine,” Straehla said.

Mammoth, which launched publicly on Nasdaq last fall, also has a growing business in Oklahoma’s myriad stacked reservoirs. The rail line now serving Taylor runs to Appalachia, but Mammoth has an option to move the sand to Oklahoma as well.

“Our expansion into the Midcontinent is on track with our fourth pressure pumping crew currently rigging up to pump its second job in the area, in line with our previously announced timeline,” Straehla said.