CAPITAL MARKETS AND OTHER FINANCING OPPORTUNITIES FOR FRAC SAND PRODUCERS

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1 CAPITAL MARKETS AND OTHER FINANCING OPPORTUNITIES FOR FRAC SAND PRODUCERS Ryan J. Maierson OCTOBER 2014

FRAC SAND MARKET DEMAND TRENDS Capital Spending (n US$ millions) 1,000,000 900,000 800,000 700,000 600,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 United States Canada Outside North America 100 2005 2007

GROWTH EXPECTED - MAJOR NEW WELLS CONTINUE TO BE DRILLED - UTICA, AND NIOBRARA - UPCOMING SHALE PLAYS THAT

2 FRAC SAND MARKET DEMAND TRENDS Capital Spending (n US$ millions) 1,000, , , , , , , , , ,000 Actual Estimates Forecast United States Canada Outside North America LARGE PLAYS HAVE MAJORITY OF THE ACTIVITY - BAKKEN, EAGLE FORD, PERMIAN - CONTINUED GROWTH EXPECTED - MAJOR NEW WELLS CONTINUE TO BE DRILLED - UTICA, AND NIOBRARA - UPCOMING SHALE PLAYS THAT MAY EXPERIENCE LARGE GROWTH - MARCELLUS HAS STABILIZED FOR NOW Sources: Barclays Capital, Hi-Crush Partners, Market Realist 2

AGO FRAC SAND DEMAND WILL INCREASE BY 300% BETWEEN NOW AND 2016 RESIN COATED SAND

3 PROPPANT DEMAND DRILLERS NOW USING APPROXIMATELY MILLION TONS OTHER CERAMICS YEAR US FRAC SAND DEMAND x AS MUCH SAND PER WELL STAGE COMPARED TO TWO YEARS AGO FRAC SAND DEMAND WILL INCREASE BY 300% BETWEEN NOW AND 2016 RESIN COATED SAND FRAC SAND Source: Hi-Crush Partners, LP Investor Presentation, Financial Press,

4 OILFIELD SERVICES IPOS: 2010-PRESENT Issuer Prelim Prospectus Price Range IPO Price 2014 FMSA Holdings, Inc. $21.00-$24.00 $16.00 Independence Contract Drilling, Inc. $14.00-$16.00 $11.00 North Atlantic Drilling $8.50-$10.00 $9.25 CHC Group Ltd. $12.00-$14.00 $10.00 Cypress Energy Partners, L.P. $19.00-$21.00 $ Emerge Energy Services LP $19.00-$21.00 $17.00 USA Compression Partners, LP $19.00-$21.00 $18.00 Frank's International N.V. $19.00-$21.00 $ Seadrill Partners LLC $20.00-$22.00 $22.00 Hi-Crush Partners LP $19.00-$21.00 $17.00 Forum Energy Technologies Inc. $18.00-$20.00 $20.00 MRC Global Inc. $21.00-$23.00 $21.00 U.S. Silica Holdings, Inc. $16.00-$18.00 $ C&J Energy Services Inc. $25.00-$28.00 $ OFS IPOs since out of 17 (41.2%) OFS IPOs have been MLPs MLP IPOs continue to be in demand Non-Traditional MLPs Frac Sand Environmental Solutions Compression Traditional & Variable MLPs Since 2010, the number of variable MLPs has grown from 2 to 10 CompresscoPartners, L.P. $19.00-$21.00 $20.00 NGL Energy Partners LP $19.00-$21.00 $ SinoTech Energy Ltd. $7.50-$9.50 $8.50 Global Geophysical Services Inc. $15.00-$17.00 $12.00 Sources: IPO Vital Signs, SEC.gov 4

5 DEBT & EQUITY OFFERINGS BY OFS COMPANIES Follow-On Equity Offerings H OFS equity offerings with a total deal value over US$1.5 billion High Yield Debt Offerings H OFS debt offerings with a total deal value over US$7.6 billion Source: Thomson Financial 5

6 HISTORY OF MLPS IPOS: CQP SXCP Primary Industry at IPO: USAC PET MAR FFP Exploration and Production Refining Midstream Wholesale Distribution Shipping Other Fertilizer Coal Propane Timber General Partner/Holding Co. SPH NRP XTEX XTXI USS EPE TGP WPZ TLP PVG NSH MGG HHGP ETE BGH AHGP AHD RGNC EXLP NRGP EROC TOO CLMT LINE OSP NMM CPLP SEP NGLS EPB DEP CMLP CEQP BKEP RGP RNO OXF KMI NGL UAN RNF GMLP GSJK RRMS OILT NRGM TLLP WGP HCLP SDLP SUSP LGP SXE SMLP MPLX EQM OCIR OCIP EMES KNOP DLNG WPT WNRL FELP VLP TEP SRLP QEPM PSXP PAGP MEP CELP RIGP HMLP GLOP JPEP CNNX VTTI WGP CRO NPL NRGY SXL KSP HLND EVEP VNR PNG AMID DKL FISH PBFX VAL SFL PCL FGP ETP PVR PPX STON GLP CEP QELP WMZ NKA MEMP NTI ARCX ENBL BCU HWY KPP TPP UAN LEV TNH SGU CNO PAA ARLP NS MWE HEP DPM BBEP LGCY WES CHKM MCEP ALDW CVRR WLKP CAL MRP EPR PDE EEP KMP OKS EOT APU GEL TIMBZ EPD TCLP APL MMP MMLP DMLP CPNO BWP ATN ENP PSE QRE LRE PDH NSLF VNOM Years Corporate IPO 6

7 OILFIELD SERVICES MLP IPOS (2010-PRESENT) GSJK NGL USAC HCLP EMES CELP Source: SEC 7

8 OILFIELD SERVICES MLPS There has been an increase in non-traditional Master Limited Partnerships (MLPs), including several in the oilfield services industry Frac Sand >Hi-Crush Partners August 2012 >Emerge Energy Services May 2013 Saltwater Disposal >Cypress Energy Partners January 2014 Compression >USA Compression January 2013 In addition, traditional MLPs have been acquiring assets and entities outside their historical businesses that provide oilfield services Ferrellgas acquisition of Sable Environmental for US$124.7 million in May 2014 Ferrellgas announced acquisition of C&E Production for US$42 million in September 2014 NGLEnergy Partners acquisition of SWDand hauling business from Oilfield Water Lines for US$239 million in August 2013 NGLEnergy Partners acquisition of 5 SWDsin the Eagle Ford shale and Permian Basin for US$83 million in July 2014 Source: SEC 8

SELECT SAND PROVIDER IPO CASE STUDIES U.S. Silica Holdings, Inc.

9 SELECT SAND PROVIDER IPO CASE STUDIES U.S. Silica Holdings, Inc. US$200 million January 2012 Hi-Crush Partners LP US$191 million August 2012 Emerge Energy Services LP US$127.5 million May 2013 FMSA Holdings, Inc. US$400 million October 2014 Source: SEC 9

10 CAPITAL MARKETS ACTIVITY: US SILICA HOLDINGS, INC. IPO US Silica Holdings, Inc. (NYSE: SLCA) completed its initial public offering in January 2012 Company Overview The first IPO in the frac sand industry SLCA is a producer of industrial minerals, including: sand proppants whole grain silica ground silica fine ground silica calcined kaolin clay aplite clay SCLAalso operates as a research and development specialist for customized products and solutions utilizing the same raw materials across other industries SCLAoperates nine industrial sand production plants and seven oil and gas sand production plants located in Sparta, WI, Rockwood, MI, Rochelle, IL, Ottawa, IL, Pacific, MO, Mill Creek, OK and Voca, TX (Cadre). Source: SEC 10

11 CAPITAL MARKETS ACTIVITY: US SILICA HOLDINGS, INC. IPO (CONT D) Transaction Overview Price per share: $17.00 Number of shares: 11,764,705 (13,529,411 with shoe) Gross Proceeds: $200 million Price performance since IPO Current Price: $42.45 IPO Price: $17.00 Sources: MarketWatch, Bloomberg 11

12 CAPITAL MARKETS ACTIVITY: HI-CRUSH PARTNERS IPO Hi-Crush Partners LP (NYSE: HCLP) completed its initial public offering in August 2012 Company Overview First sand producer to use the MLP structure HCLP is a pure play, low-cost, domestic producer and supplier of premium monocrystalline sand, a specialized mineral that is used as a proppant ( frac sand ) to enhance the recovery rates of hydrocarbons from oil and natural gas wells HCLP owns, operates, acquires and develops sand reserves and related processing and transportation facilities. HCLP has facilities in Wyeville, Wisconsin and Augusta, Wisconsin. Both facilities process coarse-grade Northern White sand reserves. 12

13 CAPITAL MARKETS ACTIVITY: HI-CRUSH PARTNERS (CONT D) ORGANIZATIONAL STRUCTURE Source: SEC.gov 13

14 CAPITAL MARKETS ACTIVITY: HI-CRUSH PARTNERS (CONT D) Transaction Overview Filed confidentially under the JOBS Act Price per unit (yield): $17.00 (11.2%) Number of units: 11,250,000 (12,937,500 with shoe) Gross Proceeds: $191 million Minimum Quarterly Distribution: $0.475 per unit ($1.90 annualized) Expected tax shield: 40% Price performance since IPO Current Price: $43.30 IPO Price: $17.00 Sources: MarketWatch, Bloomberg 14

15 CAPITAL MARKETS ACTIVITY: EMERGE ENERGY SERVICES IPO Emerge Energy Services LP (NYSE: EMES) completed its initial public offering in May 2013 Company Overview Mines and processes frac sand, which is a key component used in hydraulic fracturing of oil and natural gas wells; and Acquires, processes and separates the transportation mixture that results when multiple types of refined products are transported sequentially through a pipeline EMES owns and operates three sand mines two in Barron County, Wisconsin and one in Kosse, Texas 15

16 CAPITAL MARKETS ACTIVITY: EMERGE ENERGY SERVICES IPO (CONT D) ORGANIZATIONAL STRUCTURE Source: SEC.gov 16

17 CAPITAL MARKETS ACTIVITY: EMERGE ENERGY SERVICES IPO (CONT D) Transaction Overview Variable MLP Price per unit (yield): $17.00 (16.5%) Number of units: 7,500,000 (8,625,000 with shoe) Gross Proceeds: $127.5 million Initial Distribution: $0.70 per unit ($2.80 annualized) Expected tax shield: 35% Price performance since IPO Current Price: $79.66 IPO Price: $17.00 Sources: MarketWatch, Bloomberg 17

18 CAPITAL MARKETS ACTIVITY: FAIRMOUNT SANTROL IPO FMSAHoldings, Inc. (NYSE: FMSA) completed its initial public offering in October 2014 Company Overview FMSAis a producer of high-performance sand and sand-based products for upstream oil & gas companies to enhance the productivity of their wells FMSAproduced and shipped more than 7.5 million tons of sand and valueadded sand products in 2013 FMSAfacilities are located in the US, Canada, China, Denmark and Mexico. Its global operations include: 9 active mining and mineral processing plants 2 additional sand processing plants 10 coating facilities 1 resin-producing operation 3 custom blending plants 1 specialty colored quartz facility 3 R&D locations 18

19 CAPITAL MARKETS ACTIVITY: FAIRMOUNT SANTROL IPO (CONT D) Transaction Overview Price per share: $16.00 Number of shares: 25,000,000 (28,750,000 with shoe) Gross Proceeds: $400 million Price performance Current Price: $11.76 IPO Price: $16.00 Sources: MarketWatch 19

20 WHAT S NEXT FOR FRAC SAND CAPITAL MARKETS ACTIVITY? THE MLP STRUCTURE IS A PROVEN SUCCESS PUBLIC COMPANIES ARE CONSIDERING MLP SUBSIDIARIES PRIVATE SPONSORS SEE THE MLP AS AN EFFECTIVE WAY TO MONETIZE THEIR INVESTMENT OVER TIME C-CORP VEHICLES REMAIN A POPULAR OPTION 20

21 QUESTIONS?

22 CONTACT INFORMATION Ryan J. Maierson Partner, Houston Phone:

23 Houston 811 Main Street Suite 3700 Houston, Texas United States t: f:

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