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Pioneer Natural Resources Announces Acquisition of Carmeuse Industrial Sands
CIS is the number one producer of Hickory frac sand (Brady Brown®) used
as proppant for fracture stimulating oil and gas wells in the U.S.
Hickory sand is considered to be the highest quality brown sand for
fracture stimulation. CIS’ sand mine in
Pioneer’s annual demand for proppant to support the Company’s fracture
stimulation operations is forecasted to increase from 1.2 million tons
in 2012 to 1.6 million tons in 2015 as drilling activity continues to
ramp up in the Spraberry vertical, horizontal
The supply of brown sand is expected to continue to be tight as a result
of increasing shale play drilling, with the price of brown sand expected
to escalate further as the growth in demand for this proppant outpaces
new supplies. Other brown sand mines are primarily supplying large
service companies. White and resin coated sand alternatives are more
than two times and seven times the cost of
Assuming Pioneer could replace its current brown sand supply at market
prices and would have to substitute its incremental brown sand
requirements (300 thousand tons in 2013) with white sand due to lack of
brown sand availability, Pioneer estimates that it will save
The acquisition also provides Pioneer with significant upside potential.
First, output from the
CIS is led by a highly experienced and technically proficient management team with more than 150 years of experience in the industrial sands business. This management team has agreed to join Pioneer.
The acquisition will be funded from available cash and is expected to close late in the first quarter or early in the second quarter of 2012.
CIS’ other assets, which make up a relatively small portion of the
industrial sands business, include two outlets (
Telephone: Dial (877) 795-3599 confirmation code: 7784081 five minutes before the call. View the presentation via Pioneer’s internet address above.
A replay of the webcast will be archived on Pioneer’s website. A
telephone replay will be available through
Pioneer is a large independent oil and gas exploration and production
company, headquartered in
This news release contains forward-looking statements within the
meaning of the safe harbor provisions of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act. These
statements include any statement that does not relate strictly to
historical facts. In particular, statements, express or implied,
regarding the benefits of, and synergies from, the CIS acquisition and
Pioneer’s sand requirements, future growth opportunities and financial
condition and results of operation are forward-looking statements. These
forward-looking statements are based on management’s current plans,
expectations, estimates, assumptions and beliefs concerning future
events. While our management considers these plans, expectations,
estimates, assumptions and beliefs to be reasonable, they are inherently
difficult to predict and subject to a number of risks and uncertainties.
These risks and uncertainties include, but are not limited to, the
satisfactory completion of all conditions precedent to the closing of
the proposed CIS acquisition in accordance with the terms and conditions
of the purchase agreement, risks related to mineral estimates,
fluctuation of prices for sand and the risks discussed in the “Risk
Factors” sections of, as well as any other cautionary language in,
Pioneer’s public filings with the
Our pending CIS acquisition may not be consummated. The closing of the acquisition is subject to certain regulatory conditions and customary closing conditions, and the acquisition agreement may, in certain circumstances, be terminated.
Inaccuracies in estimates of mineral reserves and resource deposits could result in lower than expected supplies and sales and higher than expected costs. The proved reserve estimates contained in this news release have been calculated in compliance with the SEC’s Industry Guide 7 and are based on an independent review by mining and geological consultants engaged by CIS in 2011. However, commercial sand reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable. There are numerous uncertainties inherent in estimating quantities and qualities of commercial sand reserves and resources and costs to mine recoverable reserves, including many factors beyond Pioneer’s control. Estimates of economically recoverable commercial sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:
Pioneer Natural Resources
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