1. The Simple Secret
to America’s Shale Revolution

2. The Spectacular Success of Shale Drilling
InSince 2008, US oil
production has
climbed by more than
3 million barrels per
day to the highest
levels in 25 years.
Much of that change
has been from shale
drilling

3. The Spectacular Success of Shale Drilling
Production in
the most popular
oil shale plays
should increase
by another 1.5
million barrels
per day by 2020
Does not include
shale gas or
prospective
plays

4. Photo Source: NASA
Decades of Drilling Left!

5. What Has Made it So Successful?
Photo Source: NASA
Shale drillers have been developing a better
understanding of how shale wells produce over
time, adjusting their operations along the way.
The largest impact on well performance has been
the result of more proppant use

6. What is Proppant?
…SAND!!!
The same stuff we used to play in as kids…

7. Factors Influencing Proppant Use
Photo Source: NASAPhoto Credit: Wes Peck via Flickr. com
• 2014: Wells per rig projected to increase 10% since 2012
• Lateral lengths in the Bakken have doubled in past 5 years, similar
figures from other basins
• 2009-2014: Companies have gone from single frac per well to as
many as 40 frac stages per well
• 2013-2014: Average proppant used per well increased from 2,500
tons per well to 8,000 tons

8. Proppant Demand Forecast
Compounded annual growth rate of >10% for next 10 years
Photo Source: NASA

9. Who Are the Big Players?
Photo Source: NASA

10. US Silica Holdings (NYSE: SLCA)
Photo Source: NASA

11. US Silica Holdings
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
What you Need to Know:
• Biggest sand producer: 8.2 million tons sand delivered in 2013
• Contracts with largest oil services companies: Halliburton,
Schlumberger, Nabors Industries
• EBITDA CAGR greater than 33% over past 5 years.
• Large supplier of industrial silica for specialty products (50% of
volume shipped in FY 2013)

12. Hi-Crush Partners LP (NYSE: HCLP)
Photo Source: NASA

13. Hi-Crush Partners LP
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
What you Need to Know:
• Quickly ramping up activity: Contract sales for 2015 at 4 million tons,
166% greater than FY 2013
• Long term contracts in place: 5 year agreement with Weatherford, 6
year contract with Baker Hughes
• EBITDA has grown 4.8 times since FY 2011 (founded in 2010)
• Strong cash flow: Distribution coverage ratio of 1.15 for Q1 2014 pre-
equity issuance

14. Emergy Energy Services (NYSE: EMES)
Photo Source: NASA

15. Emerge Energy Services
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
What you Need to Know:
• Production growing fast: 7.3 million tons of capacity brought online
in 2 years, another 4 million awaiting permitting
• Also has refined fuels distribution segment ( 76% of revenue, but
22% of operating income in Q1 2014, sand business growing faster
than fuel segment)
• Variable rate Master Limited Partnership: gives out 100% of
distributable cash flow at end of quarter.
• Big push into Canadian shale: Of three sand producers on list, only
one with rail trans loading sites in Canada

16. Carbo Ceramics (NYSE: CRR)
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
• Oil Services specialist, designs products and services designed to
optimize well productivity from hydraulic fracturing
• Major producer of ceramic proppant
Why Ceramic?

17. Why Ceramic?
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
Works better in high-pressure environments (offshore drilling fields/
onshore depths greater than 10,000 ft) than sand

18. Carbo Ceramics
Photo Source: NASA
Photo Credit: Wes Peck via Flickr. com
What you Need to Know:
• Ceramic use taking off in certain geographies. Ceramic proppant as
% of volume in Bakken has increased from <5% in 2008 to >40%.
• Producing noticeable results in elsewhere. Ceramic wells have 20%-
60% better 3 month production per lateral foot in Eagle Ford
• Growing dividend by 16% annually since 2005
• Currently limited by ceramic proppant manufacturing. 625,000 tons
of ceramic production awaiting permits

19. What does this all mean to me?
Better well results from increased proppant use in hydraulic fracturing
likely means we will see strong demand for sand and ceramic
proppant for several years to come. U.S. Silica, Hi-Crush, Emerge, and
Carbo are all growing production fast, but demand is growing faster.
This means that there is plenty of room for these companies to grow in
proppant industry without too much risk of over capacity. All of these
companies have stable, long term contracts in place and have been
acquiring smaller players in industry to consolidate, so each are in a
unique position to succeed over next several years.
Photo Source: NASA

20. OPEC’s Worst
Nightmare…