Demand for fracking sand is reaching record levels with twice the amount of sand used per well than was the norm just three years ago, and Ft. Worth-based Emerge Energy Services is riding the trend, but the going can get rough.
Emerge's conversion of a construction material sand mine in the San Antonio area was completed recently, with the $20 million project now operational, which should increase future profits.
It's recently-released second-quarter earnings statement revealed that while Emerge is now selling more sand than at any time in the company's history, but with revenue of more than $84 million the net income was about $4.7 million.
The problem appears to be production bottlenecks. For example, as Madison.com points out, the company's facility at Kosse, Texas, is capable of producing 600,000 tons of dry sand per year but Emerge has been unable to turn out more than 220,000 tons in the year -- and production at the Kosse plant has actually declined from the previous quarter.
While the company has said it's working to expand the facility, progress has been slow, with the result a heavy weight on Emerge's profits.
Still, the company's revenue and earnings have been improving over the past two quarters and with the strength of the frack sand market and anticipated profits from the San Antonio plant, Emerge's struggles have been paying off and the future appears bright.
By Mike Shiloh
Copyright August 07, 2017, Mike Shiloh, Texas Energy Report LLC, www.texasenergyreport.com, All rights are reserved