Pioneer Buys Sand Miner (PXD, EOG)
One of the critical elements in hydraulic fracturing (fracking) for oil and gas deposits is ordinary sand. The stuff is used to prop open the fissures blasted into the sub-surface rock by the fracking process. Demand for sand is very…
One of the critical elements in hydraulic fracturing (fracking) for oil and gas deposits is ordinary sand. The stuff is used to prop open the fissures blasted into the sub-surface rock by the fracking process. Demand for sand is very strong right now, and Pioneer Natural Resources Co. (NYSE: PXD) has decided that now is the time to acquire a guaranteed supply. Another gas producer, EOG Resources Inc. (NYSE: EOG) has owned its sand supply for more than three years.
Pioneer today said that it would acquire its main supplier of sand, a Texas company called Carmeuse Holding S.A., for $297 million. The company estimates that the acquisition will save about $65-$70 million annually in sand costs. Pioneer estimates that today’s purchase is equal to about 30 years of demand at current usage rates.
Pioneer stock is down about -2% this afternoon, at $106.20 in a 52-week range of $58.63-$119.19.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
