Ohio Frac Sand Company Covia Files for Chapter 11 Bankruptcy
In December 2017 Fairmount Santrol, an Ohio-based sand producer that sells frac sand to drillers in the Utica and Marcellus Shale, announced it would sell itself to another sand company–Unimin, a subsidiary of Belgium-based SCR-Sibelco–for $170 million and 35% ownership in the newly combined company (see OH Sand Producer Fairmount Santrol Merging w/Unimin in $170M Deal). The newly merged company was later renamed Covia. Earlier this week Covia filed for Chapter 11 bankruptcy.
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Fairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, recently released its fourth quarter and full year 2017 update. Sand is good in Buckeye State. Fairmount reports the company sold 43.8% more sand in 2017 than in 2016–a sure sign that drilling in the Marcellus/Utica spiked up in 2017. Fairmount made $53.6 million in 2017, versus loosing $140.2 million in 2016, which is another positive sign. According to CEO Jennifer Deckard, “Proppant demand remained robust during the fourth quarter.” This may be the last quarterly update we bring you from Fairmount. As you may recall, late last year the company announced it is selling itself to Unimin, a subsidiary of Belgium-based SCR-Sibelco (see 
Fairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, announced yesterday it has accepted an offer to sell itself to another sand company–Unimin, a subsidiary of Belgium-based SCR-Sibelco. Fairmount Santrol shareholders will get a $170 million payment and 35% ownership in the newly combined company. The new company will have revenues approaching $2 billion per year. Fairmount Santrol’s CEO, Jenniffer Deckard, is expected to become the CEO of the new company (the name of the new company has not yet been decided). However, make no mistake–Fairmount is selling itself. The board of directors for the new company will have 6 members picked by Unimim parent SCR-Sibelco and 4 members picked by Fairmount Santrol. The location of the headquarters is still up in the air. A lot of unknowns at this point. However, one thing that IS known is that this is a done deal…
Fairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, raised $161 million from a new stock offering in August (see 
Fairmount Santrol, an Ohio-based sand producer that sells sand as a proppant for use in Utica and Marcellus Shale drilling, released their preliminary second quarter 2016 results last week. Although the company expects to lose between $91-$93 million for the quarter (compared to a profit of $14.1 million a year ago), things are not all bad. Yes, it’s been tough for Fairmount and other companies in the oil and gas industry. Really tough. But Fairmount’s CEO Jenniffer Deckard, said this: “…we are also encouraged by the early signs of improvement we are seeing in the proppant market.” In other words, a crack of light is peeking through the door and we’re beginning to see the great slowdown in drilling come to an end…
Fairmount Santrol is a proppant manufacturer/supplier headquartered in Ohio. Proppants are things like sand and ceramic beads used to “prop open” tiny fractures created in hydraulic fracturing of shale oil and gas wells. In other words, Fairmount Santrol is a regional sand supplier for shale drillers–and a good proxy to understand what’s happening (or not happening) in our neck of the woods when it comes to drilling. If drillers aren’t drilling as much, that will show up first in the balance sheets of companies like Fairmount. And so it does. Fairmount reports in their first quarter 2016 update that revenues in 1Q16 were down 52% from 1Q15. But you can’t automatically assume that means there was half the drilling one year later. Fairmount also reports the volume of sand sold was down just 8% from 1Q15 to 1Q16. Why the discrepancy between revenue and volume? Fairmount doesn’t say, but we think we know: drillers have been putting the squeeze on supply chain companies like Fairmount, forcing them to deeply discount their prices…
Seems to us like folks in Kentucky swing more to the liberal side of the isle when it comes to opposing natural gas drilling and pipelines. Just our observation over time. We think they overreact to anything related to fracking and gas drilling. However, in this case, we don’t think they’re overreacting. It appears that 47 dumpsters full of concentrated frack waste from OH, PA and WV was illegally dumped in a Kentucky landfill in Estill County, KY. They were buried between last July and November, near as anyone can tell. And the landfill sits across the road from a school. Normal frack waste has extremely low (usually no) kind of radioactivity. But when drill cuttings are further processed and concentrated, as was the case with this series of loads, the naturally occurring radiation present can become more concentrated. There’s no indication of a problem at the landfill…no indication that it’s leaking radioactivity into the water table, etc. Radiation levels are being monitored and do not show anything above normal background levels. But still, somebody somewhere should have known this was happening. Local residents have a right to be up in arms over not being told…