Sand not oil is the new gold
Amid the gloom and doom that’s set in all along America’s shale fields these past two years, there has been one small, but consistent, bright spot. Sand, it turns out, is a much greater tool in hydraulic fracking than drillers had understood it to be. Time and again, they’ve found that the more grit they pour into horizontal wells -- seemingly regardless of how extreme the amounts have become -- the more oil comes seeping out.
The message from drillers is “more, more, more sand,” said Sean Meakim, an oil-services analyst at JPMorgan Chase & Co. “All of the numbers are going up and they’re going up dramatically.”
U.S. Silica’s shares have more than doubled this year, while Fairmount Santrol Holdings Inc. tripled. Hi-Crush Partners LP rose 116 percent and Emerge Energy Services LP climbed 103 percent. In comparison, oil exploration and production companies in the S&P 500 rose 14 percent, while those in a broad oil-services index are little changed.
“People are uber uber bullish on sand,” said Matthew Johnston, an oil-services analyst at Nomura Securities. “I get it. I understand where all the euphoria is coming from.”
