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Smart Sand Expanding Bakken-Based Proppant Operations

Texas-based Smart Sand Inc. is expanding its sandbox in North Dakota's Bakken Shale, acquiring a railroad offload terminal and establishing a long-term deal with Canadian Pacific Railroad (CP).

Smart Sand supplies Northern White proppant sand for fracturing (fracking) operations from its facility near Oakdale, WI, where it said it has 321 million tons of proven recoverable reserves. The processing capacity during the second quarter is set to increase to 5.5 million tons from 3.3 million tons.

In the latest deal, Smart Sand paid $15.5 million for unit train capable terminaling assets at Van Hook, ND. It also obtained a long-term lease agreement with CP. The Van Hook facility is to be operational in April.

The company on Tuesday said it also has signed a multi-year take-or-pay purchase agreement with an undisclosed exploration and production company to supply sand from the Van Hook terminal.

Smart Sand would service Van Hook directly while continuing to serve other key oil and gas exploration and production basins in North America.

"The Oakdale facility mining operation continues to deliver fracking sand in the quantities and with the efficient logistics needed to support today's higher-intensity finer mesh frack designs," said CEO Charles Young. The goal for the operator, based in The Woodlands north of Houston, is to be "mine-to-wellhead" fracking sand supplier.

Net income for 4Q2017 totaled $10.8 million (27 cents/share), compared with $12.4 million (40 cents) in the year-ago period. For 2017, net income was $21.5 million (54 cents/share), from $10.3 million (43 cents) in 2016.

Smart Sand reported record 4Q2017 revenue of $43 million and output of 706,400 tons. Overall tons sold in 2017 were about 2.44 million, nearly tripling the full-year 2016 output of 826,000 tons.

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