APR 2017

From West Texas Dunes, A Black Mountain Of Frac Sand Rises

West Texas Ranchers in Winkler County know the name Black Mountain Sand well. Now, operators in the Permian are getting to know the name Black Mountain Sand. Soon everyone that cares about frac sand will know the name.

The Black Mountain brand is established in the Permian, but not because of silica. You’ve probably heard of their sister company Black Mountain Oil & Gas, whose Northern Delaware acreage Marathon just acquired for $700mm. Less famous siblings include Black Mountain Disposal and Eclipse Midstream LP.

What’s really going to put them on the map is what comes next. Black Mountain has quietly assembled a mind-blowing 1.5bn+ tons of frac sand reserves in the Permian Basin. For context, Hi-Crush paid $275mm for 55mm tons of reserves in late-February. As they are brought to market, Black Mountain’s currently identified reserves have the potential to be a game changer. The company’s push is going to put the regional frac sand mining trend in the Permian on steroids.

The Black Mountain Oil & Gas sale to Marathon was a meaningful event for the oilfield supply chain. Beyond simple E&P consolidation, the transaction set Black Mountain Sand up as the US market’s only pure-play Permian frac sand miner. Our understanding is that Black Mountain founder Rhett Bennett’s full attention is now devoted to addressing the Permian Basin’s most urgent need – in-basin frac sand.

With private equity backing, Black Mountain has assembled a formidable portfolio of logistically advantaged frac sand in the hottest US market for the consumable. They have the first mover advantage. And they are now working on the build-out of the largest regional sand mine announced in the Permian Basin so far. Their facility will be the industry’s second frac mine in the Permian, and the first of multiple facilities targeting Black Mountain’s massive pay.

To read more, visit the link here: https://www.infillthinking.com/infill-thoughts/west-texas-dunes-black-mountain-frac-sand-rises/