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Stock Strategist

Hi-Crush Is Misunderstood and Neglected

But we think the lowest-cost frac sand provider is attractively valued.

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We think  Hi-Crush Partners (HCLP) is misunderstood by its master limited partnership-oriented investor base and neglected by oil and gas analysts who underrate the imminent strong profits for pure-play low-cost Northern White frac sand producers.

Hi-Crush will continue to be the lowest-cost producer of Northern White frac sand in the industry, a fact that has been obscured by the U.S. shale downturn as well as the shift in mix through the downturn from Northern White to Texas-based “regional” sands. Regional sands notwithstanding, over 70% of the frac sand market will need to be supplied by Northern White sands in our midcycle forecast, and Hi-Crush stands at the bottom of this cost curve.

Preston Caldwell does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.