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Delaware
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90-0832937
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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180 State Street, Suite 225, Southlake, Texas 76092
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(817) 865-5830
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(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
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Title of Each Class
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Name of Each Exchange On Which Registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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Large-Accelerated Filer
x
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Accelerated Filer
o
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Non-Accelerated Filer
o
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Smaller Reporting Company
o
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•
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Focus on profitability and improving financial condition.
We are applying financial discipline to all aspects of our business with the primary goals of reducing costs, minimizing capital expenditures, restructuring our long-term lease commitments, realigning our human resource capital, idling our most expensive plants, working to reduce our bank debt, coordinating with our bank group to modify lending covenants, and accelerating the introduction of technology-based sand products that could improve our financial performance. These strategy efforts include, but are not limited to:
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negotiate with our suppliers to reduce costs associated with other goods and services;
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reduce our capital expenditures and cancel planned expansion projects that are no longer economically feasible in this deteriorating market;
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negotiate with key railcar lessors to delay future deliveries and reduce future lease costs;
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continue to reduce employee headcount to more closely align our human capital with current levels of sales;
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temporarily idle our most expensive dry plant at Arland, and the wet plant at New Auburn;
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explore strategic sale transactions, such as the possible sale of our Fuel segment and the application of the net proceeds to reduce bank debt;
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renegotiate bank lending covenants in connection with a possible sale of our Fuel segment;
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expand sales of our dustless proppant, SandGuard™, which we believe will result in higher profit margins; and
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introduce, after satisfactory testing, our self-suspending proppant, SandMaxx™, which we also believe will result in higher profit margins.
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Optimize existing assets.
We intend to focus on efforts that complement our existing asset base or provide attractive returns in new geographic areas or business lines. In our Sand segment, we have three Northern White dry plant facilities located in Wisconsin and an additional dry plant facility located in Kosse, TX. To reduce costs, we have temporarily idled our most expensive dry plant at Arland and the wet plant at New Auburn to run our lowest cost plants at higher capacity. In our Fuel segment, we believe there are several opportunities to contract additional transmix supplies which we can process using existing excess capacity, and increase both wholesale, and terminal volumes. We are also building hydrotreaters at our two fuel terminals to allow us to process low sulfur transmix into ultra-low sulfur diesel. We expect those hydrotreaters to be completed in 2016.
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Introduce new products serving our core end users.
We intend to increase our presence and market share in frac sand end markets that we believe are poised for growth. In September 2015, we introduced a unique, technically advanced proppant to the oil and gas industry. This new dustless proppant, brand named SandGuard™, will improve the handling, in-basin management, and job-site implementation of the hydraulic fracturing of oil and gas wells. With a SandGuard™ treatment facility in Barron County, Wisconsin, SSS will have the ability to enhance the already strong qualities of its Northern White silica sand as a patent protected proppant soon to be marketed to all major North American basins.
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Focus on customer contracts.
In our Sand segment, we are working to secure long-term take-or-pay, fixed-volume, and efforts-based contracts with existing and new customers in order to cover the substantial majority of our production capacity. In 2015, total sales to customers currently under long-term contracts, including efforts-based, fixed-volume, and take-or-pay arrangements, accounted for 83% of our total Sand segment sales. As of December 31, 2015, we had 7.5 million tons under long-term contract, primarily efforts-based arrangements, with a weighted average remaining of four years. In our Fuel segment, we designed our contract structure to capture a stable margin, as the price differential between the refined products indices at which we purchase transmix and wholesale fuel and the ultimate selling price of the corresponding refined product. We also seek to lease additional space in our terminal tanks to refiners and large fuel wholesalers, where we can capture both fixed monthly fees and fixed per-gallon throughput margins that are independent of the underlying commodity price. We also engage in financial hedging arrangements to partially mitigate, but not eliminate, our direct exposure to fuel commodity price fluctuations.
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Capitalize on industry fundamentals.
The demand for frac sand decreased in 2015 as North American drilling activity declined in response to falling oil and gas prices. Rig count reductions were partially offset by a higher number of wells drilled per operating rig and an increase in sand intensity per well drilled. Although the timeline for a recovery of drilling and fracking activity remains uncertain, we continue to believe the frac sand market offers attractive long-term growth fundamentals.
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Grow business through strategic and accretive business or asset acquisitions.
Financial performance and condition permitting, we plan to selectively pursue accretive acquisitions in our areas of operation that we believe will allow us to realize operational efficiencies by capitalizing on our existing infrastructure, personnel and commercial relationships in energy services, and we may also seek acquisitions in new geographic areas or complementary business lines. In December 2015, we acquired the rights to mine approximately 94 million tons of high quality northern white silica sand reserves in Jackson County, Wisconsin. The sand reserve figure is based upon internal analysis of drilling and coring samples. This transaction not only provides us with future access to high quality sand reserves, but also strengthens our position in the marketplace with a leading pressure pumper across a number of shale plays in North America. Given the current
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Distributions.
While Amendment No. 2 to the Amended and Restated Revolving Credit and Security Agreement limits our ability to make distributions to our unitholders, our board of directors of our general partner remains committed to resuming distributions as our financial condition allows.
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High quality, strategically located assets.
We currently operate several scalable frac sand production facilities in and around Barron County, Wisconsin and Kosse, Texas. Our facilities in Wisconsin are supported by approximately
75 million
tons of proven recoverable sand reserves and our facility in Texas is supported by approximately
27.4 million
tons of proven recoverable sand reserves. We believe that our Wisconsin and Texas reserves provide us access to a balanced amount of coarse sand (16/30, 20/40, and 30/50 mesh sands) and fine sand (40/70 and 100 mesh) compared to other frac sand producers. Our sample boring data and production data indicated that our Wisconsin reserves contain deposits of nearly 35% 40 mesh or coarser substrate, with our Barron reserves being comprised of more than 60% 50 mesh or coarser substrate. Our mine deposits in Wisconsin can be targeted to extract finer grades when the market dictates such demand is wanted, as is the current trend. Also, our Kosse, TX operation primarily consists of fine sand product, which affords us significant flexibility of serving our customers with their desired product type needs.
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Logistics.
In our Sand segment, the logistics capabilities of our Wisconsin facilities enable us to serve all major United States and Canadian oil and natural gas producing basins, as well as provide us with economical access to Mexico and South America. Our New Auburn facility is connected to a rail line owned by Union Pacific, and our Barron facility is connected to the Canadian National rail line. Between our two Wisconsin rail yards, we have storage space for approximately 1,000 railcars. Our Baron and New Auburn dry plant facilities can accommodate unit trains. As of December 31, 2015, we had a total of
5,657
railcars in our fleet, including
326
dedicated customer cars and
5,331
railcars under lease with a weighted average remaining term of 4.7 years. As of December 31, 2015, we had
15
transload facilities in North America, each of which is positioned to serve a number of our target markets.
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Competitive operating cost structure.
We believe that our operations are characterized by an overall low cost structure which allows us to capture attractive margins in the industries in which we operate. Our low cost structure is a result of the following key attributes:
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close proximity of our silica sand reserves to our processing plants, which reduces operating costs;
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expertise in designing, building, maintaining and operating advanced frac sand processing, storage and loading facilities, operating transmix plants, and managing fuel storage assets;
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a large proportion of the costs we incur in our production of sand are only incurred when we produce saleable frac sand;
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open dialogue with key vendors allowing for cost reduction in down markets;
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proximity to major sand and fuel logistics infrastructure, minimizing transportation and fuel costs, and headcount needs;
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competitive mineral royalty expenses;
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enclosed dry plant operations which allow full run rates during winter months, thereby increasing plant utilization; and
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a diversified and growing customer base spread across nearly every major shale play in North America.
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Strong reputation with our customers, suppliers and other constituencies.
Our management and operating teams have developed longstanding relationships with our customers, suppliers, and other constituencies. Based on our track record of dependability, timely delivery and high-quality products that consistently meet customer specifications, we believe that we are well positioned to secure additional contracted commitments in the future, and that our product mix and customer service will continue to benefit our reputation within the frac sand industry. In our Fuel segment, we have established long-term supply relationships with major refining, midstream and marketing companies that provide us with a steady source of supply at competitive prices.
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Experienced management team with industry specific operating and technical expertise.
The senior management team at our Sand segment has extensive industry experience in managing and operating industrial mineral production facilities. They have managed numerous frac sand mining and processing plants, and successfully led acquisitions in the industry and developed multiple greenfield industrial mineral processing facilities. Most recently, this management team commissioned the Arland facility that was designed, permitted, and entered production on an expedited timeline. We believe that our customers value our commitment to customer service, our reliable delivery, and our focus on high-quality product. The senior management team members at our Fuel segment have significant industry experience and complementary skills in the areas of transmix processing, acquiring, integrating, financing, and managing refined product terminals.
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Wet Plant
Location (1)
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Proven Recoverable Reserves
(Millions of Tons) (2)
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Lease Expiration Date (3)
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Annual Plant Capacity
(Thousands of Tons)
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2015 Production
(Thousands of Tons)
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New Auburn
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15.5
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March 2036
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2,000
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755
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Thompson Hills
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38.5
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December 2037
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1,600
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699
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FLS Mine
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10.2
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July 2037
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1,200
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779
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Church Road
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5.3
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N/A
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1,200
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604
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LP Mine
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5.5
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March 2038
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1,200
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603
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Kosse, TX
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27.4
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N/A
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1,600
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441
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Dry Plant Location (1)
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On-site Railcar
Storage Capacity (4)
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Annual Plant Capacity
(Thousands of Tons)
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2015 Production Volumes
(Thousands of Tons)
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Arland
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N/A
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2,500
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1,064
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Barron
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650 cars
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2,400
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1,536
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New Auburn
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420 cars
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1,400
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604
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Kosse, TX
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N/A
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600
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277
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(1)
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All facilities are located in Wisconsin, except for our Kosse facility. In January 2016, we temporarily idled our Arland dry plant, and we temporarily idled our mining operations at the New Auburn wet plant.
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(2)
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Reserves are estimated as of
December 31, 2015
by third-party independent engineering firms based on core drilling results and in accordance with the SEC’s definition of proven recoverable reserves and related rules for companies engaged in significant mining activities and represent marketable finished product.
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(3)
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We own the land and mineral rights at our Church Road mine and the mineral rights at our Kosse mine.
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(4)
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We transload sand produced at Arland to rail loadouts at New Auburn, Barron, and a third location in Minnesota.
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Transload Location by Basin
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Transload Sites as of December 31, 2015
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Transload Sites Capable of Receiving Unit Trains
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2015 Volume Sold
(Thousands of Tons)
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Bakken Shale
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2
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1
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176
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Barnett Shale
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1
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—
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9
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Eagle Bine Shale
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1
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—
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6
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Eagle Ford Shale
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1
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1
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240
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Haynesville Shale
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1
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1
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67
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Marcellus / Utica Shales
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4
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—
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307
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Mid-Continent Basin
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1
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1
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160
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Permian Basin
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2
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—
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153
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Western Canadian Sedimentary Basin
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2
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2
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307
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Total
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15
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6
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1,425
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Plant Location
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Transmix Processing Capacity
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Fuel From Transmix Sold
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Wholesale Fuel Volume Sold
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Terminal Tankage Capacity
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Terminal Throughput Volume
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(Volumes in thousands of gallons)
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Dallas-Fort Worth, TX
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107,310
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53,271
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22,438
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11,990
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49,208
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Birmingham, AL
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76,650
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39,858
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124,566
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21,979
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73,971
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•
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general and administrative costs related to corporate overhead, such as headquarters facilities and personnel, as well as equity-based compensation;
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certain other operating costs such as IPO transaction-related; and
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non-operating items such as interest, other income and income taxes.
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the level of production of, demand for, and price of frac sand and oil, natural gas, gasoline, diesel, biodiesel and other refined products, particularly in the markets we serve;
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the fees we charge, and the margins we realize, from our frac sand and fuel products sales and the other services we provide;
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changes in laws and regulations (or the interpretation thereof) related to the mining and oil and natural gas industries, silica dust exposure or the environment;
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the level of competition from other companies;
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the cost and time required to execute organic growth opportunities;
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difficulty collecting receivables; and
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prevailing global and regional economic and regulatory conditions, and their impact on our suppliers and customers.
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the levels of our maintenance capital expenditures and growth capital expenditures;
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the level of our operating costs and expenses;
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our debt service requirements and other liabilities;
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fluctuations in our working capital needs;
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restrictions contained in our revolving credit facility and other debt agreements to which we are a party;
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the cost of acquisitions, if any;
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fluctuations in interest rates;
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our ability to borrow funds and access capital markets; and
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the amount of cash reserves established by our general partner.
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changes in the price and availability of transportation;
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inability to obtain necessary production equipment or replacement parts;
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inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change;
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unusual or unexpected geological formations or pressures;
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unanticipated ground, grade or water conditions;
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inability to acquire or maintain necessary permits or mining or water rights;
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labor disputes and disputes with our excavation contractors;
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late delivery of supplies;
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changes in the price and availability of natural gas or electricity that we use as fuel sources for our frac sand plants and equipment;
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technical difficulties or failures;
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cave-ins or similar pit wall failures;
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environmental hazards, such as unauthorized spills, releases and discharges of wastes, tank ruptures and emissions of unpermitted levels of pollutants;
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industrial accidents;
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changes in laws and regulations (or the interpretation thereof) related to the mining and oil and natural gas industries, silica dust exposure or the environment;
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inability of our customers or distribution partners to take delivery;
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reduction in the amount of water available for processing;
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fires, explosions or other accidents; and
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facility shutdowns in response to environmental regulatory actions.
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develop new business and enter into contracts with new customers;
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retain our existing customers and maintain or expand the level of services we provide them;
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identify and obtain additional frac sand reserves;
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recruit and train qualified personnel and retain valued employees;
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expand our geographic presence;
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effectively manage our costs and expenses, including costs and expenses related to growth;
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consummate accretive acquisitions;
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obtain required debt or equity financing for our existing and new operations;
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meet customer-specific contract requirements or pre-qualifications;
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obtain permits from federal, state and local regulatory authorities; and
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make assumptions about mineral reserves, future production, sales, capital expenditures, operating expenses and costs, including synergies.
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our ability to obtain additional financing, if necessary, for operating working capital, capital expenditures, acquisitions or other purposes may be impaired by our debt level, or such financing may not be available on favorable terms;
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we need a portion of our cash flow to make payments on our indebtedness, reducing the funds that would otherwise be available for operations, future business opportunities and distributions; and
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our debt level makes us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally.
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grant liens;
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incur additional indebtedness;
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engage in a merger, consolidation or dissolution;
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enter into transactions with affiliates;
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sell or otherwise dispose of assets, businesses and operations;
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materially alter the character of our business as conducted at the closing of this offering; and
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make acquisitions, investments and capital expenditures.
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refinancing or restructuring all or a portion of our debt;
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obtaining alternative financing;
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selling assets;
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reducing or delaying capital investments;
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seeking to raise additional capital; or
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revising or delaying our strategic plans.
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geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;
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assumptions concerning future prices of frac sand products, operating costs, mining technology improvements, development costs and reclamation costs; and
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assumptions concerning future effects of regulation, including our ability to obtain required permits and the imposition of taxes by governmental agencies.
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neither our partnership agreement nor any other agreement requires Insight Equity to pursue a business strategy that favors us or utilizes our assets or dictates what markets to pursue or grow;
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our general partner is allowed to take into account the interests of parties other than us, such as Insight Equity, in resolving conflicts of interest;
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our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner's liabilities and restricts the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of its fiduciary duty;
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our partnership agreement provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was in the best interests of our partnership, and, except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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our general partner determines the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuances of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
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our general partner determines which of the costs it incurs on our behalf are reimbursable by us;
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our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or from entering into additional contractual arrangements with any of these entities on our behalf;
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our general partner intends to limit its liability regarding our obligations;
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our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units;
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our general partner controls the enforcement of its and its affiliates' obligations to us; and
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our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
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how to allocate business opportunities among us and its affiliates;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns; and
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whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
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provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning it subjectively believed that the decision was in the best interest of our partnership, and except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
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provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or their assignees resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was unlawful; and
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provides that our general partner will not be in breach of its obligations under our partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
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approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner or any of its affiliates;
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
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determined by the board of directors of our general partner to be “fair and reasonable” to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
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our existing unitholders' proportionate ownership interest in us will decrease;
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the amount of cash available for distribution on each unit may decrease;
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the ratio of taxable income to distributions may increase;
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of the common units may decline.
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we were conducting business in a state but had not complied with that particular state's partnership statute; or
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your right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
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Mineral Reserves;
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Mines and Wet Plants;
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Dry Plant Facilities;
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Transportation Logistics and Infrastructure;
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Dallas-Fort Worth Facility; and
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Birmingham Facility.
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Sand segment - Fort. Worth, Texas;
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Fuel Segment - Birmingham, Alabama and Arlington, Texas; and
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Corporate - Southlake, Texas.
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Quarter Ended
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High Price
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Low Price
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Distributions Declared
Per Unit
|
||||
March 31, 2014
|
|
$
|
62.69
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|
$
|
42.28
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|
|
$1.00
|
June 30, 2014
|
|
$
|
116.99
|
|
|
$
|
59.60
|
|
|
$1.13
|
September 30, 2014
|
|
$
|
145.72
|
|
|
$
|
101.11
|
|
|
$1.17
|
December 31, 2014
|
|
$
|
118.71
|
|
|
$
|
39.90
|
|
|
$1.38
|
|
|
|
|
|
|
|
||||
March 31, 2015
|
|
$
|
63.00
|
|
|
$
|
41.13
|
|
|
$1.41
|
June 30, 2015
|
|
$
|
52.75
|
|
|
$
|
34.16
|
|
|
$1.00
|
September 30, 2015
|
|
$
|
37.57
|
|
|
$
|
6.10
|
|
|
$0.67
|
December 31, 2015
|
|
$
|
9.25
|
|
|
$
|
3.78
|
|
|
$—
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•
|
Our IPO in May 2013 resulted in:
|
•
|
net proceeds of $116.2 million;
|
•
|
non-recurring charges of $11.0 million;
|
•
|
our ability to repay substantially all of our pre-existing long-term debt at that time and refinance at more favorable terms; and
|
•
|
on-going general and administrative costs subsequent to our IPO related to compliance with statutory and other requirements of a publicly traded limited partnership.
|
•
|
The financial position and results of operations of Direct Fuels were included in the consolidated financial statements from and as of the date of acquisition, May 14, 2013. Our acquisition of Direct Fuels expanded our Fuel segment's operations, gained new customers, improved our earnings, and increased our markets through a larger geographical presence.
|
•
|
During 2012 and 2014, our Sand segment incurred significant growth capital expenditures to keep pace with rapidly increasing demand for our Northern White frac sand.
|
|
Year Ended December 31,
|
|
|
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ in thousands, except per unit data)
|
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
711,639
|
|
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
$
|
624,096
|
|
|
$
|
377,488
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
635,825
|
|
|
950,006
|
|
|
767,911
|
|
|
575,408
|
|
|
359,822
|
|
|
|||||
Depreciation, depletion and amortization
|
28,441
|
|
|
24,803
|
|
|
20,828
|
|
|
9,119
|
|
|
6,880
|
|
|
|||||
Selling, general and administrative expenses
|
33,119
|
|
|
38,723
|
|
|
26,835
|
|
|
10,256
|
|
|
9,221
|
|
|
|||||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
—
|
|
|
—
|
|
|
|||||
Impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
|
|||||
Income from operations
|
3,602
|
|
|
97,722
|
|
|
46,715
|
|
|
29,313
|
|
|
803
|
|
|
|||||
Interest expense, net
|
12,554
|
|
|
7,365
|
|
|
10,396
|
|
|
11,005
|
|
|
3,315
|
|
|
|||||
Loss (gain) on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
377
|
|
|
(472
|
)
|
|
|||||
Gain on extinguishment of trade payable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,212
|
)
|
|
|||||
Other expense (income)
|
(45
|
)
|
|
640
|
|
|
(144
|
)
|
|
655
|
|
|
(244
|
)
|
|
|||||
Income (loss) before provision for income taxes
|
(8,907
|
)
|
|
89,717
|
|
|
35,556
|
|
|
17,276
|
|
|
(584
|
)
|
|
|||||
Provision for income taxes
|
504
|
|
|
638
|
|
|
386
|
|
|
81
|
|
|
101
|
|
|
|||||
Net income (loss)
|
(9,411
|
)
|
|
89,079
|
|
|
35,170
|
|
|
$
|
17,195
|
|
|
$
|
(685
|
)
|
|
|||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
—
|
|
|
13,124
|
|
|
|
|
|
|
|||||||
Post-IPO net income (loss)
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
|
|
|
||||
Earnings (loss) per common unit (basic)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
|
||||
Earnings (loss) per common unit (diluted)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
|
||||
Balance Sheet Data (at year end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment, net
|
$
|
233,630
|
|
|
$
|
238,657
|
|
|
$
|
146,131
|
|
|
$
|
131,414
|
|
|
$
|
88,056
|
|
|
Total assets
|
$
|
420,048
|
|
|
$
|
432,127
|
|
|
$
|
319,547
|
|
|
$
|
192,406
|
|
|
$
|
126,678
|
|
|
Long-term debt
|
$
|
295,938
|
|
|
218,063
|
|
|
$
|
94,042
|
|
|
$
|
142,555
|
|
|
$
|
98,604
|
|
|
|
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
47,325
|
|
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
$
|
1,137
|
|
|
$
|
(3,606
|
)
|
|
Investing activities
|
$
|
(33,674
|
)
|
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
$
|
(39,075
|
)
|
|
$
|
(14,754
|
)
|
|
Financing activities
|
$
|
343
|
|
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
$
|
32,884
|
|
|
$
|
19,617
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Maintenance (1)
|
$
|
(2,344
|
)
|
|
$
|
(3,240
|
)
|
|
$
|
(2,394
|
)
|
|
$
|
(2,520
|
)
|
|
$
|
(974
|
)
|
|
Growth (2)
|
(33,130
|
)
|
|
(74,644
|
)
|
|
(18,975
|
)
|
|
(37,945
|
)
|
|
(14,204
|
)
|
|
|||||
Total
|
$
|
(35,474
|
)
|
|
$
|
(77,884
|
)
|
|
$
|
(21,369
|
)
|
|
$
|
(40,465
|
)
|
|
$
|
(15,178
|
)
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common unit
|
$
|
3.08
|
|
|
$
|
4.68
|
|
|
$
|
1.23
|
|
|
|
|
|
|
||||
Adjusted EBITDA (3)
|
$
|
48,386
|
|
|
$
|
131,866
|
|
|
$
|
85,191
|
|
|
$
|
38,574
|
|
|
$
|
9,281
|
|
|
(1)
|
Maintenance capital expenditures are capital expenditures required to maintain, over the long term, our asset base, operating income or operating capacity. The maintenance capital expenditure amounts set forth above are unaudited.
|
(2)
|
Growth capital expenditures are capital expenditures made to increase, over the long term, our asset base, operating income, or operating capacity. The growth capital expenditure amounts set forth above are unaudited.
|
(3)
|
See “Adjusted EBITDA” below for a definition of Adjusted EBITDA and a reconciliation to net income (loss).
|
|
Quarter
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands, except per unit data)
|
||||||||||||||
2015:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
203,961
|
|
|
$
|
200,852
|
|
|
$
|
176,320
|
|
|
$
|
130,506
|
|
Operating income (loss)
|
12,869
|
|
|
5,692
|
|
|
(8,600
|
)
|
|
(6,359
|
)
|
||||
Net income (loss)
|
9,491
|
|
|
2,884
|
|
|
(11,898
|
)
|
|
(9,888
|
)
|
||||
Earnings (loss) per common unit (basic) (2)
|
$
|
0.39
|
|
|
$
|
0.12
|
|
|
$
|
(0.49
|
)
|
|
$
|
(0.41
|
)
|
Earnings (loss) per common unit (diluted) (2)
|
$
|
0.39
|
|
|
$
|
0.12
|
|
|
$
|
(0.49
|
)
|
|
$
|
(0.41
|
)
|
Cash dividends declared per common unit (3)
|
$
|
1.41
|
|
|
$
|
1.00
|
|
|
$
|
0.67
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
2014:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
274,081
|
|
|
$
|
298,273
|
|
|
$
|
296,338
|
|
|
$
|
242,562
|
|
Operating income
|
20,040
|
|
|
22,173
|
|
|
28,592
|
|
|
26,917
|
|
||||
Net income
|
18,486
|
|
|
20,092
|
|
|
26,083
|
|
|
24,418
|
|
||||
Earnings per common unit (basic) (2)
|
$
|
0.77
|
|
|
$
|
0.84
|
|
|
$
|
1.08
|
|
|
$
|
1.01
|
|
Earnings per common unit (diluted) (2)
|
$
|
0.77
|
|
|
$
|
0.84
|
|
|
$
|
1.08
|
|
|
$
|
1.01
|
|
Cash dividends declared per common unit (3)
|
$
|
1.00
|
|
|
$
|
1.13
|
|
|
$
|
1.17
|
|
|
$
|
1.38
|
|
(1)
|
Prior to May 14, 2013, our financial statements consist of the combined results of SSS and AEC. Subsequent to the IPO, we have also included the operations of Direct Fuels, which was purchased on May 14, 2013. We accounted for this acquisition as a business combination.
|
(2)
|
Earnings per common unit are based on the results of operations subsequent to our IPO on May 14, 2013.
|
(3)
|
Distributions related to the earnings of one quarter are declared and paid in the subsequent quarter.
|
•
|
the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
|
•
|
the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
|
•
|
our liquidity position and the ability of our assets to generate cash sufficient to make debt payments and to make distributions; and
|
•
|
our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.
|
|
Year Ended December 31, 2015
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Net income (loss)
|
$
|
16,700
|
|
|
$
|
(59
|
)
|
|
$
|
(26,052
|
)
|
|
$
|
(9,411
|
)
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
12,554
|
|
|
12,554
|
|
|
||||
Other loss
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
(45
|
)
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
504
|
|
|
504
|
|
|
||||
Operating income (loss)
|
16,700
|
|
|
(59
|
)
|
|
(13,039
|
)
|
|
3,602
|
|
|
||||
Depreciation, depletion and amortization
|
17,863
|
|
|
10,544
|
|
|
34
|
|
|
28,441
|
|
|
||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
3,532
|
|
|
3,532
|
|
|
||||
Loss (gain) on disposal of equipment
|
138
|
|
|
8
|
|
|
—
|
|
|
146
|
|
|
||||
Provision for doubtful accounts
|
1391
|
|
|
150
|
|
|
—
|
|
|
1,541
|
|
|
||||
Accretion
|
110
|
|
|
—
|
|
|
—
|
|
|
110
|
|
|
||||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
10,652
|
|
|
||||
Reduction in force
|
92
|
|
|
—
|
|
|
270
|
|
|
362
|
|
|
||||
Adjusted EBITDA
|
$
|
46,946
|
|
|
$
|
10,643
|
|
|
$
|
(9,203
|
)
|
|
$
|
48,386
|
|
|
|
Year Ended December 31, 2014
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Net income (loss)
|
$
|
108,956
|
|
|
$
|
6,377
|
|
|
$
|
(26,254
|
)
|
|
$
|
89,079
|
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
7,365
|
|
|
7,365
|
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
640
|
|
|
640
|
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
638
|
|
|
638
|
|
|
||||
Operating income (loss)
|
108,956
|
|
|
6,377
|
|
|
(17,611
|
)
|
|
97,722
|
|
|
||||
Depreciation, depletion and amortization
|
12,777
|
|
|
11,998
|
|
|
28
|
|
|
24,803
|
|
|
||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
9,042
|
|
|
9,042
|
|
|
||||
Loss (gain) on disposal of equipment
|
19
|
|
|
(11
|
)
|
|
—
|
|
|
8
|
|
|
||||
Provision for doubtful accounts
|
103
|
|
|
150
|
|
|
—
|
|
|
253
|
|
|
||||
Accretion
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
||||
Adjusted EBITDA
|
$
|
121,893
|
|
|
$
|
18,514
|
|
|
$
|
(8,541
|
)
|
|
$
|
131,866
|
|
|
|
Year Ended December 31, 2013
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Net income (loss)
|
$
|
55,338
|
|
|
$
|
12,566
|
|
|
$
|
(32,734
|
)
|
|
$
|
35,170
|
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
10,396
|
|
|
10,396
|
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
907
|
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
(144
|
)
|
|
(144
|
)
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
386
|
|
|
386
|
|
|
||||
Operating income (loss)
|
55,338
|
|
|
12,566
|
|
|
(21,189
|
)
|
|
46,715
|
|
|
||||
Depreciation, depletion and amortization
|
10,458
|
|
|
10,369
|
|
|
1
|
|
|
20,828
|
|
|
||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
10,966
|
|
|
||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
5,734
|
|
|
5,734
|
|
|
||||
Loss (gain) on disposal of equipment
|
773
|
|
|
(18
|
)
|
|
—
|
|
|
755
|
|
|
||||
Provision for doubtful accounts
|
51
|
|
|
139
|
|
|
—
|
|
|
190
|
|
|
||||
Accretion
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
||||
Adjusted EBITDA
|
$
|
66,623
|
|
|
$
|
23,056
|
|
|
$
|
(4,488
|
)
|
|
$
|
85,191
|
|
|
|
Year Ended December 31, 2012
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Net income (loss)
|
$
|
27,384
|
|
|
$
|
2,011
|
|
|
$
|
(12,200
|
)
|
|
$
|
17,195
|
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
11,005
|
|
|
11,005
|
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
377
|
|
|
377
|
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
655
|
|
|
655
|
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
81
|
|
|
81
|
|
|
||||
Operating income (loss)
|
27,384
|
|
|
2,011
|
|
|
(82
|
)
|
|
29,313
|
|
|
||||
Depreciation, depletion and amortization
|
6,377
|
|
|
2,742
|
|
|
—
|
|
|
9,119
|
|
|
||||
Loss (gain) on disposal of equipment
|
(33
|
)
|
|
5
|
|
|
—
|
|
|
(28
|
)
|
|
||||
Provision for doubtful accounts
|
57
|
|
|
113
|
|
|
—
|
|
|
170
|
|
|
||||
Adjusted EBITDA
|
$
|
33,785
|
|
|
$
|
4,871
|
|
|
$
|
(82
|
)
|
|
$
|
38,574
|
|
|
|
Year Ended December 31, 2011
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Net income (loss)
|
$
|
(1,846
|
)
|
|
$
|
2,649
|
|
|
$
|
(1,488
|
)
|
|
$
|
(685
|
)
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
3,315
|
|
|
3,315
|
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(472
|
)
|
|
(472
|
)
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
(244
|
)
|
|
(244
|
)
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
101
|
|
|
101
|
|
|
||||
Gain on extinguishment of trade payable
|
—
|
|
|
—
|
|
|
(1,212
|
)
|
|
(1,212
|
)
|
|
||||
Operating income (loss)
|
(1,846
|
)
|
|
2,649
|
|
|
—
|
|
|
803
|
|
|
||||
Depreciation, depletion and amortization
|
4,022
|
|
|
2,858
|
|
|
—
|
|
|
6,880
|
|
|
||||
Loss (gain) on disposal of equipment
|
364
|
|
|
(111
|
)
|
|
—
|
|
|
253
|
|
|
||||
Impairment of assets
|
762
|
|
|
—
|
|
|
—
|
|
|
762
|
|
|
||||
Provision for doubtful accounts
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
||||
Equipment relocation costs
|
572
|
|
|
—
|
|
|
—
|
|
|
572
|
|
|
||||
Adjusted EBITDA
|
$
|
3,885
|
|
|
$
|
5,396
|
|
|
$
|
—
|
|
|
$
|
9,281
|
|
|
•
|
the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
|
•
|
the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities; and
|
•
|
our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.
|
•
|
We reduced permanent headcount, with most of these reductions occurring in the fourth quarter of 2015.
|
•
|
We are minimizing the overall cost of sand sold by finding the lowest cost combinations of sand source, production location and transportation providers wherever possible.
|
•
|
We began shutting down our more expensive wet plants for winter earlier than normal this year, as we have sufficient wet sand stockpiled for processing in our dry plants throughout the winter months.
|
•
|
We have temporarily idled our Wisconsin wet plants with the highest cost per ton, and we have strategically shifted sourcing of wet sand from higher cost sources to lower cost sources as demand for our frac sand has decreased.
|
•
|
In January 2016, we temporarily idled one Wisconsin dry plant with high costs per ton and shifted the production to the other Wisconsin dry plants.
|
•
|
We began using new mining techniques at two of our Wisconsin mines in the third quarter of 2015, and plan to introduce these techniques to our Kosse mine in the near term. We expect to see over $1 per ton savings for frac sand sourced from these mines as these techniques are fully implemented and the resulting finished sand is sold.
|
•
|
We introduced new processing techniques at our Kosse plant in the third quarter of 2015 that allowed us to inexpensively extract significant amounts of saleable frac sand from previously mined and discarded waste sand.
|
•
|
We have negotiated, and continue to negotiate, price concessions and purchase commitment concessions from our major vendors, such as rail transportation providers, mine operators, transload facilities operators, and professional services providers.
|
•
|
We cut our planned 2015 capital expenditures to less than half of the $110 million planned at the beginning of the year, including the first quarter termination of a sand facilities project described below. In 2016, we will minimize our capital expenditures to include only those projects with the potential for rapid returns, and comply with our bank covenants that limit capital expenditures.
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues
|
$
|
711,639
|
|
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
635,825
|
|
|
950,006
|
|
|
767,911
|
|
|
|||
Depreciation, depletion and amortization
|
28,441
|
|
|
24,803
|
|
|
20,828
|
|
|
|||
Selling, general and administrative expenses
|
33,119
|
|
|
38,723
|
|
|
26,835
|
|
|
|||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
|||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
|||
Total operating expenses
|
708,037
|
|
|
1,013,532
|
|
|
826,540
|
|
|
|||
Operating income
|
3,602
|
|
|
97,722
|
|
|
46,715
|
|
|
|||
Other expense (income):
|
|
|
|
|
|
|
||||||
Interest expense
|
12,554
|
|
|
7,365
|
|
|
10,396
|
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
|||
Other expense (income)
|
(45
|
)
|
|
640
|
|
|
(144
|
)
|
|
|||
Total other expense
|
12,509
|
|
|
8,005
|
|
|
11,159
|
|
|
|||
Income (loss) before provision income for taxes
|
(8,907
|
)
|
|
89,717
|
|
|
35,556
|
|
|
|||
Provision for income taxes
|
504
|
|
|
638
|
|
|
386
|
|
|
|||
Net income (loss)
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
35,170
|
|
|
Adjusted EBITDA (a)
|
$
|
48,386
|
|
|
$
|
131,866
|
|
|
$
|
85,191
|
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
substantial growth of our Sand segment through addition of a dry plant in Wisconsin in each of 2011, 2012 and 2014, which significantly increased our overall production and profitability;
|
•
|
the acquisition of Direct Fuels to substantially increase our Fuel segment in 2013;
|
•
|
our IPO in 2013, which brought these two segments together for the first time and allowed us to refinance our debt at more favorable terms going forward;
|
•
|
development of a network of sand transload sites in 2013 and 2014; and
|
•
|
the market prices for crude oil and refined products began a steep and protracted decline in late 2014 which continued throughout 2015 impacting our Sand and Fuel segments.
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues
|
$
|
269,518
|
|
|
$
|
341,836
|
|
|
$
|
167,768
|
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
209,161
|
|
|
204,282
|
|
|
91,416
|
|
|
|||
Depreciation, depletion and amortization
|
17,863
|
|
|
12,777
|
|
|
10,458
|
|
|
|||
Selling, general and administrative expenses
|
15,142
|
|
|
15,821
|
|
|
10,556
|
|
|
|||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
|||
Operating income
|
$
|
16,700
|
|
|
$
|
108,956
|
|
|
$
|
55,338
|
|
|
Adjusted EBITDA (a)
|
$
|
46,946
|
|
|
$
|
121,893
|
|
|
$
|
66,623
|
|
|
|
|
|
|
|
|
|
||||||
Total tons of sand sold (in thousands)
|
3,392
|
|
|
4,306
|
|
|
2,651
|
|
|
|||
Tons of sand produced by dry plant (in thousands):
|
|
|
|
|
|
|
||||||
Arland, Wisconsin facility
|
1,064
|
|
|
124
|
|
|
—
|
|
|
|||
Barron, Wisconsin facility
|
1,536
|
|
|
2,224
|
|
|
1,334
|
|
|
|||
New Auburn, Wisconsin facility
|
604
|
|
|
1,394
|
|
|
1,330
|
|
|
|||
Kosse, Texas facility
|
277
|
|
|
299
|
|
|
115
|
|
|
|||
Total
|
3,481
|
|
|
4,041
|
|
|
2,779
|
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
$85.7 million decrease in sales of Northern White sand (excluding estimated transportation markups and shortfall revenues), relating primarily to a 21% decrease in volumes sold as well as decreased pricing in light of current market conditions for frac sand;
|
•
|
an estimated $2.1 million decrease for significant reductions in markups per ton sold through transload sites, net of increased volumes sold through these sites; offset by
|
•
|
$11.1 million of shortfall revenues recognized on take-or-pay customer contracts in 2015. We do not expect to recognize any take-or-pay shortfall revenues in 2016 due to recent revisions to certain take-or-pay contracts;
|
•
|
$2.6 million of business interruption insurance proceeds received in 2015 to reimburse us for lost sales during a time of equipment failure in 2014; and
|
•
|
$1.7 million increase in sales of native Texas sand (from our Kosse plant) due to increased markups.
|
•
|
$26.2 million increase in rail transportation-related expense, due mainly to higher railcar lease expense and rail use charges as we expand our shipping operations to transload facilities, and primarily including:
|
•
|
$12.8 million increased rail lease expense;
|
•
|
$11.1 million increased rail shipping costs;
|
•
|
$2.2 million increase railcar storage costs; and
|
•
|
$5.6 million increase in costs of transload facilities; offset by
|
•
|
$26.9 million decrease in the total cost to acquire and produce wet and dry sand, due mainly to lower sales volumes and lower-cost sources for wet sand.
|
•
|
$1.7 million decrease for employee-related costs, primarily incentive compensation due to greatly decreased segment profits; and
|
•
|
$1.0 million refund of legal fees associated with past litigation, offset by
|
•
|
$1.2 million increase in bad debt expense; and
|
•
|
$0.7 million increase in property taxes.
|
•
|
an estimated $88.4 million increase for higher markups related to transportation for increased sales through transload sites;
|
•
|
$78.6 million increase in sales of Northern White sand (excluding estimated transportation markups), relating primarily to a 58% increase in volumes sold; and
|
•
|
$7.1 million increase in sales of native Texas sand (from our Kosse plant) due to a 160% increase in volumes sold.
|
•
|
$72.2 million increased rail transportation-related expense, due mainly to higher railcar lease expense and rail use charges as we expand our shipping operations to transload facilities, and primarily including:
|
•
|
$56.7 million increased rail shipping costs;
|
•
|
$15.5 million increased railcar lease expense; and
|
•
|
$22.5 million increased cost of produced sand, due to a 62.4% increase in total sand sold;
|
•
|
$9.4 million increased transload service expense; and
|
•
|
$3.2 million increased utilities expenses for higher utilization of our various plants.
|
•
|
$3.4 million increase for employee-related costs, primarily incentive compensation due to greatly increased segment profits; and
|
•
|
$1.4 million increase for insurance and professional services; and
|
•
|
$0.4 million increase for software support and other information technology needs;
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues
|
$
|
442,121
|
|
|
$
|
769,418
|
|
|
$
|
705,487
|
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
426,664
|
|
|
745,724
|
|
|
676,495
|
|
|
|||
Depreciation, depletion and amortization
|
10,544
|
|
|
11,998
|
|
|
10,369
|
|
|
|||
Selling, general and administrative expenses
|
4,972
|
|
|
5,319
|
|
|
6,057
|
|
|
|||
Operating income (loss)
|
$
|
(59
|
)
|
|
$
|
6,377
|
|
|
$
|
12,566
|
|
|
Adjusted EBITDA (a)
|
$
|
10,643
|
|
|
$
|
18,514
|
|
|
$
|
23,056
|
|
|
|
|
|
|
|
|
|
||||||
Volume of refined fuels sold (gallons in thousands)
|
240,132
|
|
|
264,364
|
|
|
224,484
|
|
|
|||
Volume of terminal throughput (gallons in thousands)
|
123,180
|
|
|
210,665
|
|
|
207,280
|
|
|
|||
Volume of transmix refined (gallons in thousands)
|
93,128
|
|
|
116,611
|
|
|
91,813
|
|
|
|||
Refined transmix as a percent of total refined fuels sold
|
38.8
|
%
|
|
44.1
|
%
|
|
40.9
|
%
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
$262.4 million decrease due to lower average fuel sales prices;
|
•
|
$65.4 million decrease for lower volumes of fuel sold; offset by
|
•
|
$0.8 million increase in excise and other transaction taxes. These taxes are offset on a one-to-one basis with excise and similar taxes in cost of goods sold.
|
•
|
$257.5 million decrease for lower average fuel purchase prices;
|
•
|
$62.5 million decrease for lower volumes of fuel sold; offset by
|
•
|
$0.8 million increase in excise and other transaction taxes.
|
•
|
$115.9 million increase due to increased volumes, mainly for inclusion of a full year of Direct Fuels’ operations in 2014, offset by lower volumes sold in the last half of 2014 when prices had dropped;
|
•
|
$54.7 million decrease in sales prices due primarily to drastic reduction in the market price of fuel late in 2014; and
|
•
|
$3.1 million increase in excise and similar taxes.
|
•
|
$109.6 million increase due to increased volumes, mainly for inclusion of a full year of Direct Fuels’ operations in 2014;
|
•
|
$44.3 million decrease in fuel purchase prices due primarily to drastic reduction in the market price of fuel late in 2014, particularly in the fourth quarter; and
|
•
|
$3.1 million increase in excise and similar taxes.
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Depreciation, depletion and amortization
|
$
|
34
|
|
|
$
|
28
|
|
|
$
|
1
|
|
|
Selling, general and administrative expenses
|
13,005
|
|
|
17,583
|
|
|
10,222
|
|
|
|||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
|||
Operating loss
|
(13,039
|
)
|
|
(17,611
|
)
|
|
(21,189
|
)
|
|
|||
Other expense (income):
|
|
|
|
|
|
|
||||||
Interest expense, net
|
12,554
|
|
|
7,365
|
|
|
10,396
|
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
|||
Other
|
(45
|
)
|
|
640
|
|
|
(144
|
)
|
|
|||
Income (loss) before provision for income taxes
|
(25,548
|
)
|
|
(25,616
|
)
|
|
(32,348
|
)
|
|
|||
Provision for income taxes
|
504
|
|
|
638
|
|
|
386
|
|
|
|||
Unallocated corporate loss
|
$
|
(26,052
|
)
|
|
$
|
(26,254
|
)
|
|
$
|
(32,734
|
)
|
|
Adjusted EBITDA (a)
|
$
|
(9,203
|
)
|
|
$
|
(8,541
|
)
|
|
$
|
(4,488
|
)
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
Negotiate reduced cost of our railcars under lease or future lease commitment through:
|
•
|
cancellation or deferral of all future railcar deliveries (we have successfully negotiated the cancellation or deferred a significant number of future deliveries); and
|
•
|
railcar lease rate concessions.
|
•
|
Continued aggressive cost reductions, which started in 2015, including but not limited to:
|
•
|
significantly reduced headcount across all business units in 2015 and early 2016;
|
•
|
having already achieved rate concessions from certain vendors, such as rail transportation, trucking, and professional fees, we will seek to leverage these gains with our other vendors;
|
•
|
successfully negotiated cessation of take-or-pay commitments with certain vendors; and
|
•
|
temporarily idling the sand processing plants with the most expensive cost structures, and sourcing our frac sand from the most cost-effective plants (we have already idled our Arland dry plant and the New Auburn wet plant).
|
•
|
Differentiate our sand products from our competitors by pursuing the development, testing, and marketing of new technology, such as our SandGuard™ and SandMaxx™ products, which should yield higher margins, if successful.
|
•
|
Complete the hydrotreaters at our Fuel segment locations in Dallas-Fort Worth and Birmingham, which we believe will enhance our margins and open new outlets for our transmix processing activities.
|
•
|
In January 2016, we engaged a third party expert to identify and pursue strategic alternatives, including the marketing and possible sale of our Fuel segment at a favorable price.
|
•
|
Continue in discussions with our bank group to realign our credit agreement and its covenants to meet our liquidity needs during this downturn:
|
•
|
reduce our bank debt with proceeds from any strategic sale transactions, such as our Fuel segment;
|
•
|
reduce the overall lending commitment; and
|
•
|
reset covenants based on revised forecasted liquidity requirements.
|
•
|
If necessary and available, we may seek alternative financing such as a capital infusion.
|
•
|
Reducing or delaying capital investments that do not produce short-term return on investment.
|
•
|
increase our revolving credit facility (the “Credit Facility”) to $350 million, which we may increase from time to time upon our satisfaction of certain conditions by up to an aggregate of $150 million;
|
•
|
increase the sublimit for the issuance of letters of credit to $30 million;
|
•
|
revise financial covenants as discussed below; and
|
•
|
extend the maturity date to June 27, 2019.
|
•
|
an interest coverage ratio (as defined in the Credit Agreement) of not less than
3.00
to 1.00; and
|
•
|
a total leverage ratio (as defined in the Credit Agreement) of not greater than
3.00
to 1.00. On April 6, 2015, we entered into an amendment to the Credit Agreement that increased this leverage ratio to
3.50
to 1.00.
|
•
|
the
$350 million
total aggregate commitment under the Credit Agreement will be reduced in an amount equal to the net proceeds of any notes offerings we may make in the future;
|
•
|
we will be required to maintain at least
$25 million
of excess availability (as defined in the Credit Agreement) under the Credit Agreement; and
|
•
|
we will be required to generate consolidated EBITDA in certain minimum amounts beginning with the quarter ending December 31, 2015 and rolling forward thereafter.
|
•
|
our subsidiaries will be restricted from making distributions to us (to permit us to make distributions to unitholders) if, after giving pro forma effect to such distribution, our total leverage ratio would be greater than or equal to
4.00
to 1.00 or the excess availability under the Credit Agreement would be less than the greater of
$43.75 million
or
12.5%
of the total aggregate commitments;
|
•
|
we will be restricted from entering into certain substantial acquisition or merger agreements with third-party businesses or making certain other investments;
|
•
|
through March 31, 2019, our capital expenditures for growth and maintenance will be restricted and may not exceed certain amounts per quarter;
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Cash flows from operating activities
|
$
|
47,325
|
|
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
Cash flows from investing activities
|
$
|
(33,674
|
)
|
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
Cash flows from financing activities
|
$
|
343
|
|
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
Cash and cash equivalents at beginning of period
|
$
|
6,876
|
|
|
$
|
2,167
|
|
|
$
|
1,467
|
|
|
Cash and cash equivalents at end of period
|
$
|
20,870
|
|
|
$
|
6,876
|
|
|
$
|
2,167
|
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Proceeds from IPO, net of offering costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
116,574
|
|
|
Net debt proceeds (payments)
|
79,160
|
|
|
127,874
|
|
|
(71,523
|
)
|
|
|||
Distributions to owners
|
(74,351
|
)
|
|
(112,992
|
)
|
|
(49,167
|
)
|
|
|||
Distribution to Direct Fuels' owners
|
—
|
|
|
—
|
|
|
(11,500
|
)
|
|
|||
Other
|
(4,466
|
)
|
|
(8,162
|
)
|
|
(3,711
|
)
|
|
|||
Total
|
$
|
343
|
|
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
|
Payments Due By Period
|
|
||||||||||||||||||
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||||||||||
Long-term debt (1)
|
$
|
380,922
|
|
|
$
|
16,265
|
|
|
$
|
31,599
|
|
|
$
|
333,058
|
|
|
$
|
—
|
|
|
Railcar leases (2)
|
547,011
|
|
|
59,161
|
|
|
117,948
|
|
|
124,526
|
|
|
245,376
|
|
|
|||||
Other operating leases (3)
|
6,458
|
|
|
1,607
|
|
|
1,489
|
|
|
588
|
|
|
2,774
|
|
|
|||||
Purchase commitments (4)
|
168,103
|
|
|
27,556
|
|
|
47,893
|
|
|
43,849
|
|
|
48,805
|
|
|
|||||
Minimum royalty payments (5)
|
2,860
|
|
|
230
|
|
|
460
|
|
|
460
|
|
|
1,710
|
|
|
|||||
Total
|
$
|
1,105,354
|
|
|
$
|
104,819
|
|
|
$
|
199,389
|
|
|
$
|
502,481
|
|
|
$
|
298,665
|
|
|
(1)
|
Assumes balances outstanding as of 12/31/15 will be paid at maturity and includes interest using interest rates in effect at 12/31/15.
|
(2)
|
Includes minimum amounts payable under various operating leases for railcars as well as estimated costs to transport leased railcars from the manufacturer to our site for initial placement in service.
|
(3)
|
Includes lease agreements for land, facilities and equipment.
|
(4)
|
Includes minimum amounts payable under a business acquisition agreement, long-term rail transportation agreements, and other purchase commitments.
|
(5)
|
Represents minimum royalty payments for various sand mining locations. The amounts paid will differ based on amounts extracted.
|
•
|
changes in laws and regulations that limit the estimated economic life of an asset;
|
•
|
changes in technology that render an asset obsolete;
|
•
|
changes in expected salvage values; or
|
•
|
significant changes in the forecast life of proved reserves of applicable oil- and gas-producing basins, if any.
|
Emerge Energy Services LP Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
Revenues (1)
|
$
|
711,639
|
|
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization) (1)
|
635,825
|
|
|
950,006
|
|
|
767,911
|
|
|
|||
Depreciation, depletion and amortization
|
28,441
|
|
|
24,803
|
|
|
20,828
|
|
|
|||
Selling, general and administrative expenses
|
33,119
|
|
|
38,723
|
|
|
26,835
|
|
|
|||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
|||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
|||
Total operating expenses
|
708,037
|
|
|
1,013,532
|
|
|
826,540
|
|
|
|||
Income from operations
|
3,602
|
|
|
97,722
|
|
|
46,715
|
|
|
|||
Other expense (income):
|
|
|
|
|
|
|
||||||
Interest expense, net
|
12,554
|
|
|
7,365
|
|
|
10,396
|
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
|||
Other expense (income)
|
(45
|
)
|
|
640
|
|
|
(144
|
)
|
|
|||
Total other expense
|
12,509
|
|
|
8,005
|
|
|
11,159
|
|
|
|||
Income (loss) before provision for income taxes
|
(8,907
|
)
|
|
89,717
|
|
|
35,556
|
|
|
|||
Provision for income taxes
|
504
|
|
|
638
|
|
|
386
|
|
|
|||
Net income (loss)
|
(9,411
|
)
|
|
89,079
|
|
|
35,170
|
|
|
|||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
—
|
|
|
13,124
|
|
|
|||
Post-IPO net income (loss)
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
Earnings (loss) per common unit (basic) (2)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
Earnings (loss) per common unit (diluted) (2)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
Weighted average number of common units outstanding including participating securities (basic) (2)
|
23,973,850
|
|
|
24,070,418
|
|
|
24,015,562
|
|
|
|||
Weighted average number of common units outstanding (diluted) (2)
|
23,973,850
|
|
|
24,076,437
|
|
|
24,021,957
|
|
|
|||
(1) Fuel revenues and cost of goods sold include excise taxes and similar taxes
|
$
|
50,939
|
|
|
$
|
50,116
|
|
|
$
|
47,007
|
|
|
(2) See Note 15
|
|
|
|
|
|
|
|
Limited Partner
Common Units |
|
General Partner
(non-economic interest) |
|
Predecessor
|
|
Total Partners'
Equity |
|
||||||||
Balance at December 31, 2012
|
$
|
(79
|
)
|
|
$
|
—
|
|
|
$
|
9,496
|
|
|
$
|
9,417
|
|
|
Net income (loss) from January 1, 2013 through May 13, 2013
|
(97
|
)
|
|
—
|
|
|
13,221
|
|
|
13,124
|
|
|
||||
Balance at May 13, 2013
|
(176
|
)
|
|
—
|
|
|
22,717
|
|
|
22,541
|
|
|
||||
Proceeds from IPO, net of offering costs
|
116,220
|
|
|
—
|
|
|
—
|
|
|
116,220
|
|
|
||||
Contribution of Predecessor net assets in exchange for common units
|
22,717
|
|
|
—
|
|
|
(22,717
|
)
|
|
—
|
|
|
||||
Common units issued for business acquired
|
53,721
|
|
|
—
|
|
|
—
|
|
|
53,721
|
|
|
||||
Equity-based compensation expense
|
5,734
|
|
|
—
|
|
|
—
|
|
|
5,734
|
|
|
||||
Distribution to prior owners including over commitment proceeds
|
(19,628
|
)
|
|
—
|
|
|
—
|
|
|
(19,628
|
)
|
|
||||
Redemption of original limited partner interest
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
||||
Distributions paid
|
(29,539
|
)
|
|
—
|
|
|
—
|
|
|
(29,539
|
)
|
|
||||
Distribution equivalent rights accrued
|
(372
|
)
|
|
—
|
|
|
—
|
|
|
(372
|
)
|
|
||||
Net income from May 14, 2013 through December 31, 2013
|
22,046
|
|
|
—
|
|
|
—
|
|
|
22,046
|
|
|
||||
Balance at December 31, 2013
|
170,721
|
|
|
—
|
|
|
—
|
|
|
170,721
|
|
|
||||
Net income
|
89,079
|
|
|
—
|
|
|
—
|
|
|
89,079
|
|
|
||||
Equity-based compensation
|
9,194
|
|
|
—
|
|
|
—
|
|
|
9,194
|
|
|
||||
Distributions paid
|
(112,651
|
)
|
|
—
|
|
|
—
|
|
|
(112,651
|
)
|
|
||||
Distribution equivalent rights accrued
|
(1,164
|
)
|
|
—
|
|
|
—
|
|
|
(1,164
|
)
|
|
||||
Recovery of short swing profit
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
||||
December 31, 2014
|
155,189
|
|
|
—
|
|
|
—
|
|
|
155,189
|
|
|
||||
Net income (loss)
|
(9,411
|
)
|
|
—
|
|
|
—
|
|
|
(9,411
|
)
|
|
||||
Equity-based compensation
|
3,654
|
|
|
—
|
|
|
—
|
|
|
3,654
|
|
|
||||
Distributions paid
|
(74,337
|
)
|
|
—
|
|
|
—
|
|
|
(74,337
|
)
|
|
||||
Distribution equivalent rights accrued
|
(632
|
)
|
|
—
|
|
|
—
|
|
|
(632
|
)
|
|
||||
Recovery of short swing profit
|
315
|
|
|
—
|
|
|
—
|
|
|
315
|
|
|
||||
Balance at December 31, 2015
|
$
|
74,778
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
74,778
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
35,170
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization
|
28,441
|
|
|
24,803
|
|
|
20,828
|
|
|
|||
Equity-based compensation expense
|
3,532
|
|
|
9,042
|
|
|
5,734
|
|
|
|||
Project termination costs - non-cash portion
|
10,345
|
|
|
—
|
|
|
—
|
|
|
|||
Interest paid in-kind
|
—
|
|
|
—
|
|
|
3,202
|
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
|||
Provision for doubtful accounts
|
1,541
|
|
|
253
|
|
|
190
|
|
|
|||
Loss (gain) on disposal of assets
|
146
|
|
|
8
|
|
|
755
|
|
|
|||
Amortization of debt discount/premium and deferred financing costs
|
1,244
|
|
|
969
|
|
|
937
|
|
|
|||
Loss on termination of sand supply agreement
|
—
|
|
|
689
|
|
|
—
|
|
|
|||
Unrealized loss on derivative instruments
|
(419
|
)
|
|
669
|
|
|
(247
|
)
|
|
|||
Other non-cash
|
110
|
|
|
38
|
|
|
(244
|
)
|
|
|||
Changes in operating assets and liabilities, net of business acquired:
|
|
|
|
|
|
|
||||||
Restricted cash and equivalents
|
—
|
|
|
6,188
|
|
|
(6,188
|
)
|
|
|||
Accounts receivable
|
36,938
|
|
|
(26,328
|
)
|
|
(17,374
|
)
|
|
|||
Inventories
|
(10,341
|
)
|
|
9,044
|
|
|
(11,451
|
)
|
|
|||
Prepaid expenses and other current assets
|
(1,861
|
)
|
|
(5,104
|
)
|
|
5,064
|
|
|
|||
Accounts payable and accrued liabilities
|
(8,592
|
)
|
|
(14,971
|
)
|
|
20,871
|
|
|
|||
Other assets
|
(4,348
|
)
|
|
(8,218
|
)
|
|
(118
|
)
|
|
|||
Net cash provided by operating activities
|
47,325
|
|
|
86,161
|
|
|
58,036
|
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Purchases of property, plant, equipment and intangible assets
|
(35,474
|
)
|
|
(77,884
|
)
|
|
(21,369
|
)
|
|
|||
Business acquisitions, net of cash acquired
|
—
|
|
|
(11,000
|
)
|
|
(16,687
|
)
|
|
|||
Proceeds from disposals of assets
|
1,787
|
|
|
335
|
|
|
35
|
|
|
|||
Collection of notes receivable
|
13
|
|
|
377
|
|
|
12
|
|
|
|||
Net cash used in investing activities
|
(33,674
|
)
|
|
(88,172
|
)
|
|
(38,009
|
)
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from IPO including over commitment
|
—
|
|
|
—
|
|
|
122,221
|
|
|
|||
IPO offering costs
|
—
|
|
|
—
|
|
|
(5,647
|
)
|
|
|||
Proceeds from line of credit borrowings
|
284,200
|
|
|
371,657
|
|
|
134,180
|
|
|
|||
Repayments of line of credit borrowings
|
(204,000
|
)
|
|
(243,603
|
)
|
|
(61,619
|
)
|
|
|||
Repayment of Direct Fuels' debt
|
—
|
|
|
—
|
|
|
(21,673
|
)
|
|
|||
Proceeds from other long-term debt
|
—
|
|
|
—
|
|
|
81
|
|
|
|||
Repayments of other long-term debt
|
(53
|
)
|
|
(180
|
)
|
|
(118,640
|
)
|
|
|||
Distributions to unitholders
|
(74,351
|
)
|
|
(112,992
|
)
|
|
(29,539
|
)
|
|
|||
Distributions to Predecessor owners
|
—
|
|
|
—
|
|
|
(19,628
|
)
|
|
|||
Pre-IPO dividends paid (Direct Fuels)
|
—
|
|
|
—
|
|
|
(11,500
|
)
|
|
|||
Payment of business acquisition obligation
|
(2,253
|
)
|
|
—
|
|
|
—
|
|
|
|||
Payment of financing costs
|
(2,528
|
)
|
|
(2,342
|
)
|
|
(3,709
|
)
|
|
|||
Payments on capital lease obligation
|
(987
|
)
|
|
(5,831
|
)
|
|
(3,507
|
)
|
|
|||
Repayments of other debt
|
—
|
|
|
—
|
|
|
(345
|
)
|
|
|||
Redemption of general partner interest
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
|||
Recovery of short swing profit
|
315
|
|
|
11
|
|
|
—
|
|
|
|||
Net cash provided by (used in) financing activities
|
343
|
|
|
6,720
|
|
|
(19,327
|
)
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||||
Net increase (decrease)
|
13,994
|
|
|
4,709
|
|
|
700
|
|
|
|||
Balance at beginning of year
|
6,876
|
|
|
2,167
|
|
|
1,467
|
|
|
|||
Balance at end of year
|
$
|
20,870
|
|
|
$
|
6,876
|
|
|
$
|
2,167
|
|
|
|
Useful Lives (in Years)
|
|
Building and land improvements including assets under capital lease
|
10 – 39
|
|
Mineral reserves
|
N/A*
|
|
Tanks and equipment
|
7 – 40
|
|
Railroad and related improvements
|
20 – 40
|
|
Machinery and equipment
|
5 – 10
|
|
Plant equipment including assets under capital lease
|
5 – 7
|
|
Industrial vehicles
|
3 – 7
|
|
Furniture, office equipment and software
|
3 – 7
|
|
Leasehold improvements
|
3 – 5 or lease term, whichever is less
|
|
•
|
The Sand segment consists of the production and sale of various grades of industrial sand primarily used in the extraction of oil and natural gas, as well as the production of building products and foundry materials.
|
•
|
The Fuel segment operates
two
terminals and
two
transmix processing facilities that are located in the Dallas-Fort Worth, Texas area and Birmingham, Alabama. In addition to refining transmix, the Fuel segment sells a suite of complementary fuel products and services, including third-party terminaling services, the sale of wholesale petroleum products, certain reclamation services (which consist primarily of tank cleaning services) and blending of renewable fuels.
|
Total purchase price
|
$
|
98,277
|
|
|
Fair value of assets and liabilities acquired:
|
|
|
||
Cash
|
6,197
|
|
|
|
Accounts receivable
|
9,845
|
|
|
|
Other current assets
|
13,146
|
|
|
|
Property, plant and equipment
|
14,897
|
|
|
|
Intangible assets
|
45,080
|
|
|
|
Goodwill
|
29,264
|
|
|
|
Total assets acquired
|
118,429
|
|
|
|
Less accounts payable and accrued liabilities
|
8,652
|
|
|
|
Less dividend payable
|
11,500
|
|
|
|
Total current liabilities
|
20,152
|
|
|
|
Net assets acquired
|
$
|
98,277
|
|
|
|
Year Ended
|
|
||
|
December 31, 2013
|
|
||
|
($ in thousands)
|
|
||
Revenues
|
$
|
996,587
|
|
|
Net income
|
$
|
38,258
|
|
|
Consideration:
|
|
|
|
||
Cash deposit
|
|
$
|
11,000
|
|
|
Present value of purchase obligation
|
|
11,226
|
|
|
|
Present value of contingent consideration
|
|
853
|
|
|
|
Loss on settlement of pre-existing agreements
|
|
(689
|
)
|
|
|
Total consideration
|
|
$
|
22,390
|
|
|
|
|
|
|
||
Assets acquired:
|
|
|
|
||
Mineral reserves
|
|
$
|
19,381
|
|
|
Other property, plant and equipment
|
|
4,403
|
|
|
|
Non-compete agreement
|
|
100
|
|
|
|
Total assets acquired
|
|
23,884
|
|
|
|
Less liabilities assumed:
|
|
|
|
||
Governmental highway improvement obligation
|
|
1,128
|
|
|
|
Asset retirement obligation
|
|
227
|
|
|
|
Accounts payable
|
|
139
|
|
|
|
Net assets acquired
|
|
$
|
22,390
|
|
|
|
As of December 31,
|
|
||||||
|
2015
|
|
2014
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Sand work in process
|
$
|
17,795
|
|
|
14,413
|
|
|
|
Sand finished goods
|
12,224
|
|
|
7,582
|
|
|
||
Refined fuels
|
10,289
|
|
|
8,031
|
|
|
||
Fuel raw materials and supplies
|
2,168
|
|
|
2,157
|
|
|
||
Sand raw materials and supplies
|
142
|
|
|
95
|
|
|
||
Total inventory
|
$
|
42,618
|
|
|
$
|
32,278
|
|
|
|
As of December 31,
|
|
||||||
|
2015
|
|
2014
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Machinery and equipment (1)
|
$
|
160,203
|
|
|
$
|
146,951
|
|
|
Buildings and improvements (1)
|
58,036
|
|
|
51,027
|
|
|
||
Land and improvements (1)
|
47,901
|
|
|
37,461
|
|
|
||
Mineral reserves
|
30,181
|
|
|
30,181
|
|
|
||
Construction in progress
|
9,555
|
|
|
24,172
|
|
|
||
Capitalized reclamation costs
|
2,445
|
|
|
2,332
|
|
|
||
Total cost
|
308,321
|
|
|
292,124
|
|
|
||
Accumulated depreciation and depletion
|
74,691
|
|
|
53,467
|
|
|
||
Net property, plant and equipment
|
$
|
233,630
|
|
|
$
|
238,657
|
|
|
(1)
|
Includes assets under capital lease
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
December 31, 2015:
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
46
|
|
|
$
|
23
|
|
|
$
|
23
|
|
|
Patents
|
7,000
|
|
|
234
|
|
|
$
|
6,766
|
|
|
||
Customer relationships
|
43,922
|
|
|
21,267
|
|
|
22,655
|
|
|
|||
Supply and transportation agreements
|
3,801
|
|
|
2,367
|
|
|
1,434
|
|
|
|||
Non-compete agreement
|
1,550
|
|
|
981
|
|
|
569
|
|
|
|||
Total
|
$
|
56,319
|
|
|
$
|
24,872
|
|
|
$
|
31,447
|
|
|
December 31, 2014:
|
|
|
|
|
|
|
||||||
Trade names
|
$
|
46
|
|
|
$
|
20
|
|
|
$
|
26
|
|
|
Customer relationships
|
43,922
|
|
|
15,293
|
|
|
28,629
|
|
|
|||
Supply and transportation agreements
|
3,330
|
|
|
1,769
|
|
|
1,561
|
|
|
|||
Non-compete agreement
|
1,550
|
|
|
608
|
|
|
942
|
|
|
|||
Total
|
$
|
48,848
|
|
|
$
|
17,690
|
|
|
$
|
31,158
|
|
|
Year Ending December 31,
|
($ in thousands)
|
|
||
2016
|
$
|
8,688
|
|
|
2017
|
7,267
|
|
|
|
2018
|
4,416
|
|
|
|
2019
|
2,610
|
|
|
|
2020
|
2,081
|
|
|
|
As of December 31,
|
|
||||||
|
2015
|
|
2014
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Sales, excise, property and income taxes
|
$
|
3,276
|
|
|
$
|
5,002
|
|
|
Current portion of business acquisition obligation
|
2,843
|
|
|
2,702
|
|
|
||
Purchase of intangible assets
|
2,500
|
|
|
—
|
|
|
||
Logistics
|
2,486
|
|
|
3,185
|
|
|
||
Deferred compensation
|
1,540
|
|
|
1,341
|
|
|
||
Salaries and other employee-related
|
1,096
|
|
|
4,048
|
|
|
||
Accrued interest
|
947
|
|
|
407
|
|
|
||
Derivative contract liability
|
624
|
|
|
422
|
|
|
||
Sand purchases and royalties
|
520
|
|
|
659
|
|
|
||
Current portion of contract termination
|
135
|
|
|
—
|
|
|
||
Mining
|
—
|
|
|
951
|
|
|
||
Deferred revenue
|
—
|
|
|
127
|
|
|
||
Construction
|
—
|
|
|
3,379
|
|
|
||
Other
|
2,434
|
|
|
2,188
|
|
|
||
Total
|
$
|
18,401
|
|
|
$
|
24,411
|
|
|
|
As of December 31,
|
|
||||||
|
2015
|
|
2014
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Revolving credit facility
|
|
|
|
|
|
|
||
Principal
|
$
|
302,063
|
|
|
$
|
221,864
|
|
|
Deferred financing costs, net
|
(6,125
|
)
|
|
(4,841
|
)
|
|
||
Other notes
|
—
|
|
|
53
|
|
|
||
Total debt
|
295,938
|
|
|
217,076
|
|
|
||
Less current portion
|
—
|
|
|
53
|
|
|
||
Long-term portion
|
$
|
295,938
|
|
|
$
|
217,023
|
|
|
•
|
increase our revolving credit facility (the “Credit Facility”) to
$350 million
, which we may increase from time to time upon our satisfaction of certain conditions by up to an aggregate of
$150 million
;
|
•
|
increase the sublimit for the issuance of letters of credit to
$30 million
;
|
•
|
revise financial covenants as discussed below; and
|
•
|
extend the maturity date to June 27, 2019.
|
•
|
an interest coverage ratio (as defined in the Credit Agreement) of not less than
3.00
to 1.00; and
|
•
|
a total leverage ratio (as defined in the Credit Agreement) of not greater than
3.00
to 1.00. On April 6, 2015, we entered into an amendment to the Credit Agreement that increased this leverage ratio to
3.50
to 1.00.
|
•
|
the
$350 million
total aggregate commitment under the Credit Agreement will be reduced in an amount equal to the net proceeds of any notes offerings we may make in the future;
|
•
|
we will be required to maintain at least
$25 million
of excess availability (as defined in the Credit Agreement) under the Credit Agreement; and
|
•
|
we will be required to generate consolidated EBITDA in certain minimum amounts beginning with the quarter ending December 31, 2015 and rolling forward thereafter.
|
•
|
our subsidiaries will be restricted from making distributions to us (to permit us to make distributions to unitholders) if, after giving pro forma effect to such distribution, our total leverage ratio would be greater than or equal to
4.00
to 1.00 or the excess availability under the Credit Agreement would be less than the greater of
$43.75 million
or
12.5%
of the total aggregate commitments;
|
•
|
we will be restricted from entering into certain substantial acquisition or merger agreements with third-party businesses or making certain other investments;
|
•
|
through March 31, 2019, our capital expenditures for growth and maintenance will be restricted and may not exceed certain amounts per quarter;
|
|
Railcar Leases (1)
|
|
Other Operating Leases
|
|
Royalty Commitments
|
|
Purchase Commitments (2)
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|||||||||||||||
Year ending December 31,
|
|
|
|
|
|
|
|
|
||||||||
2016
|
$
|
59,161
|
|
|
$
|
1,607
|
|
|
$
|
230
|
|
|
$
|
27,556
|
|
|
2017
|
55,500
|
|
|
914
|
|
|
230
|
|
|
23,376
|
|
|
||||
2018
|
62,448
|
|
|
574
|
|
|
230
|
|
|
24,517
|
|
|
||||
2019
|
66,618
|
|
|
320
|
|
|
230
|
|
|
22,527
|
|
|
||||
2020
|
57,908
|
|
|
269
|
|
|
230
|
|
|
21,322
|
|
|
||||
Thereafter
|
245,376
|
|
|
2,774
|
|
|
1,710
|
|
|
48,805
|
|
|
||||
Total
|
$
|
547,011
|
|
|
$
|
6,458
|
|
|
$
|
2,860
|
|
|
168,103
|
|
|
|
Less amount representing interest
|
|
|
|
|
|
|
(1,304
|
)
|
|
|||||||
Total less interest
|
|
|
|
|
|
|
$
|
166,799
|
|
|
(1)
|
Includes minimum amounts payable under various operating leases as well estimated costs necessary to transport leased railcars from the manufacturer to our site for initial placement in service for those railcars to be delivered in the future.
|
(2)
|
Includes various obligations for services as well as estimated payments for business acquisition obligation, inclusive of expected contingent consideration, based on forecasted volumes.
|
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Balances for the year ended December 31:
|
|
|
|
|
|
|
||||||
Wages and employee-related costs (1)
|
$
|
27,454
|
|
|
$
|
26,875
|
|
|
$
|
17,366
|
|
|
Interest expense (2)
|
—
|
|
|
—
|
|
|
1,915
|
|
|
|||
IPO transaction-related cost reimbursements (3)
|
—
|
|
|
—
|
|
|
1,643
|
|
|
|||
General and administrative expense reimbursements (3)
|
280
|
|
|
75
|
|
|
180
|
|
|
|||
Consulting services (4)
|
—
|
|
|
—
|
|
|
112
|
|
|
|||
Lease expense
|
25
|
|
|
25
|
|
|
24
|
|
|
|||
|
|
|
|
|
|
|
||||||
Balances as of December 31:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
295
|
|
|
$
|
181
|
|
|
$
|
124
|
|
|
Accounts payable and accrued liabilities
|
553
|
|
|
704
|
|
|
515
|
|
|
(1)
|
We do not have any employees. Prior to May 14, 2013, our Predecessor and Direct Fuels had employees assigned directly to their respective operations. On May 14, 2013, our general partner hired all employees of the Predecessor and Direct Fuels. After this date, our general partner manages our human resource assets, including fringe benefits and other employee-related charges. We routinely and regularly reimburse our general partner for any employee-related costs paid on our behalf, and report such costs as operating expenses.
|
(2)
|
Debt payable to related parties was repaid using proceeds of our IPO in May 2013.
|
(3)
|
We paid Insight Equity certain IPO transaction-related costs and other general and administrative costs. We also paid
$40,000
to one of our independent directors for production of a video clip for investors and press.
|
(4)
|
Prior to May 14, 2013, our Fuel segment paid an affiliated company for leadership services at an annual amount of
$250,000
plus bonus for financial performance, if any. Beginning May 14, 2013, these services are being performed by Insight Equity employees and are charged to us through the reimbursement process described in (1) above.
|
|
Total
Units |
|
Phantom
Units |
|
Restricted
Units |
|
Fair Value per Unit
at Award Date |
|
|||||
Outstanding at December 31, 2014
|
605,664
|
|
|
602,836
|
|
|
2,828
|
|
|
$
|
18.12
|
|
|
Granted
|
59,771
|
|
|
49,284
|
|
|
10,487
|
|
|
35.69
|
|
|
|
Vested
|
(401,011
|
)
|
|
(397,941
|
)
|
|
(3,070
|
)
|
|
17.5
|
|
|
|
Forfeitures
|
(39,424
|
)
|
|
(37,375
|
)
|
|
(2,049
|
)
|
|
33.33
|
|
|
|
Outstanding at December 31, 2015
|
225,000
|
|
|
216,804
|
|
|
8,196
|
|
|
$
|
21.22
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Federal and state income tax expense for Distributor
|
$
|
231
|
|
|
$
|
378
|
|
|
$
|
188
|
|
|
Texas margin tax
|
288
|
|
|
197
|
|
|
198
|
|
|
|||
Canadian income tax
|
(15
|
)
|
|
63
|
|
|
—
|
|
|
|||
Total provision for income taxes
|
$
|
504
|
|
|
$
|
638
|
|
|
386
|
|
|
|
||||||||||||
|
Year ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands except per unit data)
|
|
||||||||||
Net income (loss)
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings per unit:
|
|
|
|
|
|
|
||||||
Weighted average common units outstanding
|
23,973,850
|
|
|
23,527,469
|
|
|
23,219,680
|
|
|
|||
Weighted average phantom units deemed participating securities
|
—
|
|
|
542,949
|
|
|
795,882
|
|
|
|||
Total
|
23,973,850
|
|
|
24,070,418
|
|
|
24,015,562
|
|
|
|||
Earnings (loss) per common unit (basic)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per unit:
|
|
|
|
|
|
|
||||||
Weighted average common units outstanding
|
23,973,850
|
|
|
23,527,469
|
|
|
23,219,680
|
|
|
|||
Weighted average phantom units deemed participating securities
|
—
|
|
|
542,949
|
|
|
795,882
|
|
|
|||
Weighted average potentially dilutive units outstanding
|
—
|
|
|
6,019
|
|
|
6,395
|
|
|
|||
Total
|
23,973,850
|
|
|
24,076,437
|
|
|
24,021,957
|
|
|
|||
Earnings (loss) per common unit (diluted)
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
•
|
Sand
- the production and sale of various grades of sand primarily used in the extraction of oil and natural gas and the production of numerous building products and foundry materials.
|
•
|
Fuel -
the refining of transmix, distribution of finished fuel products, terminal and reclamation activities, and refining of biodiesel.
|
•
|
general and administrative costs related to corporate overhead, such as headquarters facilities and personnel, as well as equity-based compensation;
|
•
|
certain other operating costs such as IPO transaction-related; and
|
•
|
non-operating items such as interest, other income and income taxes.
|
|
Year Ended December 31, 2015
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
269,518
|
|
|
$
|
442,121
|
|
|
$
|
—
|
|
|
$
|
711,639
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
209,161
|
|
|
426,664
|
|
|
—
|
|
|
635,825
|
|
|
||||
Depreciation, depletion and amortization
|
17,863
|
|
|
10,544
|
|
|
34
|
|
|
28,441
|
|
|
||||
Selling, general and administrative expenses
|
15,142
|
|
|
4,972
|
|
|
13,005
|
|
|
33,119
|
|
|
||||
Project terminations
|
10,652
|
|
|
—
|
|
|
—
|
|
|
10,652
|
|
|
||||
Operating income (loss)
|
$
|
16,700
|
|
|
$
|
(59
|
)
|
|
$
|
(13,039
|
)
|
|
$
|
3,602
|
|
|
Capital expenditures
|
$
|
27,995
|
|
|
$
|
7,251
|
|
|
$
|
228
|
|
|
$
|
35,474
|
|
|
Total assets (at year end)
|
$
|
261,761
|
|
|
$
|
139,070
|
|
|
$
|
19,217
|
|
|
$
|
420,048
|
|
|
|
Year Ended December 31, 2014
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
341,836
|
|
|
$
|
769,418
|
|
|
$
|
—
|
|
|
$
|
1,111,254
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
204,282
|
|
|
745,724
|
|
|
—
|
|
|
950,006
|
|
|
||||
Depreciation, depletion and amortization
|
12,777
|
|
|
11,998
|
|
|
28
|
|
|
24,803
|
|
|
||||
Selling, general and administrative expenses
|
15,821
|
|
|
5,319
|
|
|
17,583
|
|
|
38,723
|
|
|
||||
Operating income (loss)
|
$
|
108,956
|
|
|
$
|
6,377
|
|
|
$
|
(17,611
|
)
|
|
$
|
97,722
|
|
|
Capital expenditures
|
$
|
76,473
|
|
|
$
|
1,086
|
|
|
$
|
325
|
|
|
$
|
77,884
|
|
|
Total assets (at year end)
|
$
|
284,330
|
|
|
$
|
142,354
|
|
|
$
|
5,443
|
|
|
$
|
432,127
|
|
|
|
Year Ended December 31, 2013
|
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
167,768
|
|
|
$
|
705,487
|
|
|
$
|
—
|
|
|
$
|
873,255
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
91,416
|
|
|
676,495
|
|
|
—
|
|
|
767,911
|
|
|
||||
Depreciation, depletion and amortization
|
10,458
|
|
|
10,369
|
|
|
1
|
|
|
20,828
|
|
|
||||
Selling, general and administrative expenses
|
10,556
|
|
|
6,057
|
|
|
10,222
|
|
|
26,835
|
|
|
||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
10,966
|
|
|
||||
Operating income (loss)
|
$
|
55,338
|
|
|
$
|
12,566
|
|
|
$
|
(21,189
|
)
|
|
$
|
46,715
|
|
|
Capital expenditures
|
$
|
20,406
|
|
|
$
|
931
|
|
|
$
|
32
|
|
|
$
|
21,369
|
|
|
Total assets (at year end)
|
$
|
138,755
|
|
|
$
|
172,833
|
|
|
$
|
7,959
|
|
|
$
|
319,547
|
|
|
•
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
|
•
|
Level 3 inputs are measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources.
|
Agreement Date
|
|
Effective Date
|
|
Maturity Date
|
|
Notional Amount
|
|
Fixed Rate
|
|
Variable Rate
|
Nov. 1, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$25,000,000
|
|
1.33200%
|
|
1 Month LIBOR
|
Nov. 7, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$25,000,000
|
|
1.25500%
|
|
1 Month LIBOR
|
Nov. 21, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$20,000,000
|
|
1.21875%
|
|
1 Month LIBOR
|
|
December 31, 2015
|
|
December 31, 2014
|
|
Classification
|
|
||||
|
|
|
|
|
|
|
||||
|
($ in thousands)
|
|
|
|
||||||
Derivative assets:
|
|
|
|
|
|
|
||||
Commodity derivative contracts
|
$
|
621
|
|
|
$
|
—
|
|
|
Prepaid expenses and other current assets
|
|
Derivative liabilities:
|
|
|
|
|
|
|
||||
Interest rate swaps
|
$
|
472
|
|
|
$
|
422
|
|
|
Accrued liabilities
|
|
Commodity derivative contracts
|
$
|
152
|
|
|
$
|
—
|
|
|
Accrued liabilities
|
|
|
|
Year Ended December 31,
|
|
|
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
Classification
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
(income (expense), $ in thousands)
|
|
|
|
||||||||||
Interest rate swaps
|
|
$
|
(820
|
)
|
|
$
|
(804
|
)
|
|
$
|
247
|
|
|
Interest expense, net
|
|
Commodity derivative contracts
|
|
715
|
|
|
1,819
|
|
|
540
|
|
|
Cost of goods sold
|
|
|||
|
|
$
|
(105
|
)
|
|
$
|
1,015
|
|
|
$
|
787
|
|
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Cash paid for interest
|
$
|
12,755
|
|
|
$
|
5,942
|
|
|
$
|
5,866
|
|
|
Cash paid for income taxes, net of refunds
|
$
|
937
|
|
|
$
|
423
|
|
|
$
|
159
|
|
|
Purchases of PP&E and intangible assets accrued but not paid at year-end
|
$
|
4,364
|
|
|
$
|
5,238
|
|
|
$
|
1,641
|
|
|
Purchases of PP&E accrued in a prior period and paid in the current period
|
$
|
5,238
|
|
|
$
|
1,641
|
|
|
$
|
9,455
|
|
|
Distribution equivalent rights accrued, net of payments
|
$
|
618
|
|
|
$
|
1,164
|
|
|
$
|
372
|
|
|
Capitalized reclamation costs, net of amounts acquired in business combination
|
$
|
113
|
|
|
$
|
706
|
|
|
$
|
721
|
|
|
Deferred compensation expense
|
$
|
—
|
|
|
$
|
122
|
|
|
$
|
6,368
|
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and the board of directors of our general partner; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
•
|
performed a qualitative and quantitative administrative headcount and competency gap analysis to determine the most appropriate level of staffing necessary to manage the complexity and quantity of transactions to successfully perform the required control activities in a manner that positions us to respond to external and internal demands;
|
•
|
through selective hiring, we improved skill competencies in the areas of accounting, monitoring, and information technology;
|
•
|
where appropriate, incorporated training of information technology and accounting personnel. In 2015, we have supplemented our personnel resources with a number of consulting resources experienced in controls and SOX compliance; and
|
•
|
increased managerial monitoring activities in the areas of information technology general controls as well as Sand segment procurement controls, general accounting controls related to capital expenditures, and railcar lease acquisition costs.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
|
Position
|
|
Ted W. Beneski
|
59
|
|
|
Chairman of the Board and Director
|
Rick Shearer
|
65
|
|
|
Chief Executive Officer and Director
|
Deborah Deibert
|
51
|
|
|
Chief Financial Officer
|
Warren B. Bonham
|
53
|
|
|
Vice President and Director
|
Nadya Kurani
|
42
|
|
|
Chief Accounting Officer
|
Kevin Clark
|
59
|
|
|
Independent Director
|
Mark Gottfredson
|
58
|
|
|
Independent Director
|
Peter Jones
|
58
|
|
|
Independent Director
|
Francis Kelly
|
59
|
|
|
Independent Director
|
Eliot Kerlin
|
41
|
|
|
Director
|
Victor L. Vescovo
|
50
|
|
|
Director
|
ITEM 11.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
Rick Shearer, Chief Executive Officer of Emerge Energy Services GP LLC, our general partner;
|
•
|
Robert Lane, former Chief Financial Officer of our general partner;
|
•
|
Joseph C. Tusa, Jr., Chief Financial Officer of our general partner;
|
•
|
Warren Bonham, Vice President of our general partner;
|
•
|
Richard DeShazo, former Chief Accounting Officer of our general partner; and
|
•
|
Deborah Deibert, Chief Accounting Officer of our general partner.
|
•
|
align officer and unitholder interests by providing a significant portion of total compensation opportunities for senior management in the form of equity awards and bonuses awarded based on the board of directors of our general partner’s review of company and individual performance; and
|
•
|
ensure executive officer compensation is competitive within the marketplace in which we compete for executive talent by relying on the board of directors of our general partner’s judgment, expertise and personal experience with other similar companies.
|
•
|
Base salary: compensation for ongoing services throughout the year.
|
•
|
Annual performance-based compensation and discretionary bonuses: annual incentive bonus based on the achievement of pre-established targets and/or discretionary objectives, each to recognize and reward achievement of corporate and individual performance.
|
•
|
Long-term incentive compensation programs: equity compensation to provide an incentive to our named executive officers to manage us from the perspective of an owner with an equity stake in the business.
|
•
|
Severance and change in control benefits: remuneration paid to certain executives in the event of a qualifying termination of employment and/or change in control.
|
Named Executive Officer
|
|
2015 Annual Base Salary
|
Rick Shearer (1)
|
|
$500,000
|
Robert Lane (1)
|
|
$279,100
|
Joseph C. Tusa, Jr.
|
|
$335,000
|
Warren Bonham
|
|
$200,000
|
Richard DeShazo
|
|
$245,700
|
Deborah Deibert (2)
|
|
$225,000
|
(1)
|
Mr. Shearer’s annual base salary was increased from $450,000 to $500,000 effective July 1, 2015.
|
(2)
|
Ms. Deibert’s annual base salary was increased from $200,850 to $225,000 effective September 28, 2015.
|
Named Executive Officer
|
|
2015 Target Bonus as a Percent of Base Salary
|
Rick Shearer
|
|
80%
|
Robert Lane
|
|
50%
|
Joseph C. Tusa, Jr.
|
|
75%
|
Warren Bonham
|
|
40%
|
Richard DeShazo
|
|
45%
|
Deborah Deibert
|
|
45%
|
Named Executive Officer
|
|
Adjusted EBITDA
|
|
Payout (as a percentage of base salary) (1)
|
Rick Shearer
|
|
|
|
|
Threshold
|
|
$145,000,000
|
|
10%
|
Target
|
|
$180,000,000
|
|
80%
|
Maximum
|
|
(1)
|
|
(1)
|
Robert Lane (1)
|
|
|
|
|
Threshold
|
|
$167,000,000
|
|
10%
|
Target
|
|
$187,000,000
|
|
50%
|
Maximum
|
|
(1)
|
|
(1)
|
Joseph C. Tusa, Jr.
|
|
|
|
|
Threshold
|
|
$167,000,000
|
|
10%
|
Target
|
|
$187,000,000
|
|
75%
|
Maximum
|
|
(1)
|
|
(1)
|
Warren Bonham (Direct Fuels incentive) (2)
|
|
|
|
|
Threshold
|
|
$4,100,000
|
|
5%
|
Target
|
|
$7,100,000
|
|
20%
|
Maximum
|
|
(1)
|
|
(1)
|
Warren Bonham (AEC incentive) (2)
|
|
$11,250,000
|
|
5%
|
Threshold
|
|
$13,500,000
|
|
20%
|
Target
|
|
(1)
|
|
(1)
|
Maximum
|
|
|
|
|
Richard DeShazo
|
|
|
|
|
Threshold
|
|
$167,000,000
|
|
9%
|
Target
|
|
$187,000,000
|
|
45%
|
Maximum
|
|
(1)
|
|
(1)
|
Deborah Deibert
|
|
|
|
|
Threshold
|
|
$167,000,000
|
|
9%
|
Target
|
|
$187,000,000
|
|
45%
|
Maximum
|
|
(1)
|
|
(1)
|
(1)
|
There was no maximum funding level under the 2015 annual incentive bonus plan.
|
(2)
|
Mr. Bonham’s annual incentive bonus was determined based on the individual adjusted EBITDA results for Direct Fuels and AEC (weighted equally).
|
Named Executive Officer
|
|
2014 Bonus
|
|
2014 Bonus (as percentage of base salary)
|
Rick Shearer
|
|
$928,886
|
|
219%
|
Robert Lane
|
|
$384,178
|
|
142%
|
Warren Bonham
|
|
$35,727
|
|
18%
|
Richard DeShazo
|
|
$298,972
|
|
128%
|
Named Executive Officer
|
|
2015 Annual Incentive Bonus
|
|
2015 Individual Performance or Transition Bonus
|
|
2015 Bonus (as percentage of base salary)
|
|||
Rick Shearer (1)
|
|
—
|
|
|
$15,000
|
|
3.0%
|
||
Robert Lane
|
|
—
|
|
|
—
|
|
|
—
|
|
Joseph C. Tusa, Jr. (2)
|
|
—
|
|
|
$6,663
|
|
2.0%
|
||
Warren Bonham
|
|
$14,151
|
|
—
|
|
|
6.7%
|
||
Richard DeShazo (3)
|
|
—
|
|
|
$200,000
|
|
81.4%
|
||
Deborah Deibert (1)
|
|
—
|
|
|
$6,750
|
|
3.0%
|
(1)
|
We paid a 3% individual performance bonus to Mr. Shearer ($15,000) and Ms. Deibert ($6,750) based on their respective annual base salaries on December 31, 2015.
|
(2)
|
We paid a 3% individual performance bonus to Mr. Tusa ($6,663) based on his base annual salary on December 31, 2015 (prorated to reflect his starting date of May 4, 2015).
|
(3)
|
For transition services provided to our general partner, we paid Mr. DeShazo a one-time bonus equal to $200,000 on November 27, 2015.
|
•
|
50% of the units would vest on the date our per-unit closing price equaled or exceeded 1.5 times the per-unit closing price on the grant date ($38.18); and
|
•
|
50% of the units would vest on the date our per-unit closing price equaled or exceeded two times the per-unit closing price on the grant date.
|
•
|
50% of the units will vest on the date our per-unit closing price equals or exceeds 1.25 times the per-unit closing price on the grant date ($36.70); and
|
•
|
50% of the units will vest on the date our per-unit closing price equals or exceeds two times the per-unit closing price on the grant date.
|
Name and Principal Position
|
|
Salary
($)
|
|
Bonus
($)(1)
|
|
Stock Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation ($)(3)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
||||||
Rick Shearer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2015
|
|
475,000
|
|
|
15,000
|
|
|
999,928
|
|
|
—
|
|
|
28,223
|
|
|
1,518,151
|
|
2014
|
|
425,000
|
|
|
—
|
|
|
—
|
|
|
928,886
|
|
|
17,877
|
|
|
1,371,763
|
|
2013
|
|
312,940
|
|
|
—
|
|
|
9,019,996
|
|
|
4,653,499
|
|
|
11,582
|
|
|
13,998,017
|
|
Robert Lane
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2015
|
|
123,459
|
|
|
—
|
|
|
64,800
|
|
|
—
|
|
|
433,980
|
|
|
622,239
|
|
2014
|
|
270,620
|
|
|
—
|
|
|
550,000
|
|
|
384,178
|
|
|
28,193
|
|
|
1,232,991
|
|
2013
|
|
256,000
|
|
|
153,000
|
|
|
—
|
|
|
—
|
|
|
22,083
|
|
|
431,083
|
|
Joseph C. Tusa, Jr. (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2015
|
|
212,596
|
|
|
6,663
|
|
|
199,987
|
|
|
—
|
|
|
101,240
|
|
|
520,486
|
|
Warren Bonham
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2015
|
|
210,000
|
|
|
—
|
|
|
—
|
|
|
14,151
|
|
|
3,665
|
|
|
227,816
|
|
2014
|
|
200,000
|
|
|
200,000
|
|
|
—
|
|
|
35,727
|
|
|
3,500
|
|
|
439,227
|
|
2013
|
|
136,577
|
|
|
1,130,080
|
|
|
2,049,996
|
|
|
—
|
|
|
—
|
|
|
3,316,653
|
|
Richard DeShazo (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2015
|
|
222,075
|
|
|
200,000
|
|
|
—
|
|
|
—
|
|
|
59,448
|
|
|
481,523
|
|
2014
|
|
234,000
|
|
|
—
|
|
|
—
|
|
|
298,972
|
|
|
27,506
|
|
|
560,478
|
|
Deborah Deibert (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|||||
2015
|
|
206,423
|
|
|
6,750
|
|
|
67,260
|
|
|
—
|
|
|
14,864
|
|
|
295,297
|
|
(1)
|
For 2015, Messrs. Shearer and Tusa and Ms. Deibert were paid discretionary bonuses of $15,000, $6,663, and $6,750, respectively, based on their individual performances. Mr. DeShazo was paid a transition bonus of $200,000 in connection with transition services related to his retirement in November 2015.
|
(2)
|
The amounts illustrated in this column reflect the aggregate grant date fair value of phantom unit awards made in 2015. The values are calculated in accordance with GAAP. For a discussion of the assumptions used to calculate the value of all phantom unit awards made to named executive officers, refer to Note 12 to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2015.
|
(3)
|
For 2015, the amounts include annual incentive bonuses earned in connection with the achievement of pre-established adjusted EBITDA targets. Mr. Bonham’s bonus was determined based on adjusted EBITDA results for Direct Fuels. Annual incentive bonuses earned in 2015 were paid in 2016.
|
(4)
|
The following table sets forth the amount of each other item of compensation paid to, or on behalf of, our named executive officers in 2015 included in the “All Other Compensation” column. Amounts for each other item of compensation are valued based on the aggregate incremental cost to us, in each case without taking into account the value of any income tax deductions for which we may be eligible.
|
Name
|
|
Company Contributions to 401(k) Plan
($)
|
|
Company Contributions to Health Savings Account
($)
|
|
Reimbursement for Executive Physical Allowance
($)
|
|
Severance Payments
($)
|
|
Payment for Unused Paid Time Off
($)
|
|
Reimbursement for Relocation, Moving and Temporary Living Costs
($) (1)
|
||||||
Rick Shearer
|
|
21,923
|
|
|
3,300
|
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Robert Lane
|
|
17,500
|
|
|
1,523
|
|
|
—
|
|
|
398,854
|
|
|
16,103
|
|
|
—
|
|
Joseph C. Tusa, Jr
|
|
8,375
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,865
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
3,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Richard DeShazo
|
|
19,674
|
|
|
2,919
|
|
|
—
|
|
|
—
|
|
|
36,855
|
|
|
—
|
|
Deborah Deibert
|
|
11,564
|
|
|
3,300
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(5)
|
Mr. Lane terminated employment on May 1, 2015.
|
(6)
|
Mr. Tusa terminated employment on January 29, 2016.
|
(7)
|
Mr. DeShazo was not a “named executive officer” of the company in 2013. Mr. DeShazo retired on November 13, 2015.
|
(8)
|
Ms. Deibert was not a “named executive officer” of the company in 2013 or 2014.
|
|
|
|
|
Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)
|
|
Estimated Possible Payouts under Equity Incentive Plan Awards (2)
|
|
|
|
|
|||||||||||||||||
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum (S)
|
|
Threshold (#)
|
|
Target (#)
|
|
Maximum (#)
|
|
All Other Stock Awards: Number of Units (#)(3)
|
|
Grant Date Fair Value of Stock Awards ($)
|
|||||||||
Rick Shearer
|
|
|
|
47,500
|
|
|
380,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
7/1/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,812
|
|
|
13,623
|
|
|
13,623
|
|
|
—
|
|
|
499,964
|
|
|
|
|
7/1/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,623
|
|
|
499,964
|
|
|
Robert Lane
|
|
|
|
27,913
|
|
|
139,563
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
1/1/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,200
|
|
|
64,800
|
|
|
Joseph C. Tusa, Jr
|
|
|
|
33,500
|
|
|
251,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
5/4/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,310
|
|
|
2,619
|
|
|
2,619
|
|
|
—
|
|
|
99,993
|
|
|
|
|
5/4/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,619
|
|
|
99,993
|
|
|
Warren Bonham
|
|
|
|
36,750
|
|
|
84,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Richard DeShazo
|
|
|
|
22,113
|
|
|
110,565
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Deborah Deibert
|
|
|
|
18,620
|
|
|
93,099
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
1/1/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600
|
|
|
32,400
|
|
|
|
|
10/26/15
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,000
|
|
|
34,860
|
|
(1)
|
Amounts shown in these columns represent each named executive officer’s non-discretionary incentive bonus opportunity under our 2015 bonus programs. The “Target” amount represents the named executive officer’s target bonus if the performance goal under the applicable bonus program was achieved at the target levels and the “Threshold” amount represents the named executive officer’s minimum bonus if the performance goal under the incentive bonus plan was achieved at the minimum percentage level. There was no maximum funding level under the 2015 annual incentive bonus programs.
|
(2)
|
Consists of performance-based vesting phantom units awards which the board of directors of our general partner approved in 2015. For details of each award, see “Elements of Executive Compensation - Equity Awards” above.
|
(3)
|
Consists of time-base vesting phantom units awards which the board of directors of our general partner approved in 2015. For details of each award, see “Elements of Executive Compensation - Equity Awards” above.
|
Name
|
|
Grant
Date
|
|
Number of Units
That Have Not
Vested
(#)
|
|
Market Value
of Units That Have Not
Vested
($)(1)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Units
That Have Not
Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or Payout Value of Unearned
Units That Have
Not Vested
($)(2)
|
|||||
Rick Shearer
|
|
7/1/15 (3)
|
|
13,623
|
|
|
63,074
|
|
|
|
|
|
|||
|
|
7/1/15 (4)
|
|
—
|
|
|
—
|
|
|
13,623
|
|
|
63,074
|
|
|
Robert Lane
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Joseph C. Tusa, Jr
|
|
5/4/15 (5)
|
|
2,619
|
|
|
12,126
|
|
|
—
|
|
|
—
|
|
|
|
|
5/4/15 (6)
|
|
|
|
|
|
2,619
|
|
|
12,126
|
|
|||
Warren Bonham
|
|
5/14/13 (5)
|
|
|
|
|
|
82,974
|
|
|
1,130,106
|
|
|||
Richard DeShazo
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Deborah Deibert
|
|
1/1/15 (8)
|
|
600
|
|
|
2,778
|
|
|
—
|
|
|
—
|
|
|
|
|
10/26/15 (8)
|
|
7,000
|
|
|
32,410
|
|
|
—
|
|
|
—
|
|
(1)
|
The market value of phantom units that have not vested is calculated based on the closing trading price of our common units as reported on the New York Stock Exchange on December 31, 2015 ($4.63).
|
(2)
|
The payout value for Mr. Bonham includes $745,936 of outstanding DERs that were accrued as of December 31, 2015 and will be paid once the underlying phantom unit award and associated DERs vest.
|
(3)
|
This phantom unit award vests, subject to continued service, in equal installments on the first, second and, third anniversaries of the vesting commencement date (July 1, 2015). In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control or upon a qualifying termination of service.
|
(4)
|
This phantom unit award vests based on achievement of the following unit price targets, and subject to continued service: (i) 50% on the date our per-unit closing price equals or exceeds 1.25 times the per-unit closing price on the grant date ($36.70); and (ii) 50% on the date our per-unit closing price equals or exceeds 2.0 times the per-unit closing price on the grant date. In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control.
|
(5)
|
This phantom unit award vests, subject to continued service, in equal installments on the first, second, third and, fourth anniversaries of the vesting commencement date (May 4, 2015). In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control or upon a qualifying termination of service. Mr. Tusa forfeited this award in connection with his termination of employment on January 29, 2016.
|
(6)
|
This phantom unit award vests based on achievement of the following unit price targets, and subject to continued service: (i) 50% vest on the date our per-unit closing price equals or exceeds 1.5 times the per-unit closing price on the grant date ($38.18); and (ii) 50% vest on the date our per-unit closing price equals or exceeds 2.0 times the per-unit closing price
|
(7)
|
This phantom unit award vests subject to continued service, based on the achievement of performance, in pro-rated installments in connection with the sale or disposition of common units held by Insight Equity based on the ratio of common units sold or disposed of by Insight Equity as compared to the total number of common units held by Insight Equity immediately following the completion of our IPO. In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control. The number of units that have not vested, as shown in the table, assumes a payout of the unvested portion of the phantom unit award.
|
(8)
|
These phantom unit awards vest, subject to continued service, in equal installments on the first, second, and third anniversaries of the vesting commencement date (January 1, 2015 or October 1, 2015, as applicable). In addition, these phantom unit awards may be subject to accelerated vesting immediately prior to a change in control.
|
Name
|
|
Number of Units Acquired on Vesting
(#)
|
|
Value Realized on Vesting
($)(1)
|
Rick Shearer
|
|
265,294
|
|
10,256,266
|
Robert Lane
|
|
—
|
|
—
|
Joseph C. Tusa, Jr
|
|
—
|
|
—
|
Warren Bonham
|
|
—
|
|
—
|
Richard DeShazo
|
|
—
|
|
—
|
Deborah Deibert
|
|
—
|
|
—
|
(1)
|
Represents the product of the number of phantom units which vested and the closing price of our common units on the vesting date. Mr. Shearer’s phantom units are accompanied by tandem DERs, which were vested as of the date of grant (May 14, 2013). The value includes $639,359 distributed in 2015 to Mr. Shearer related to his DERs.
|
Name
|
|
Termination Due to Death or Disability
($)
|
|
Change in Control (No Termination)
($)
|
|
Qualifying Termination (Not in Connection with Change of Control)
($)
|
|
Qualifying Termination
(In Connection with Change of Control)
($)
|
||||
Rick Shearer
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
1,000,000
|
|
|
1,000,000
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
126,148
|
|
|
10,599
|
|
|
126,148
|
|
Total
|
|
—
|
|
|
126,148
|
|
|
1,010,599
|
|
|
1,126,148
|
|
Robert Lane
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
252,758
|
|
|
—
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
146,096
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
—
|
|
|
—
|
|
|
398,854
|
|
|
—
|
|
Joseph C. Tusa, Jr (2)
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
335,000
|
|
|
335,000
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
24,252
|
|
|
2,002
|
|
|
24,252
|
|
Total
|
|
—
|
|
|
24,252
|
|
|
337,002
|
|
|
359,252
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Cash Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
1,130,106
|
|
|
—
|
|
|
1,130,106
|
|
Total
|
|
—
|
|
|
1,130,106
|
|
|
—
|
|
|
1,130,106
|
|
Richard DeShazo
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
200,000
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
—
|
|
|
—
|
|
|
200,000
|
|
|
—
|
|
Deborah Deibert
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
112,500
|
|
|
112,500
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
35,188
|
|
|
—
|
|
|
35,188
|
|
Total
|
|
—
|
|
|
35,188
|
|
|
112,500
|
|
|
147,688
|
|
(1)
|
Only non-employee directors who are not affiliated with us, our general partner, or certain Insight Equity affiliates are eligible to receive cash and/or equity compensation pursuant to the Director Plan.
|
(2)
|
The amounts shown in this column include the annual retainer and any individual retainers for serving as the chair or non-chair committee member, in each case earned in 2015.
|
(3)
|
The amounts shown in this column reflect the aggregate grant date fair value of restricted units awards granted in 2015, calculated in accordance with financial accounting standards. For a discussion of the assumptions used to calculate the value of all restricted unit awards made to directors, refer to Note 11 to our financial statements included in this Annual Report on Form 10-K for the period ended December 31, 2015. The total number of restricted units outstanding as of the end of the 2015 fiscal year for each non-employee director was 2,049.
|
(4)
|
Mr. Gottfredson was appointed as an independent director of our general partner and as a member of the Audit Committee on March 25, 2015. In connection with his appointment, Mr. Gottfredson received a restricted unit award of 242 units for the period covering his date of appointment through the anniversary date of our IPO (May 14, 2015).
|
(5)
|
Mr. Jones resigned his Audit Committee membership on March 20, 2015.
|
(6)
|
Mr. McCarthy resigned from the board of directors of our general partner on July 27, 2015.
|
(7)
|
In connection with his resignation from the board of directors of our general partner, Mr. McCarthy forfeited his restricted stock unit award granted in 2015.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS
|
•
|
each person who is known to us to beneficially own 5% or more of such units to be outstanding;
|
•
|
our general partner;
|
•
|
each of the directors and named executive officers of our general partner; and
|
•
|
all of the directors and executive officers of our general partner as a group.
|
Name of Beneficial Owner
|
|
Common Units Beneficially
Owned
|
|
Percentage of
Common Units
to be Beneficially
Owned
|
|
Insight Equity (1)
|
|
7,168,545
|
|
|
30.2%
|
Ted W. Beneski (2)
|
|
1,172,624
|
|
|
4.9%
|
Rick Shearer
|
|
251,644
|
|
|
*
|
Victor L. Vescovo
|
|
139,752
|
|
|
*
|
Warren B. Bonham
|
|
6,899
|
|
|
*
|
Joseph C. Tusa, Jr.
|
|
—
|
|
|
*
|
Deborah Deibert
|
|
134
|
|
|
*
|
Mark Gottfredson (5)
|
|
10,242
|
|
|
*
|
Francis J. Kelly III (5)
|
|
4,236
|
|
|
*
|
Kevin Clark (5)
|
|
2,974
|
|
|
*
|
Eliot E. Kerlin, Jr.
|
|
2,408
|
|
|
*
|
Peter Jones (5)
|
|
774
|
|
|
*
|
All directors and officers as a group (11 persons)
|
|
8,760,232
|
|
|
36.3%
|
(1)
|
As described elsewhere in this prospectus, Ted W. Beneski and Victor L. Vescovo are the controlling equity owners of Insight Equity, which owns a controlling interest in Emerge Holdings, the entity which owns Emerge Energy Services GP, LLC. Messrs. Beneski and Vescovo, by virtue of being controlling equity owners of Insight Equity, may be deemed to beneficially own the units held by Insight Equity. Messrs. Beneski and Vescovo disclaim beneficial ownership of the units held by Insight Equity except to the extent of their pecuniary interest therein.
|
(2)
|
Amounts do not include 27,522 units for which Mr. Beneski disclaims beneficial ownership, which are held in irrevocable trust accounts in favor of his sons. Mr. Beneski is the trustee of each trust account.
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column(a))
|
||||
|
|
(a)(1)
|
|
(b)
|
|
(c)(2)
|
||||
Equity compensation plans approved by security holders
|
|
225,000
|
|
|
$
|
—
|
|
|
1,196,676
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
225,000
|
|
|
$
|
—
|
|
|
1,196,676
|
|
(1)
|
The amounts in column (a) of this table reflect only phantom units that have been granted (but not yet issued) under the LTIP. No unit options have been granted. Our LTIP was approved by our partners (general and limited) prior to our IPO. No value is shown in column (b) of the table, since the phantom units do not have an exercise, or strike, price.
|
(2)
|
The LTIP was adopted by the Emerge Energy Services GP LLC Board of Directors in connection with the closing of our IPO in May 2013, and provides for awards of options, restricted units, phantom units, distribution equivalent rights, substitute awards, unit appreciation rights, unit awards, profits interest units and other unit-based awards to be available for employees, consultants and directors of our general partner and any affiliates who perform services for Emerge Energy Services LP.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
|
|
|
|
|
Post-IPO Stage
|
|
|
|
|
|
|
|
|
|
Distributions of available cash to our general partner and its affiliates
|
|
We make cash distributions pro rata to the holders of our common units, including affiliates of our general partner, as the holders of an aggregate of 7,168,545 common units.
|
||
|
|
|
||
Payments to our general partner and its affiliates
|
|
Our general partner does not receive a management fee or other compensation for its management of us. Our general partner and its affiliates are reimbursed for expenses incurred on our behalf. Our partnership agreement provides that our general partner determines the amount of these expenses.
|
||
|
|
|
||
Withdrawal or removal of our general partner
|
|
If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.
|
||
Liquidation Stage
|
|
|
|
|
|
|
|
|
|
Liquidation
|
|
Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their particular capital account balances.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
||||
|
|
($ in thousands)
|
||||||
Audit fees (1)
|
|
$
|
1,775
|
|
|
$
|
1,825
|
|
Audit-related fees (2)
|
|
—
|
|
|
68
|
|
||
Tax fees (3)
|
|
4
|
|
|
4
|
|
||
Total
|
|
$
|
1,779
|
|
|
$
|
1,897
|
|
(1)
|
Consists primarily of services provided in connection with the audit of the annual financial statements, audit of internal control over financial reporting, review of quarterly financial statements, services related to offering documents and advice on accounting policies.
|
(2)
|
Consists primarily of services performed related to business combination, S-3 Filing review and SOX 404 (a) consulting.
|
(3)
|
Represents fees for professional services in connection with tax compliance and planning.
|
•
|
the external auditors' internal quality-control procedures;
|
•
|
any material issues raised by the most recent internal quality-control review, or peer review, of the external auditors;
|
•
|
the independence of the external auditors;
|
•
|
the aggregate fees billed by the external auditors for each of the previous two fiscal years; and
|
•
|
the rotation of the external auditors' lead partner.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)(1).
|
Financial Statements
. See “Index to Financial Statements” on page 69.
|
(a)(2).
|
Financial Statement Schedules
. Other schedules are omitted because they are not required or applicable, or the required information is included in our consolidated financial statements or related notes.
|
(a)(3).
|
Exhibits
. See “Index to Exhibits.”
|
|
EMERGE ENERGY SERVICES LP
|
||
|
|
|
|
|
By:
|
EMERGE ENERGY SERVICES GP LLC, its general partner
|
|
|
|
|
|
|
By:
|
/s/ Rick Shearer
|
|
|
|
Rick Shearer
|
|
|
|
President, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Rick Shearer
|
|
President, Chief Executive Officer and Director
|
|
February 29, 2016
|
Rick Shearer
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Deborah Deibert
|
|
Chief Financial Officer
|
|
February 29, 2016
|
Deborah Deibert
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ Nadya Kurani
|
|
Chief Accounting Officer
|
|
February 29, 2016
|
Nadya Kurani
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
/s/ Ted W. Beneski
|
|
Chairman of the Board and
|
|
February 29, 2016
|
Ted W. Beneski
|
|
Director
|
|
|
|
|
|
|
|
/s/ Warren B. Bonham
|
|
Director
|
|
February 29, 2016
|
Warren B. Bonham
|
|
|
|
|
|
|
|
|
|
/s/ Kevin Clark
|
|
Director
|
|
February 29, 2016
|
Kevin Clark
|
|
|
|
|
|
|
|
|
|
/s/ Mark Gottfredson
|
|
Director
|
|
February 29, 2016
|
Mark Gottfredson
|
|
|
|
|
|
|
|
|
|
/s/ Peter Jones
|
|
Director
|
|
February 29, 2016
|
Peter Jones
|
|
|
|
|
|
|
|
|
|
/s/ Francis Kelly
|
|
Director
|
|
February 29, 2016
|
Francis Kelly
|
|
|
|
|
|
|
|
|
|
/s/ Eliot Kerlin
|
|
Director
|
|
February 29, 2016
|
Eliot Kerlin
|
|
|
|
|
|
|
|
|
|
/s/ Victor L. Vescovo
|
|
Director
|
|
February 29, 2016
|
Victor L. Vescovo
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.2
|
|
Amendment to Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.3
|
|
First Amended and Restated Limited Partnership Agreement of Emerge Energy Services LP, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
3.4
|
|
Certificate of Limited Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.5
|
|
Amendment to Certificate of Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.6 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.6
|
|
Amended and Restated Limited Liability Company Agreement of Emerge Energy Services GP, LLC, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
4.1
|
|
Registration Rights Agreement, dated as of May 14, 2013, by and among Emerge Energy Services LP, AEC Resources LLC, Ted W. Beneski, Superior Silica Resources LLC, Kayne Anderson Development Company and LBC Sub V, LLC (incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.1
|
|
Amended and Restated Revolving Credit and Security Agreement, dated as of June 27, 2014, among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, PNC Bank, National Association, as administrative agent and collateral agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 30, 2014).
|
|
|
|
10.2
|
|
Administrative Services Agreement, dated as of May 14, 2013, by and among Emerge Energy Services LP, Emerge Energy Services GP LLC and Insight Equity Management Company LLC (incorporated by reference to Exhibit 10.6 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.3#
|
|
Emerge Energy Services LP 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.4#
|
|
Emerge Energy Services LP Director Compensation Program (incorporated by reference to Exhibit 10.4 to the Registrant’s Annual report on Form 10-K, filed with the SEC on March 5, 2015).
|
|
|
|
10.5#
|
|
Form of Emerge Energy Services LP 2013 Long-Term Incentive Plan Phantom Unit Agreement (Performance-Vesting Agreement) (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.6#
|
|
Form of Emerge Energy Services LP 2013 Long-Term Incentive Plan Phantom Unit Agreement (Time-Vesting Agreement) (incorporated by reference to Exhibit 10.8 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.7#
|
|
Amended Employment Letter, dated May 29, 2013, between Emerge Energy Services GP LLC and Rick Shearer (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.8#
|
|
Letter Agreement, dated May 29, 2013, between Emerge Energy Services GP LLC and Rick Shearer (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.9#
|
|
Second Amendment to Employment Letter, dated August 5, 2014, between Emerge Energy Services GP LLC and Robert Lane (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on August 11, 2014).
|
|
|
|
10.10 †
|
|
Sand Supply Agreement, dated as of May 31, 2011, between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
Exhibit
Number
|
|
Description
|
10.11 †
|
|
Sand Supply Agreement, dated as of March 31, 2011, between Superior Silica Sands LLC and BJ Services Company, U.S.A (incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.12 †
|
|
Amendment to Sand Supply Agreement, dated as of November 15, 2012 between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.13 †
|
|
Second Amendment to Sand Supply Agreement, dated as of June 10, 2014, between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed with the SEC on November 7, 2014).
|
|
|
|
10.14 †
|
|
Memorandum of Understanding, dated May 9, 2012, between Canadian National Railway Company and Superior Silica Sands LLC (incorporated by reference to Exhibit 10.9 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.15 †
|
|
Wet Sand Services Agreement, dated April 7, 2011, by and between Superior Silica Sands LLC and Fred Weber, Inc. (incorporated by reference to Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.16
|
|
Contribution, Conveyance and Assumption Agreement, dated as of May 14, 2013, by and among Emerge Energy Services GP LLC, Emerge Energy Services LP, Emerge Energy Services Operating LLC, Emerge Energy Services Holdings LLC, and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.17#
|
|
Employment Letter, dated April 13, 2015, between Emerge Energy Services GP LLC and Jody Tusa (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 4, 2015).
|
|
|
|
10.18#
|
|
Retention and Transition Bonus Agreement, dated October 16, 2015, between Emerge Energy Services GP LLC and Richard L. DeShazo (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 22, 2015).
|
|
|
|
10.19#
|
|
Employment Letter, dated October 19, 2015, between Emerge Energy Services GP LLC and Deborah Deibert (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 22, 2015).
|
|
|
|
10.20
|
|
First Amendment to Amended and Restated Revolving Credit and Security Agreement, dated as of April 6, 2015, among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, PNC Bank, National Association, as administrative agent and collateral agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 8, 2015).
|
|
|
|
10.21
|
|
Limited Waiver No. 1 to Amended and Restated Revolving Credit and Security Agreement, dated as of October 19, 2015, by and among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, the Lenders party thereto and PNC Bank, National Association, as agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on October 22, 2015).
|
|
|
|
10.22
|
|
Limited Waiver No. 2 to Amended and Restated Revolving Credit and Security Agreement, dated as of November 12, 2015, by and among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, the Lenders party thereto and PNC Bank, National Association, as agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November 16, 2015).
|
|
|
|
10.23
|
|
Amendment No. 2 to Amended and Restated Revolving Credit and Security Agreement, dated November 18, 2015, among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, PNC Bank, National Association, as administrative agent and collateral agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed with the SEC on November 20, 2015).
|
|
|
|
10.24*†
|
|
Amended and Restated Master Supply Agreement, dated December 22, 2015, between Superior Silica Sands LLC and Performance Technologies, LLC.
|
|
|
|
10.25*†
|
|
Purchase Option Agreement, dated December 22, 2015, between Superior Silica Sands LLC and Performance Technologies, LLC.
|
|
|
|
21.1*
|
|
List of Subsidiaries of Emerge Energy Services LP.
|
|
|
|
Exhibit
Number
|
|
Description
|
23.1*
|
|
Consent of BDO USA, LLP.
|
|
|
|
23.2*
|
|
Consent of Cooper Engineering Company, Inc.
|
|
|
|
23.3*
|
|
Consent of Westward Environmental, Inc.
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95.1*
|
|
Mine Safety Disclosure Exhibit.
|
|
|
|
101*
|
|
Interactive Data Files - XBRL.
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†
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Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been separately filed with the Securities and Exchange Commission.
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If to Buyer:
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Performance Technologies, LLC
777 NW 63rd Street
Oklahoma City, Oklahoma 73116
Attn: Scott Anderson, Director Supply Chain
Telephone: 405-608-7313
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If to Supplier:
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Superior Silica Sands LLC
6000 Western Place, Suite 465
Ft. Worth, Texas 76107
Attn: Rick Shearer, President & CEO
Telephone: 817-841-8072
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With a copy to:
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Superior Silica Sands LLC
1400 Civic Place, Suite 250
Southlake, Texas 76092
Attn: General Counsel
Telephone: 817-488-7775
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With a copy to:
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Hunton & Williams LLP
Riverfront Plaza, East Tower
951 E. Byrd Street
Richmond, VA 23219
Attn: J.C. Chenault, V
Telephone: 804-788-8744
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Item List
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Unit Price
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20/40 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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30/50 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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40/70 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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100 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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20/40 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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30/50 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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40/70 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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Properties
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20140 Mesh
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30/50 Mesh
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40/70 Mesh
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API RP-56 Maximum % Fines at Stress
|
<14% at
4,000 psi |
<10% at
4,000 psi |
<8% at
5,000 psi |
ISO 13503-2 Proppant Crush Resistance
Test (K Value) |
>
6K
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>
7K
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>
9K
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Sieve Distribution per ISO 13503-2
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>90 % between the designated sieve sizes.
<0.1% larger than the first sieve size and
<1.0% should fall on the pan
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||
Acid Solubility
- Solubility in 12/3 HCL/HF for 0.5 HR @ 150 °F (% Weight Loss)
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<
2.0%
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<
2.0%
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<
3.0%
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Roundness
- mean of 20 count per API RP 19C
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>
0.7
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>
0.7
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>
0.7
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Sphericity - mean of 20 count per API RP 19C
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>
0.6
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>
0.6
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>
0.6
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Turbidity, FTU
per API RP-56 and RP-58
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< 150 FTU
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Supplier’s Origin
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Forecast Cap (tons/month)
1
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FCA Railcar at Plant with UP Origin
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30/50 Mesh *** tons/month
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FCA Railcar at Plant with CN Origin
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30/50 Mesh *** tons/month
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FCA Railcar at Plant with CN Origin
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40/70 Mesh *** tons/month
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FCA Railcar at Plant
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*** tons/month – variable allocation of 30/50 and/or 40/70
2
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FCA Plant (Rail Origin TBA)
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*** tons/month (Mesh Size to be
confirmed 6 weeks prior to shipment)
3
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Seventy Seven Energy
3715 S Radio Road, El Reno
El Reno, OK 73036
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Purchase Order
______________
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Item
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Material/Description
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Deliv. Date
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Quantity
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UM
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Unit Price
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Net Amount
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Total Material Value
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$___________
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|||
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Estimated Freight
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$___________
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|||
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Total Net Value Exclusive Freight
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$___________
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Name
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Product identifier
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%
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GHS-US classification
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Quartz
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(CAS No)
14808-60-7
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90 - 99.9
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Acute Tox. 4 (Oral), H302
Carc. 1A, H350
STOT RE2, H373
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Quartz (14808-60-7)
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USA ACGIH
(8-Hour Time Weighted
Average)
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ACGIH TWA (mg/m³)
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0.025 mg/m³
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USA MSHA/OSHA
(8-Hour Time Weighted
Average)
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PEL
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10 mg/m3 / % SiO2+2
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NIOSH
(10-Hour Time Weighted
Average, 4--hour work
week)
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TWA
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0.05 mg/m3
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Quartz (14808-60-7)
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LD50 oral rat
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500 mg/kg
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ATE (oral)
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500.000 mg/kg
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Quartz (14808-60-7)
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IARC group
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1 - Carcinogenic to humans
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National Toxicology Program (NTP) Status
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2 - Known Human Carcinogens
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Quartz (14808-60-7)
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||||
U.S. - California -
Proposition 65 -
Carcinogens List
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U.S. - California -
Proposition 65 -
Developmental Toxicity
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U.S. - California -
Proposition 65 -
Reproductive Toxicity -
Female
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U.S. - California -
Proposition 65 -
Reproductive Toxicity - Male
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No significance risk level
(NSRL)
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Yes
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If to Buyer:
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Performance Technologies, LLC
777 NW 63rd Street
Oklahoma City, Oklahoma 73116
Attn: Scott Anderson, Director Supply Chain
Telephone: 405-608-7313
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If to Supplier:
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Superior Silica Sands LLC
6000 Western Place, Suite 465
Ft. Worth, Texas 76107
Attn: Rick Shearer, President & CEO
Telephone: 817-841-8072
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With a copy to:
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Superior Silica Sands LLC
1400 Civic Place, Suite 250
Southlake, Texas 76092
Attn: General Counsel
Telephone: 817-488-7775
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With a copy to:
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Hunton & Williams LLP
Riverfront Plaza, East Tower
951 E. Byrd Street
Richmond, VA 23219
Attn: J.C. Chenault, V
Telephone: 804-788-8744
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Current Price FCA Seller’s Plant (by mesh size)
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Corresponding
Company Discount (by mesh size) |
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Lower
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Upper
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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*For every whole $*** increase above $***, additional $*** discount shall be applied to the Corresponding Company Discount.
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1.
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Option to Purchase Certain Products
.
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1.
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Term and Termination
.
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3.
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Miscellaneous
.
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Properties
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20140 Mesh
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30/50 Mesh
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40/70 Mesh
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API RP-56 Maximum % Fines at Stress
|
<14% at 4,000
psi |
<10% at 4,000
psi |
<8% at 5,000
psi |
ISO 13503-2 Proppant Crush Resistance Test (1i
-
Value)
|
>
6K
|
>
7K
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>
9K
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Sieve Distribution per ISO 13503-2
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>90 % between the designated sieve sizes.
<0.1% larger than the first sieve size and
<1.0% should fall on the pan
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||
Acid Solubility - Solubility in 12/3 11CD:11F for 0.5 HR @ 150 °F (% Weight Loss)
|
<
2.0%
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<
2.0%
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<
3.0%
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Roundness - mean of 20 count per API RP 19C
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>
0.7
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>
0.7
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>
0.7
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Sphericity - mean of 20 count per API RP 19C
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>
0.6
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>
0.6
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>
0.6
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Turbidity, FTU per API RP-56 and RP-58
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< 150 FTU
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Year
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Minimum Annual Volume (tons/year)
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1 to 3
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***
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4 to 6
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***
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7 to Fulfillment of Contract Volume Option
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***
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Seventy Seven Energy
3715 S Radio Road, El Reno
El Reno, OK 73036
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Purchase Order
______________
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Item
|
Material/Description
|
Deliv. Date
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Quantity
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UM
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Unit Price
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Net Amount
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Total Material Value
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$___________
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|||
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|
Estimated Freight
|
$___________
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|||
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Total Net Value Exclusive Freight
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$___________
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Item List
|
Unit Price
|
20/40 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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30/50 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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40/70 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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100 Mesh Sand FCA Railcar Supplier’s Plants, WI
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$***/ton
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20/40 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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30/50 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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40/70 Mesh Sand FCA Truck Supplier’s Terminals, Ohio
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$***/ton
1
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Current Price FCA Seller’s Plant (by mesh size)
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Corresponding
Company Discount (by mesh size) |
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Lower
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Upper
|
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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$***
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*For every whole $
***
increase above $
***
, additional $
***
discount shall be applied to the Corresponding Company Discount.
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Name
|
Product identifier
|
%
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GHS-US classification
|
Quartz
|
(CAS No)
14808-60-7
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90 - 99.9
|
Acute Tox. 4 (Oral), H302
Carc. 1A, H350
STOT RE2, H373
|
Quartz (14808-60-7)
|
||
USA ACGIH
(8-Hour Time Weighted
Average)
|
ACGIH TWA (mg/m³)
|
0.025 mg/m³
|
USA MSHA/OSHA
(8-Hour Time Weighted
Average)
|
PEL
|
10 mg/m3 / % SiO2+2
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NIOSH
(10-Hour Time Weighted
Average, 4--hour work
week)
|
TWA
|
0.05 mg/m3
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Quartz (14808-60-7)
|
|
LD50 oral rat
|
500 mg/kg
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ATE (oral)
|
500.000 mg/kg
|
Quartz (14808-60-7)
|
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IARC group
|
1 - Carcinogenic to humans
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National Toxicology Program (NTP) Status
|
2 - Known Human Carcinogens
|
Quartz (14808-60-7)
|
||||
U.S. - California -
Proposition 65 -
Carcinogens List
|
U.S. - California -
Proposition 65 -
Developmental Toxicity
|
U.S. - California -
Proposition 65 -
Reproductive Toxicity -
Female
|
U.S. - California -
Proposition 65 -
Reproductive Toxicity - Male
|
No significance risk level
(NSRL)
|
Yes
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|
|
|
|
If to Buyer:
|
Performance Technologies, LLC
777 NW 63rd Street
Oklahoma City, Oklahoma 73116
Attn: Scott Anderson, Director Supply Chain
Telephone: 405-608-7313
|
If to Supplier:
|
Superior Silica Sands LLC
6000 Western Place, Suite 465
Ft. Worth, Texas 76107
Attn: Rick Shearer, President & CEO
Telephone: 817-841-8072
|
With a copy to:
|
Superior Silica Sands LLC
1400 Civic Place, Suite 250
Southlake, Texas 76092
Attn: General Counsel
Telephone: 817-488-7775
|
And a copy to:
|
Hunton & Williams LLP
Riverfront Plaza, East Tower
951 E. Byrd Street
Richmond, VA 23219
Attn: J.C. Chenault, V
Telephone: 804-788-8744
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Name of Subsidiary
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Jurisdiction of Organization
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Allied Energy Company LLC
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Alabama
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Allied Renewable Energy, LLC
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Delaware
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Direct Fuels LLC
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Delaware
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Emerge Energy Services Operating LLC
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Delaware
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Emerge Energy Distributors Inc.
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Delaware
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Superior Silica Sands LLC
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Texas
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Westward Environmental, Inc.
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s/s Tommy Mathews, PG 5321
|
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Tommy Mathews, PG, REM
President
TX License No. 5321
Firm No. 50112
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b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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Date: February 29, 2016
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/s/ Rick Shearer
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Rick Shearer
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President and Chief Executive Officer of Emerge Energy Services GP LLC (the general partner of Emerge Energy Services LP)
(Principal Executive Officer)
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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Date: February 29, 2016
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/s/ Deborah Deibert
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Deborah Deibert
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Chief Financial Officer of Emerge Energy Services GP LLC (the general partner of Emerge Energy Services LP)
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(Principal Financial Officer)
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Date: February 29, 2016
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By:
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/s/ Rick Shearer
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Rick Shearer
|
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President and Chief Executive Officer of
Emerge Energy Services
GP LLC (the general partner of
Emerge Energy Services
LP)
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Date: February 29, 2016
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By:
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/s/ Deborah Deibert
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Deborah Deibert
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Chief Financial Officer of Emerge Energy Services GP LLC (the general partner of Emerge Energy Services LP)
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(Principal Financial Officer)
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Mine or Operating
Name and MSHA
Identification Number
|
Section 104
S&S Citations
(#)
|
Section
104(b)
Orders
(#)
|
Section
104(d)
Citations
and Orders
(#)
|
Section
110(b)(2)
Violations
(#)
|
Section
107(a)
Orders
(#)
|
Total Dollar
Value of MSHA
Assessments
Proposed
($)
|
Total Number
of Mining
Related
Fatalities
(#)
|
Received Notice
of Pattern of
Violations Under
Section 104(e)
(yes/no)
|
Received Notice of
Potential to Have
Pattern Under Section
104(e)
(yes/no)
|
Legal
Actions
Pending as
of Last Day
of Period
(#)
|
Legal
Actions
Initiated
During
Period
(#)
|
Legal
Actions
Resolved
During
Period
(#)
|
Kosse Mine
(#4104312)
|
2
|
—
|
—
|
—
|
—
|
$480
|
—
|
No
|
No
|
—
|
3
|
5
|
Chippewa Sand
(#4703607)
(New Auburn Wet Plant)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Dry Plant
(#4703620)
(New Auburn)
|
2
|
—
|
—
|
—
|
—
|
$645
|
—
|
No
|
No
|
3
|
5
|
2
|
Arland Dry Plant
(#4703662)
(Midwest FracSep0909)
|
1
|
—
|
—
|
—
|
—
|
$434
|
—
|
No
|
No
|
—
|
2
|
2
|
FLS Mine/Wet Plant
(#4703670)
(Barron/Clinton)
|
3
|
—
|
—
|
—
|
—
|
$3,464
|
—
|
No
|
No
|
5
|
21
|
16
|
Clinton Dry Plant
(#4703671)
(Barron/Clinton)
|
2
|
—
|
—
|
—
|
—
|
$1,720
|
—
|
No
|
No
|
1
|
10
|
9
|
LP Mine Site and Wet Plant
(#4703707) |
—
|
—
|
—
|
—
|
—
|
$100
|
—
|
No
|
No
|
—
|
1
|
1
|
Thompson Hills
(#4703718)
|
1
|
—
|
—
|
—
|
—
|
$300
|
—
|
No
|
No
|
—
|
3
|
3
|
Arland Dry Plant
(#4703720) |
1
|
—
|
—
|
—
|
—
|
$762
|
—
|
No
|
No
|
1
|
1
|
—
|
Independence Mine
(#4703728) |
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|