Atlas Energy Solutions Inc. to Acquire Hi-Crush Inc., Creating the Largest Proppant Producer in the Country and an Industry Leading Logistics Provider
The transaction consideration includes
Acquisition Highlights
- Combination brings together two of the leading innovators in the Permian proppant space, and two of the largest holders of premium giant open dune sand reserves and resources in the Permian
- Pro forma production capacity expected to be ~28 million tons, with ~80% of pro forma 2024 production capacity contracted, accelerating free cash flow generation and shareholder returns
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Adds ~12 mmtpy of production capacity (~5 million tons in
Kermit, TX , proximal to Atlas's existingKermit facilities and ~7 million tons from OnCore’s distributed mining network) (2) -
We expect the acquired assets to contribute
$110-125 million in Adjusted EBITDA in 2024, which implies on a full run-rate basis, a valuation of approximately 3x 2024 Adjusted EBITDA. - Broadens Atlas’s logistics offering through the addition of Pronghorn, a leading multi-basin provider of proppant logistics and wellsite services
- Estimated to be immediately double-digit accretive to CFPS and EPS (3)
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Expected to realize more than
$20 million in annual synergies by 2026 - Acquisition maintains low and flexible operating cost structure and a strong margin profile
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Combines Atlas’s
Delaware Basin -leading logistics offering (Dune Express) with Hi-Crush’sMidland Basin -leading logistics offerings (Oncore + Pronghorn) to drive significant operational efficiencies - The transaction is expected to close before the end of the first quarter of 2024
Pro Forma Estimated 2024 Outlook
The transaction has an effective date of
On a combined basis, we'll have 28 million tons of available production capacity, increasing to about 29 million tons in 2025 with a full year's contribution and the benefit of these additional Oncore deployments. As our contracted volumes and Permian activity levels remain strong, and completions efficiencies continue to compound proppant usage, we expect to continue to operate at 85% to 90% utilization going forward. Taking into account Hi-Crush’s contracts, we expect our sand prices for 2024 to average between
Financing Details
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Our ABL facility has been amended to, among other things increase the maximum borrowing availability to
$125 million . Atlas intends to draw~$50 million at closing -
Our Stonebriar Term Loan has been amended to, among other things install a new
$150 million Acquisition Term Loan to be drawn at closing - Atlas will use a combination of the above debt facilities to fund the cash component of the up-front purchase price and to add cash to the balance sheet to fund capital expenditures associated with Hi-Crush’s near-term investments in Oncore #8 and #9
- The number of shares to be issued to the seller at closing will be 9,711,432, as calculated pursuant to a 10-day volume weighted average share price as defined in the Merger Agreement
Advisors
Conference Call
The Company will host a conference call to discuss the transaction along with financial and operational results on
The Company will also post an updated investor presentation titled “Hi-Crush Acquisition Presentation”, at https://ir.atlas.energy/ in the "Presentations” section under “News & Events” tab on the Company’s Investor Relations webpage prior to the conference call.
About Atlas Energy Solutions
Our company was founded in 2017 by long-time E&P operators and led by
Atlas is a leader in the proppant and proppant logistics industry and is currently solely focused on serving customers in the
Our core mission is to maximize value for our stockholders by generating strong cash flow and allocating our capital resources efficiently, including providing a regular and durable return of capital to our investors through industry cycles. Further, we recognize that our long-term profitability is maximized by being good stewards of the environments and communities in which we operate. In our pursuit of this mission, we work to improve the processes involved in the development of hydrocarbons, which we believe will ultimately contribute to providing individuals with access to the energy they need to sustain or improve their quality of life in a clean, safe, and efficient manner. We take great pride in contributing positively to the development of the hydrocarbons that power our lives.
About Hi-Crush
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are predictive or prospective in nature, that depend upon or refer to future events or conditions or that include the words “may,” “assume,” “forecast,” “position,” “strategy,” “potential,” “continue,” “could,” “will,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements about the anticipated financial performance of Atlas following the transaction; the expected synergies and efficiencies to be achieved as a result of the transaction; expected accretion to free cash flow, cash flow per share, Adjusted EBITDA and earnings per share; expected production volumes; expectations regarding the leverage and dividend profile of Atlas following the transaction; expansion and growth of Atlas’s business; Atlas’s plans to finance the transaction; and the receipt of all necessary approvals to close the transaction and the timing associated therewith; our business strategy, our industry, our future operations and profitability, expected capital expenditures and the impact of such expenditures on our performance, statements about our financial position, production, revenues and losses, our capital programs, management changes, current and potential future long-term contracts and our future business and financial performance.
Although forward-looking statements reflect our good faith beliefs at the time they are made, we caution you that these forward-looking statements are subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include but are not limited to: the completion of the transaction on anticipated terms and timing or at all, including obtaining any required governmental or regulatory approval and satisfying other conditions to the completion of the transaction; uncertainties as to whether the transaction, if consummated, will achieve its anticipated benefits and projected synergies within the expected time period or at all; Atlas’s ability to integrate Hi-Crush’s operations in a successful manner and in the expected time period; the occurrence of any event, change, or other circumstance that could give rise to the termination of the transaction; risks that the anticipated tax treatment of the transaction is not obtained; unforeseen or unknown liabilities; unexpected future capital expenditures; potential litigation relating to the transaction; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; the effect of the announcement, pendency, or completion of the transaction on the parties’ business relationships and business generally; risks that the transaction disrupts current plans and operations of Atlas or Hi-Crush and their respective management teams and potential difficulties in retaining employees as a result of the transaction; the risks related to Atlas’s financing of the transaction; potential negative effects of this announcement and the pendency or completion of the transaction on the market price of Atlas’s common stock or operating results; commodity price volatility, including volatility stemming from the ongoing armed conflicts between
Non-GAAP Financial Measures
This press release includes or references certain forward-looking financial measures not prepared in conformity with generally accepted accounting principles (“GAAP”), including free cash flow, cash flow per share, Adjusted EBITDA and earnings per share. Because Atlas provides these measures on a forward-looking basis, it cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward-looking GAAP financial measures, such as Gross Profit, Net Income, Operating Income, or any other measure derived in accordance with GAAP. Accordingly, Atlas is unable to present a quantitative reconciliation of such forward-looking, non-GAAP financial measures to the respective most directly comparable forward-looking GAAP financial measures. Atlas believes that these forward-looking, non-GAAP measures may be a useful tool for the investment community in comparing Atlas’s forecasted financial performance to the forecasted financial performance of other companies in the industry.
No Offer or Solicitation
This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
(1) |
The Transaction excludes Hi-Crush’s |
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(2) |
Oncore’s distributed mining network of mobile proppant production assets currently includes Oncore #1-7, which are currently producing sand and Oncore #8, which is scheduled to open during the second quarter of 2024. |
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(3) |
CFPS = Net income plus depreciation, depletion and amortization divided by shares outstanding ; EPS = Earnings per share. |
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Atlas Investor Contact
T: 512-220-1200
IR@atlas.energy
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