Hi-Crush units tumble on contract cancelation
HOUSTON (AP) — Hi-Crush Partners LP's limited partner units tumbled 30 percent Tuesday after the company reported strong results for its first weeks as a public company, but also announced the end of a key contract.
Hi-Crush produces premium monocrystalline sand, a specialty product used to enhance recovery rates in oil and natural gas wells. Baker Hughes Oilfield Operations Inc. notified the company in September that it would terminate a supply agreement. Hi-Crush filed suit in a Texas court seeking damages because it thinks the termination was an attempt by Baker Hughes to get out of purchase requirements under the agreement.
It called the contract cancelation an "isolated incident" and said it won't affect cash distributions to its unit holders. Hi-Crush expects to pay a 2013 quarterly distribution of at least 47.5 cents per unit.
For the period starting Aug. 16, when the Houston-based company went public, through Sept. 30, Hi-Crush earned $9.1 million, or 33 cents per unit. Revenue totaled $12.6 million.
The company sold 191,446 tons during the period as a public company, up from the 186,957 tons it sold as a private company between July 1 and Aug. 15 and the 126,036 it sold in the three-month period ended Sept. 30, 2011.
In their daily energy update, Raymond James analysts said they expected a profit of about 28 cents per share for the partial quarter, so the company's results were better than expected. But they expected the units to fall because of the contract cancelation.
Hi-Crush units fell $4.71, or 23.1 percent, to $15.64 in heavy midday trading, after dropping to $13.21 earlier in the day and passing their all-time low and initial public offering price of $17.