(Reuters) - Frac sand miner U.S. Silica Holdings (SLCA.N) reported a bigger-than-expected quarterly profit on Tuesday, as it transported and sold more sand to U.S. shale producers, sending its shares up as much as 20%.
The company’s Sandbox unit, which saw a 14% sequential increase in sand loadings, provides transportation and storage facilities for proppant used in fracking in the oil and gas industry.
The Katy, Texas-based company estimates it had a 27% market share for the unit in the quarter ended June 30 and is looking to expand its uses in both oilfield and non-oilfield industries.
The company sold 3.9 million tons of sand to oil and gas companies in the second quarter, an increase of 13% over last year, helped by a ramp up at its West Texas capacity.
U.S. oil producers, which have been spending and drilling less as investors focus on returns, have shifted focus to drilling longer lateral wells requiring more sand and pumping in more proppant per well to wring out as much oil as possible at cheaper prices.
Frac sand is mixed in a slurry and forced at high pressure into wells to free oil and gas trapped in rocks.
U.S. Silica expects volumes in its oil & gas unit to rise by about 10% sequentially in the third quarter and now projects annual capital expenditures to be about $125 million, at the top end of their previous outlook.
The company’s net income fell to $6.2 million, or 8 cents per share, in the three months ended June 30, from $17.6 million, or 22 cents per share, a year earlier.
Excluding one-time items, the company earned 14 cents per share, beating analysts’ estimates of 4 cents per share according to IBES data from Refinitiv.
Total sales fell 7.6% to $394.9 million.
Shares of the company were up about 10% at $11.31 in morning trade.
Reporting by Taru Jain; Editing by Shailesh Kuber