Carmeuse Industrial Sands sold for USD 297 million
Pioneer Natural Resources Company signed an agreement with Carmeuse Holding to acquire its US industrial sands business, Carmeuse Industrial Sands (CIS), for approximately USD 297m.
Pioneer Natural Resources Company today announced it has signed an agreement with a subsidiary of Carmeuse Holding to acquire its US industrial sands business, Carmeuse Industrial Sands, for approximately USD 297m.
CIS is the number one producer of Hickory frac sand in the US. Hickory sand is considered to be the highest quality brown sand for fracture stimulation.
Scott Sheffield, Chairman and CEO, stated, "When Carmeuse recently announced plans to sell its US sand business, we viewed this as a strategic opportunity to secure high-quality, low-cost and logistically advantaged brown sand supply to support our growing fracture stimulation requirements in three of our four core Texas growth assets. The acquisition complements Pioneer's vertical integration strategy, which is reducing execution risk and controlling costs. By securing supply at below market prices, we expect to reduce annual capital spending by USD 65m to USD 70m based on our estimated sand requirements and current market prices."
Pioneer's annual demand for proppant to support the company's fracture stimulation operations is forecasted to increase from 1.2m tons in 2012 to 1.6m tons in 2015 as drilling activity continues to ramp up. Seventy percent to eighty percent of the company's forecasted proppant demand is brown sand. Pioneer's primary source for brown sand is CIS.
Pioneer estimates that it will save USD 65m to USD 70m per year by acquiring CIS. After taking into account an additional USD 10m of annual cash flow from CIS' other assets, Pioneer's total annual savings are estimated to be USD 75m to USD 80m.
CIS is led by a highly experienced and technically proficient management team with more than 150 years of experience in the industrial sands business. This management team has agreed to join Pioneer.
The acquisition will be funded from available cash and is expected to close late in the first quarter or early in the second quarter of 2012.