Bloomberg News

US Silica Falls as Industry Reports Fracking Costs: Dallas Mover

February 02, 2012

Feb. 1 (Bloomberg) -- US Silica Holdings Inc., a provider of sand to energy companies, fell in its first day of trading as other oilfield suppliers struggle to contain costs related to moving from natural-gas to crude basins.

The company, which initially priced 11.8 million shares at $17 each, fell 5.3 percent to $16.08 at 2:54 p.m. in New York.

“The industry is having challenges all around from a logistics standpoint to operationally,” John Keller, an analyst at Stephens Inc. in Houston, who doesn’t rate US Silica, said in an interview today.

US Silica, based in Frederick, Maryland, sells sand to oil and gas companies for use in hydraulic fracturing, a technique that pumps the material down a well with chemicals and millions of gallons of water to free crude from underground rock. Fracking-service providers and sand suppliers are currently facing higher costs as they shift their equipment and materials from gas basins to oil-producing fields where customers are boosting work, said Keller.

Carbo Ceramics Inc., the largest provider of manufactured fracking material that’s similar to sand, said Jan. 26 it had higher freight and logistics costs in the fourth quarter as customers moved away from gas basins and into oil plays in the U.S. and Canada.

Gas producers such as Chesapeake Energy Corp. and EQT Corp. have announced they’re curtailing production because of low gas prices.

--Editors: Jasmina Kelemen, Charles Siler

-0- Feb/01/2012 20:24 GMT

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net -0- Feb/01/2012 19:10 GMT


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