Marker:
Fairmount Santrol Ho (FMSA)
$6.50 down -0.58 (-8.19%)
Volume: 6,527,994
*Current price of WTI crude is $48.16 @ bbl.
FSMA is down 50% over the last month.
FD: I hold no position on FMSA at this time but I will strongly consider it should it fall another 25%. IMO price decay is not attributable to a drop in demand or company financials. Frac sand suppliers, rightly or wrongly, are very tightly tethered to the daily volatility of crude. Frac sand usage has grown so much over the last 12 months it has quietly become a full fledged commodity. What was once delivered in dump truck type quantities now takes a full trainload. To recover more oil more sand is required. How much more? A single well today requires as much as 15,000 tons of sand. To put that in perspective multiple 15,000 X 2,000 = 30,000,000 lbs. To move 30MM pounds of sand requires 150 hopper cars. Now visualize a freight train 150 hopper cars long rumbling out to the oil patches required to frac just a single well. The sheer quantity is hard to grasp. Logistics to get it out to the oil fields is another factor.
Although drilling and the price of oil has been greatly curtailed since the summer of 2014 the demand for frac sand has gone through the roof.
The commodity Oil is in a glut situation...however the commodity of Sand is just the opposite. Its only a matter of time before Wall St. figures out which commodity will produce the highest ROI.
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