Solaris Oilfield Infrastructure, Inc., a leading manufacturer and provider of patented mobile proppant management systems for oil and natural gas well sites, plans a major new customer contract transloading center in Kingfisher, Oklahoma.
According to company officials, the facility is part of Solaris’ strategic expansion to integrate transloading logistics with its existing operations. The Kingfisher Facility will be located central to the STACK/SCOOP region, an area of The Sooner State better known by its acronym; SCOOP refers to "South Central Oklahoma," while STACK is located in north-central portion of the state.
The complex will be the first independent, unit-train capable, high speed transload facility in Oklahoma. The Kingfisher Facility will initially provide proppant transloading services, but will also have capacity to provide transloading services for other drilling and completion related consumables.
The Kingfisher Facility will be located on a 300-acre parcel of land, directly on the Union Pacific Railroad line. Solaris has secured a 30-year land lease with the State of Oklahoma. The facility is designed to service multiple large volume customers with dedicated storage and unit train loop tracks, as well as direct rail-to-truck transloading.
To support Operator’s committed volumes, Solaris is commencing Phase One construction, which will consist of an 8,000 foot unit-train loop, 30,000 tons of high efficiency silo storage and an additional 18,000 feet of rail sidetrack.
The vertical silo storage will consist of six silos with individual capacity of 5,000 tons per silo. Solaris estimates that the Operator’s contracted minimum volumes represent less than 50% of the operational capacity of the Phase One infrastructure.
“The STACK/SCOOP are already among the most economic oil basins for operators in the U.S. and the Kingfisher Facility will further improve well economics that support added investment by customers, spurring incremental demand,” company officials said.
Greg Lanham, CEO of Solaris commented, “Since the formation of Solaris, our focus has been helping customers streamline supply chains to drive down costs. Our industry-leading well site proppant management systems allow customers to better manage proppant inventory levels at the well site and last mile trucking. The Kingfisher Facility is a natural extension of our business, as we expand one step further through the supply chain and continue to facilitate the flow of increasing volumes of proppant across the industry.”
Discussions underway with other major customers for potential long-term agreements utilizing the Kingfisher Facility. Solaris is engaged in discussions with other large acreage holders and service providers in the STACK/SCOOP interested in establishing similar long-term agreements at the Kingfisher Facility.
Lanham continued, “We are excited about forming a long-term partnership with an important tenant at the facility, a strong endorsement that reaffirms our growth strategy. The new seven-year agreement is a milestone contract adding significant revenue backlog and improving the visibility of future earnings. We anticipate other customers will also seek long-term agreements tied to the new facility. The STACK/SCOOP have yielded fantastic individual well results, as E&P companies transition toward large-scale development, we expect the need for high-capacity infrastructure will increase throughout the basin.”
Estimated capital investment for Phase One totals approximately $40 million and will be funded from available cash raised in connection with Solaris’ recent initial public offering. This investment includes capital expenditures related to engineering and site preparation, as well as rail and silo construction that is scheduled to be completed by August 2018.