Business Context and Reporting Period
Smart Sand, Inc. filed this Form 8-K on December 14, 2016, to disclose the entry into material definitive agreements. The company is incorporated in Delaware and operates from The Woodlands, Texas.
Key Financial Metrics
This filing does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the execution of new commercial contracts.
Material Changes
On December 14, 2016, the Company entered into two significant agreements with Rice Drilling B, LLC (a subsidiary of Rice Energy Inc.):
- Master Product Purchase Agreement (PPA): A multi-year, take-or-pay agreement for the purchase of frac sand. The agreement includes a monthly non-refundable capacity reservation charge. Purchases are expected to commence in January 2017.
- Railcar Usage Agreement: An agreement under which the Buyer will borrow railcars from Smart Sand to transport the purchased products.
Guidance, Outlook, and Risks
Management expects the Buyer to begin purchasing frac sand under the PPA in January 2017. The filing notes that the summary of the agreements is not complete and is qualified by the full text of the agreements, which will be filed as exhibits to the Company's Annual Report on Form 10-K for the year ended December 31, 2016. No specific risks or contingencies beyond the standard contractual qualifications are detailed in this report.
Key Facts for Investor Verification
- Verify the specific terms of the "take-or-pay" structure and the monthly non-refundable capacity reservation charge in the full PPA exhibit.
- Confirm the volume commitments and pricing mechanisms within the Master Product Purchase Agreement.
- Review the terms of the Railcar Usage Agreement regarding liability and usage fees.
- Monitor the commencement of shipments in January 2017 as projected by management.