Southlake-based fracking sand and fuel supplier Emerge Energy reported a net loss of $11.9 million, or $0.49 per diluted unit for the three months ended Sept. 30. Revenues were $ 176.3 million, down from $ 296.3 million a year earlier.
“The third quarter reflected a continued challenging market, with significant downward pressure on pricing for frac sand and refined fuels as rig counts and oil prices continue to decline,” said Ted W. Beneski, chairman of the board of directors of the general partner of Emerge Energy. “We also expect drilling and well completion activity levels, based on indications from our customers and other industry sources, will be extremely weak in the fourth quarter of this year. While we do ultimately expect a recovery in the frac sand market, we now expect that any market recovery in our frac sand business will occur during the second half of 2016 or, potentially, not until 2017.”
Despite the results, company officials said during its earnings conference call that it was looking at acquisition opportunities and/or a merger in the sand fracking business as other firms in the same business are also facing challenges.
There has also been interest in the company’s fuel business, according to company officials.
The company will also be introducing a new technology, a technically advanced proppant to the oil and gas industry. SandGuard, which the company says will improve the handling, inner-basin management and job-site implementation of the hydraulic fracturing of oil and gas wells. It will be on the market soon and should give the company a better product than other proppants on the market.
“Our fuel segment also had a challenging third quarter, primarily driven by declining oil prices,” said Beneski. “We have begun work on two hydrotreater facilities which will allow us to remove sulfur from our transmix diesel so that it can be sold at a premium into the on-road market for ultra low sulfur diesel beginning next spring. We expect margins in the fourth quarter of 2015 to improve significantly over the third quarter, as we expect the market for petroleum products to be more stable in the quarter and we have a solid solution in place for dealing with our transmix diesel.”