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Frac sand producer Hi-Crush pursuing bankruptcy amid flagging sales

Frac sand producer Hi-Crush pursuing bankruptcy amid flagging sales


One of Wisconsin’s largest sand mining companies plans to file for bankruptcy and says it may be forced to go out of business after losing nearly $147 million in the first three months of 2020 and seeing a sudden and sharp decline in sales with the ensuing pandemic.

Hi-Crush Inc. has shuttered three of its four Wisconsin sand mines amid a recession and glut of imported oil that have eroded demand for its sand, which is used in oil and gas drilling.

The first quarter losses announced Thursday include a $116.6 million write-off of the value of the Hi-Crush facility in Blair and $29 million in impairment of other assets.

Hi-Crush said it has reduced its workforce by about 60% since mid-March and closed mines in Blair and Whitehall. The Hi-Crush mine in Augusta has been closed since Jan. 2019.

The company says it is operating its facility in Wyeville — along with a mine in Texas — at reduced capacity.

In regulatory filings that Hi-Crush said were delayed by the COVID-19 pandemic, the company said it is negotiating with holders of unsecured loans for a prearranged bankruptcy filing; however, Hi-Crush said it expects to file bankruptcy even if no agreement is reached.

In the quarterly report to the Securities Exchange Commission, Hi-Crush said current conditions and events “indicate that there is substantial doubt about the Company’s ability to continue as a going concern” within the next year.

Hi-Crush in November devalued two of its Wisconsin mines by more than $215 million.

Global oil prices plunged in March when the 13-member Organization of Petroleum Exporting Countries flooded the market in a price war with Russia just as the COVID-19 crisis was sending economies into recession, which oilfield supply chain analyst Joseph Triepke called “a two-headed black swan event” for frac sand producers.

Triepke, president of Infill Thinking, said it was “a devastating blow” to an industry already weakened by increased competition and a move toward using cheaper sand mined near oilfields.

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