Smart Sand has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). The company expects to price its 10.62 million shares in the range of $15 to $18 per share, with an overallotment option for an additional 1.59 million shares. At the maximum price, the entire offering is valued up to $219.73 million. The company intends to list its shares on the Nasdaq Global Market under the symbol SND.
The underwriters for the offering are Credit Suisse, Goldman Sachs, Jefferies, Simmons, Tudor Pickering Holt and Deutsche Bank.
This company is a pure-play, low-cost producer of high-quality Northern White raw frac sand, which is a preferred proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells.
Smart Sand sells its products primarily to oil and natural gas exploration and production companies, such as EOG Resources, and oilfield service companies, such as Weatherford, under a combination of long-term take-or-pay contracts and spot sales in the open market.
Smart Sand owns and operates a raw frac sand mine and related processing facility near Oakdale, Wisconsin, at which it has roughly 244 million tons of proven recoverable sand reserves and approximately 92 million tons of probable recoverable sand reserves as of December 31, 2015, respectively. The company believes that with further development and permitting the Oakdale facility could ultimately be expanded to allow production of up to 9 million tons of raw frac sand per year.
In addition to the Oakdale facility, the company owns a second property in Jackson County, Wisconsin, called the Hixton site. As of August 2014, the Hixton site had approximately 100 million tons of proven recoverable sand reserves.
In the filing, the company detailed its financial position as follows:
For the year ended December 31, 2015 and six months ended June 30, 2016, we generated net income (loss) of approximately $5.0 million and $(2.0) million, respectively, and Adjusted EBITDA of approximately $23.9 million and $6.4 million, respectively.
The company intends to use a portion of the net proceeds from this offering to redeem all of its outstanding preferred stock and to repay the outstanding indebtedness under its existing revolving credit facility. The remaining net proceeds will be used for general corporate purposes.