Value Microcaps Junior Energy

[Bobwins]

Since logistics is such a big part of sand costs, I expect Regional Sand to continue to grow share. If demand for sand keeps rising, which I think it will, cost containment will be a necessity for drillers. Regional sand provides that. I also read that regional sand is becoming a bigger part of the equation in Canada, since transport from Wisconsin to BC/Alberta is expensive too.

The rapid change from ceramic coated sand to 20 coarse sand and now to fine mesh sand is a warning that this is a rapidly changing industry driven by ever changing technology. That is a warning sign for investing. You can hit it big or get buried.

So I tend to agree with you about the industry having a relatively low barrier to entry. I do still like SND because of their longer term mgmt perspective. They survived the downturn and have the right mix of sand. they have excellent logistics so amongst the Wisconsin producers, they should have a good competitive position. With fine mesh sand projected to be sold out, SND should still do well. I also like Select Sand. They are new and have purchased their assets for well under cost. The recent addition of land doubled their reserves and while they aren't in Texas, they are pretty close.

The regional sand is a cost issue. But longer term, I still think the better quality of the Wisconsin white sand will continue to have supporters. and SND is a low cost producer so can still compete on price.