Business Context and Reporting Period
This Form 8-K Current Report was filed by Smart Sand, Inc. on September 13, 2019, covering events occurring on September 9 and September 10, 2019. The Company, an emerging growth company incorporated in Delaware, operates in the frac sand industry with a primary terminal in Van Hook, North Dakota.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures. The report focuses on contractual agreements rather than periodic financial performance data.
Material Changes and Agreements
- Settlement and New Agreement with Schlumberger: The Company settled a lawsuit filed against Schlumberger Technology Corporation (STC) on January 3, 2019. As part of the settlement, the parties entered into a Second Amended and Restated Master Product Purchase Agreement (STC PPA) on September 10, 2019. This agreement expires on September 30, 2023, subject to earlier termination based on purchase volumes.
- Termination of Agreement with Hess: On September 9, 2019, Hess Corporation notified the Company of its intention to terminate their multi-year Master Product Purchase Agreement (Hess PPA). The termination is effective December 8, 2019. Hess is contractually obligated to pay a specified termination payment upon this election.
Outlook, Risks, and Management Commentary
The filing indicates a shift in the Company's customer base, replacing a terminated agreement with Hess by a new, settled agreement with STC. The STC PPA is expected to drive future sand sales through the Van Hook, North Dakota terminal. No specific forward-looking guidance, risk factors, or unusual items beyond the contractual changes were detailed in this report.
Investor Verification Checklist
- Review the full text of the Second Amended and Restated Master Product Purchase Agreement (Exhibit 10.1) to understand pricing, volume commitments, and termination clauses.
- Verify the specific amount of the contractually-specified termination payment to be received from Hess Corporation.
- Assess the impact of the Hess PPA termination on near-term revenue streams prior to the December 8, 2019 effective date.
- Confirm the operational capacity of the Van Hook, North Dakota terminal to meet the demands of the new STC agreement.