FAIRMOUNT SANTROL | INTERVIEW
OCTOBER 2017 OIL & GAS FINANCIAL JOURNAL | WWW.OGFJ.COM 21
some studies have shown more than 50% uplift. Although it’s
designed to increase production through more effective proppant placement, benefits are immediately recognized on the
surface where we have the ability to complete wells at any pump
rate, any proppant concentration, any mesh size and varying
water quality, while lowering the average treating pressure.
Compared to a typical slickwater design, E&Ps will observe that
a Propel SSP optimized design reduces water, chemicals, and
time needed to complete wells.
Do you see your two main businesses at cross purposes
with each other – selling sand and selling proppant systems
that could potentially use less sand?
GC: We see them as complementary. Over the years, we’ve
consistently developed strategic relationships to maximize
value through mine and supply-chain efficiencies, as well as
value added technology solutions. For years we have been the
leading supplier of coated proppant and fluid diverting agents
while consistently growing our mining operations and demand
for our frac sands. Specifically, Propel SSP adds portfolio dynamics that enhance our value to customers. E&Ps can now
shift between frac sand grades to hedge against inflation due
to the ability to pump coarse sand with Propel SSP while fine
sand in the market tightens.
Water management is a significant issue, especially
for operators in the Permian, with some looking to reduce
freshwater use and water management costs. Are these realistic goals for operators?
JD: Yes, in fact, this year, we introduced a produced-water
tolerant version of Propel SSP to cope with these needs – Propel
SSP 350, allowing operators to use up to 100% produced water.
Believe it or not, you can actually frac with seawater, not to
mention brine and produced water. With this extension of
technical capability, we now can reduce overall demand for frac
water by loading proppant with Propel SSP at more than two
times the concentration of sand in slickwater, and promote
water reuse. In fact, we’ve seen more than 50% water reduction
in wells while using Propel SSP over a traditional slickwater
design. To answer your question though, water management
costs and disposal concerns continue to challenge operators,
not just in the Permian. As an industry, we need to find more
eco-friendly and economically viable ways to reduce fresh water
use, increase water reuse, and utilize non-potable sources.
You recently reported second quarter 2017 operational
and earnings results. What should readers glean from the
quarter about the future performance and outlook for the
MB: We continue to execute well to meet strong demand as
well as positioning ourselves, both operationally and financially,
is more than a phrase, it
represents our mission
our commitment to
deliver solutions that
and enhance well
for the long term. Operationally, we’re gearing up for what we
see as another year of increased proppant demand and intensity
per well, and a growing appetite for in-basin and regional sand.
We are in the process of building our West Texas Kermit mine,
which we anticipate will start-up early next year to serve the
Permian Basin. Also, our Shakopee, Minnesota mine and sand
processing plant, which is located on the Union Pacific railroad,
has recently been reactivated. The addition of these two mines
will add approximately 3. 7 million tons of annual processing
capacity to our mining footprint. We’re also making investments
to better align our production with demand. For example, we
are increasing our production of fine grade sand, which we
expect to be in the shortest available supply, at our Wedron,
Illinois facility. And we’re continuing to invest in Propel SSP
field trials to build a strong case history of performance. Financially, we’ve demonstrated strong capital discipline by prepaying
debt in 2016 and again in the second quarter of 2017. Our top
priorities for the coming quarters will be to begin operations
at our Kermit facility, continue reducing our net debt through
free cash flow generation and to refinance our term debt and
revolving credit facility prior to the end of 2017.
One last question for Jenniffer. You’ve been the company’s president and CEO since 2013. How would you grade
the level of diversity in senior leadership roles in our industry?
How is Fairmount Santrol promoting diversity in its
JD: Diversity is vital for optimal success – in all industries,
including our own. More perspectives means more opportunities
for us to get to the right answer. At Fairmount Santrol, we pride
ourselves on being a company with a people-first approach.
And we’re always looking for ways to improve. Just recently, we
established our internal Diversity and Inclusion Council that
is charged with developing meaningful ways to promote real
diversity in our workplace culture, so we’re excited to see the
benefits that this council will create.
Thank you very much for your time.