Atlas Energy Commissions Dune Express

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(Atlas, 10.Oct.2024) — Atlas Energy Solutions Inc. announced that the commissioning of the Dune Express, a 42-mile long, fully electric conveyor system that is expected to transform proppant logistics in the Permian Basin, began early this week.

The system remains on-time and on-budget with the commercial transportation of proppant into the Delaware Basin scheduled to begin in late Q4. Additionally, the company expects higher plant operating expenses to cause third quarter 2024 operating results to fall below prior guidance. The company now expects third quarter 2024 revenue will be between $300mn and $310mn with adjusted EBITDA of $70mn to $75mn. Proppant sales volumes are expected to be approximately 6mnn tons. The company also expects to book an asset write-down of approximately $9mn related to one of its dredge mining assets.

“Following the rebuild of the feed system at our Kermit facility that was completed in July, our focus has turned to the commissioning of the Dune Express and ensuring that our mining operations are optimized to produce the increased volumes we expect to provide our customers in the Delaware Basin next year. The incident at our Kermit operation catalyzed a full review of all plant systems and processes by our new operational leadership team, which revealed multiple opportunities for improvement. Additionally, during the quarter, one of our new dredges at the Kermit mine was severely damaged during the commissioning process, resulting in a total loss. The second dredge is currently operating and feeding the plant at reduced levels. Based on the performance of the new dredge models year-to-date, we have made the decision to shift to a well-known domestic dredge manufacturer with a multi-year track record of strong performance at our Kermit dredging operation. This partnership will enable a fully domestic supply chain with improved spare part lead times and local aftermarket support for our mining operations,” stated John Turner, President and Chief Executive Officer.

“The execution of these process improvements, the re-start of full mining operations, and the delays in dredge commissioning at Kermit resulted in temporarily higher operating expenses than originally anticipated. As we approach the end of the calendar year, we expect the combination of E&P capital budget exhaustion and higher costs at our Kermit plant as we work to complete these key initiatives to result in fourth quarter financial results that are roughly flat with those expected in the third quarter. Additionally, we expect our average production costs per ton to return to normalized levels by year-end, setting Atlas up for improved financial performance in 2025. Despite the weaker-than-expected operating results, Atlas’ balance sheet and cash flow generation both remain in strong positions, which we expect will enable us to further strengthen our return of capital to shareholders.”

“While 2024 has been a transition year, highlighted by the integration of Hi-Crush personnel and assets into our enterprise and the construction of the Dune Express conveyor system, we believe the hard work and investments made this year set up 2025 as a break-out year for Atlas as the market leader in proppants and logistics. Customer response to the imminent start-up of operations on the Dune Express has been very positive, validating our expectations for growth in both production and sales in 2025. With the commissioning of the Dune Express commencing earlier this week, these investments to ensure that our plant operations are optimized to produce the incremental demand tonnage at our industry-low-cost levels are imperative to the Atlas strategy. Ultimately, we expect the investments made this quarter to further differentiate Atlas’s position as the low-cost supplier of logistically advantaged premium proppant in the Permian Basin during 2025 and beyond. We are just months away from beginning to realize our goal of taking thousands of trucks off public roads, making the Permian Basin a safer, more reliable, and environmentally cleaner place to live and work.”

Atlas will announce third quarter results in a press release issued after market close on 28 Oct. 2024, and will conduct a conference call on 29 Oct. 2024, at 9:00 a.m. Central Time (10:00 a.m. Eastern Time). Individuals wishing to participate in the conference call should dial 877-407-4133. A live webcast will be available at https://ir.atlas.energy/.

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