Over the last few years, investors have witnessed the U.S. become a dominant force in the crude oil and natural gas space, thanks in part to rapid development in technologies. The use of hydraulic fracturing, or fracking, has boomed in recent years, as the technology has made it possible to reach significant oil and gas resources that had previously demonstrated a poor flow rate and weren’t economically accessible [for more commodity news and analysis subscribe to our free newsletter].
The process, which involves propagating the fractures in a rock layer using pressurized fluids in order to release oil and gas, utilizes several key components – one of them being sand. And thanks to the rapid growth in fracking, companies that provide this key component have benefited tremendously.
For those wanting to tap into the growing industry, we highlight some of the top players in the sand space [see 10 Ways To Invest In Fracking]:
Hi-Crush Partners Lp (HCLP)
This Houston-based company is a major producer of monocrystaline sand, a mineral that is used to enhance the recovery rates of hydrocarbons from oil and natural gas wells. The company also offers raw frac sand, which is used in hydraulic fracturing operations. HCLP has a market capitalization of just over $916 million and an average trading volume of roughly 187,600 shares; the stock also features a rather attractive dividend yield of 6.4%.
U.S. Silica Holdings, Inc (SLCA)
Founded more than 100 years ago, this holdings company engages in the mining and processing of commercial silica – yet another mineral that can be used as fracturing sand in oil and natural gas wells. As of February 26, 2013, SLCA had approximately 307 million tons of proven and probable recoverable mineral reserves. In a recent report, the company stated that it expects to double EBITDA earnings by 2016, a rather compelling trajectory for investors wanting to make a play on the company [see A Closer Look At EIA’s Latest Short-Term Energy Outlook].
Carbo Ceramics, Inc. (CRR)
Another Houston-based firm, Carbo Ceramics manufactures resin-coated ceramic and resin-coated sand proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. Over the last five years, the company has increased its proppant capacity by over 60%. Currently, Carbo has a market cap $2.8 billion and a trading volume of just over 315,000. Investors should also note that Carbo Ceramics is debt-free, meaning it maintains a debt to equity ratio of zero.
EOG Resources (EOG)
This independent oil and gas firm is one of the leaders in the industry. In an effort to minimize costs and increase production, EOG has invested billions into developing its own fracing sand as well as expanding its crude-by-rail infrastructure. According to EOG’s CEO, being a self-supplier of sand has saved the company $500,000 in costs on the average $7.5 million well (EOG drills approximately 600 wells a year). EOG’s market cap is currently $45.5 billion; the stock has an average volume of over 1.7 million [see A Visualization of U.S. Crude Oil Production].
Disclosure: No positions at time of writing