Atlas Energy Solutions Inc. (NYSE: AESI) (“Atlas” or the
“Company”) today announced that the commissioning of the Dune
Express, a 42-mile long, fully electric conveyor system that is
expected to transform proppant logistics in the Permian Basin,
began early this week. The system remains on-time and on-budget
with the commercial transportation of proppant into the Delaware
Basin scheduled to begin in late Q4. Additionally, the Company
expects higher plant operating expenses to cause third quarter 2024
operating results to fall below prior guidance. The Company now
expects third quarter 2024 revenue will be between $300 and $310
million with adjusted EBITDA of $70 to $75 million. Proppant sales
volumes are expected to be approximately 6.0 million tons. The
Company also expects to book an asset write-down of approximately
$9 million related to one of its dredge mining assets.
“Following the rebuild of the feed system at our Kermit facility
that was completed in July, our focus has turned to the
commissioning of the Dune Express and ensuring that our mining
operations are optimized to produce the increased volumes we expect
to provide our customers in the Delaware Basin next year. The
incident at our Kermit operation catalyzed a full review of all
plant systems and processes by our new operational leadership team,
which revealed multiple opportunities for improvement.
Additionally, during the quarter, one of our new dredges at the
Kermit mine was severely damaged during the commissioning process,
resulting in a total loss. The second dredge is currently operating
and feeding the plant at reduced levels. Based on the performance
of the new dredge models year-to-date, we have made the decision to
shift to a well-known domestic dredge manufacturer with a
multi-year track record of strong performance at our Kermit
dredging operation. This partnership will enable a fully domestic
supply chain with improved spare part lead times and local
aftermarket support for our mining operations,” stated John Turner,
President and Chief Executive Officer.
“The execution of these process improvements, the re-start of
full mining operations, and the delays in dredge commissioning at
Kermit resulted in temporarily higher operating expenses than
originally anticipated. As we approach the end of the calendar
year, we expect the combination of E&P capital budget
exhaustion and higher costs at our Kermit plant as we work to
complete these key initiatives to result in fourth quarter
financial results that are roughly flat with those expected in the
third quarter. Additionally, we expect our average production costs
per ton to return to normalized levels by year-end, setting Atlas
up for improved financial performance in 2025. Despite the
weaker-than-expected operating results, Atlas’ balance sheet and
cash flow generation both remain in strong positions, which we
expect will enable us to further strengthen our return of capital
to shareholders.”
“While 2024 has been a transition year, highlighted by the
integration of Hi-Crush personnel and assets into our enterprise
and the construction of the Dune Express conveyor system, we
believe the hard work and investments made this year set up 2025 as
a break-out year for Atlas as the market leader in proppants and
logistics. Customer response to the imminent start-up of operations
on the Dune Express has been very positive, validating our
expectations for growth in both production and sales in 2025. With
the commissioning of the Dune Express commencing earlier this week,
these investments to ensure that our plant operations are optimized
to produce the incremental demand tonnage at our industry-low-cost
levels are imperative to the Atlas strategy. Ultimately, we expect
the investments made this quarter to further differentiate Atlas’s
position as the low-cost supplier of logistically advantaged
premium proppant in the Permian Basin during 2025 and beyond. We
are just months away from beginning to realize our goal of taking
thousands of trucks off public roads, making the Permian Basin a
safer, more reliable, and environmentally cleaner place to live and
work.”
The Company will announce third quarter results in a press
release issued after market close on Monday, October 28, 2024, and
will conduct a conference call on Tuesday, October 29, 2024, at
9:00 a.m. Central Time (10:00 a.m. Eastern Time). Individuals
wishing to participate in the conference call should dial
877-407-4133. A live webcast will be available at
https://ir.atlas.energy/.
About Atlas Energy Solutions
Atlas Energy Solutions Inc. is a leading proppant producer and
proppant logistics provider, serving primarily the Permian Basin of
West Texas and New Mexico. We operate 14 proppant production
facilities across the Permian Basin with a combined annual
production capacity of 29 million tons, including both large-scale
in-basin facilities and smaller distributed mining units. We manage
a portfolio of leading-edge logistics assets, which includes our
42-mile Dune Express conveyor system, which is currently under
construction and is scheduled to come online in the fourth quarter
of 2024. In addition to our conveyor infrastructure, we manage a
fleet of 120 trucks, which are capable of delivering expanded
payloads due to our custom-manufactured trailers and patented
drop-depot process. Our approach to managing both our proppant
production and proppant logistics operations is intently focused on
leveraging technology, automation and remote operations to drive
efficiencies.
We are a low-cost producer of various high-quality, locally
sourced proppants used during the well completion process. We offer
both dry and damp sand, and carry various mesh sizes including 100
mesh and 40/70 mesh. Proppant is a key component necessary to
facilitate the recovery of hydrocarbons from oil and natural gas
wells.
Our logistics platform is designed to increase the efficiency,
safety and sustainability of the oil and natural gas industry
within the Permian Basin. Proppant logistics is increasingly a
differentiating factor affecting customer choice among proppant
producers. The cost of delivering sand, even short distances, can
be a significant component of customer spending on their well
completions given the substantial volumes that are utilized in
modern well designs.
We continue to invest in and pursue leading-edge technologies,
including autonomous trucking, digital infrastructure, and
artificial intelligence, to support opportunities to gain
efficiencies in our operations. To this end, we have recently taken
delivery of next-generation dredge mining assets to drive
efficiencies in our proppant production operations. These
technology-focused investments aim to improve our cost structure
and also combine to produce beneficial environmental and community
impacts.
While our core business is fundamentally aligned with a lower
emissions economy, our core obligation has been, and will always
be, to our stockholders. We recognize that maximizing value for our
stockholders requires that we optimize the outcomes for our broader
stakeholders, including our employees and the communities in which
we operate. We are proud of the fact that our approach to
innovation in the hydrocarbon industry while operating in an
environmentally responsible manner creates immense value. Since our
founding in 2017, our core mission has been to improve human
beings’ access to the hydrocarbons that power our lives while also
delivering differentiated social and environmental progress. Our
Atlas team has driven innovation and has produced industry-leading
environmental benefits by reducing energy consumption, emissions,
and our aerial footprint. We call this Sustainable Environmental
and Social Progress.
We were founded in 2017 by Ben M. “Bud” Brigham, our Executive
Chairman, and are led by an entrepreneurial team with a history of
constructive disruption bringing significant and complementary
experience to this enterprise, including the perspective of
longtime E&P operators, which provides for an elevated
understanding of the end users of our products and services. Our
executive management team has a proven track record with a history
of generating positive returns and value creation. Our experience
as E&P operators was instrumental to our understanding of the
opportunity created by in-basin sand production and supply in the
Permian Basin, which we view as North America’s premier shale
resource and which we believe will remain its most active through
economic cycles.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Statements
that are predictive or prospective in nature, that depend upon or
refer to future events or conditions or that include the words
“may,” “assume,” “forecast,” “position,” “strategy,” “potential,”
“continue,” “could,” “will,” “plan,” “project,” “budget,”
“predict,” “pursue,” “target,” “seek,” “objective,” “believe,”
“expect,” “anticipate,” “intend,” “estimate” and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. Examples of forward-looking statements include, but are
not limited to, timing expectations and costs associated with the
execution of process improvements at the Kermit facility; expected
production volumes; the ultimate impact of the incident on Atlas’s
future performance, operations and operating expenses; our business
strategy, industry, future operations and profitability, expected
capital expenditures and the impact of such expenditures on our
performance, statements about our financial position, production,
revenues and losses, our capital programs, management changes,
current and potential future long-term contracts and our future
business and financial performance.
Although forward-looking statements reflect our good faith
beliefs at the time they are made, we caution you that these
forward-looking statements are subject to a number of risks and
uncertainties, most of which are difficult to predict and many of
which are beyond our control. These risks include but are not
limited to: uncertainty regarding the ultimate cost and time needed
to execute the desired process improvements at our production
facilities; unexpected future capital expenditures; uncertainties
as to whether the Hi-Crush Acquisition will achieve its anticipated
benefits and projected synergies within the expected time period or
at all; Atlas’s ability to integrate Hi-Crush Inc.’s operations in
a successful manner and in the expected time period; commodity
price volatility, including volatility stemming from the ongoing
armed conflicts between Russia and Ukraine and Israel and Hamas;
increasing hostilities and instability in the Middle East; adverse
developments affecting the financial services industry; our ability
to complete growth projects, including the Dune Express, on time
and on budget; the risk that stockholder litigation in connection
with our recent corporate reorganization may result in significant
costs of defense, indemnification and liability; changes in general
economic, business and political conditions, including changes in
the financial markets; transaction costs; actions of OPEC+ to set
and maintain oil production levels; the level of production of
crude oil, natural gas and other hydrocarbons and the resultant
market prices of crude oil; inflation; environmental risks;
operating risks; regulatory changes; lack of demand; market share
growth; the uncertainty inherent in projecting future rates of
reserves; production; cash flow; access to capital; the timing of
development expenditures; the ability of our customers to meet
their obligations to us; our ability to maintain effective internal
controls; and other factors discussed or referenced in our filings
made from time to time with the U.S. Securities and Exchange
Commission (“SEC”), including those discussed under the heading
“Risk Factors” in Annual Report on Form 10-K, filed with the SEC on
February 27, 2024, and any subsequently filed Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K. Readers are cautioned
not to place undue reliance on forward-looking statements, which
speak only as of the date hereof. Factors or events that could
cause our actual results to differ may emerge from time to time,
and it is not possible for us to predict all of them. We undertake
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as may be required by law.
Information Regarding Preliminary Results
The preliminary estimated financial information contained in
this news release reflects management’s estimates based solely upon
information available to it as of the date of this news release and
is not a comprehensive statement of the Company’s financial results
for the three months ended September 30, 2024. The information
presented herein should not be considered a substitute for full
unaudited financial statements for the three months ended September
30, 2024, and should not be regarded as a representation by the
Company or its management as to its actual financial results for
the three months ended September 30, 2024. The ranges for the
preliminary estimated financial results described above constitute
forward-looking statements. The preliminary estimated financial
information presented herein is subject to change, and the
Company's actual financial results may differ from such preliminary
estimates and such differences could be material. Accordingly, you
should not place undue reliance upon these preliminary
estimates.
Non-GAAP Financial Measures
Adjusted EBITDA is a non-GAAP supplemental financial measure
used by our management and by external users of our financial
statements such as investors, research analysts and others to
assess our operating performance on a consistent basis across
periods by removing the effects of development activities and
provide views on capital resources available to organically fund
growth projects.
We define Adjusted EBITDA as net income before depreciation,
depletion and accretion, interest expense, income tax expense,
stock and unit-based compensation, loss on extinguishment of debt,
loss on disposal of assets, insurance recovery (gain), unrealized
commodity derivative gain (loss), other acquisition related costs,
and other non-recurring costs. Management believes Adjusted EBITDA
is useful because it allows management to more effectively evaluate
the Company’s operating performance and compare the results of its
operations from period to period and against our peers without
regard to financing method or capital structure. We exclude the
items listed above from net income in arriving at Adjusted EBITDA
because these amounts can vary substantially from company to
company within our industry depending upon accounting methods and
book values of assets, capital structures and the method by which
the assets were acquired.
This measure does not represent and should not be considered an
alternative to, or more meaningful than, net income or any other
measure of financial performance presented in accordance with GAAP
as measures of our financial performance. Adjusted EBITDA has
important limitations as an analytical tool because it excludes
some but not all items that affect net income, the most directly
comparable GAAP financial measure. Our computation of Adjusted
EBITDA may differ from computations of similarly titled measures of
other companies.
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version on businesswire.com: https://www.businesswire.com/news/home/20241010345981/en/
Kyle Turlington T: 512-220-1200 IR@atlas.energy
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