OilPrice.com Market Commentary: As Saudi Arabia cuts even more oil than promised, U.S. shale production is up by 176,000 barrels per day-but it's the frac sand industry that will feel the real revolution, and
But the U.S. shale rebound started even before the historical OPEC deal-so we're already running out of time to get in on the frac sand euphoria.
Last week, the Saudis said they had cut production to
The shale rebound started when no one expected the OPEC deal to become a reality, and now that it is and the market is starting to rebalance, things are about to go much further. The EIA sees U.S. production for December coming in at 320,000 barrels per day more for the year, with production reaching 9.22 million barrels per day as of the end of 2016.
And even this is probably conservative.
But it's not just about OPEC-it's about the 'Mega Frac'-the frac of all fracs that requires a ton of sand and is making it possible for U.S. shale operators to produce in any kind of market.
Hydraulic fracturing involves injecting highly pressurized water and sand into a well, widening the tiny fractures created by the water and sand blast so that more crude oozes from the shale rock. As U.S. producers create more fractures in rock to get ore oil and gas out, they need the 'Mega Frac', which requires mega sand to keep the fractures open.
Producers are now using more sand, or proppants, per well than anyone ever imagined, bringing the frac sand sub-sector to the forefront of oil and gas investing in a very urgent and dramatic way.
So the bottom-line situation is this: While frac sand companies are at the center of the U.S. shale rebound, unique micro-cap sand miners like Select Sands (
Here are 3 reasons to keep a close eye on Select Sands (SNS.V) (SLSDF) and its substantial permitted quarry in Arkansas containing a desirable mix of Premium Tier 1 "Ottawa White" high purity 40/70 and 100 mesh silica.
#1 Most Explosive Oil & Gas Sub-Sector
Credit Suisse predicts a 50 percent increase on 2015 demand and is eyeing 62.8 million tons of frac sand demand in 2018. In 2017, we could be looking at 49.4 million tons.
By 2018, according to Credit Suisse analysts, sand volumes used in fracking will surpass the boom levels of 2014, making frac sand the "fastest-growing sub-segment" in the oilfield services and equipment market.
It's been great for frac sand stocks, with U.S. Silica (NYSE:
#2 Preparing for 'Mega Demand'
Not only have frac sand stocks had a great few months, but the fundamentals behind that surge are clear and present. Smart...