One of the most important ingredients in fracking a well is one of the simplest — sand. And frac-sand demand continues to skyrocket as North America adopts the advanced drilling technique at rapid pace.
However, as simple as it is, sand can also be pretty complex.
At its core, CARBO Ceramics (CRR) manufactures synthetic proppants used in oil and gas drilling. The takeaway for E&P firms willing to cough up the extra bucks for “artificial sand” is that they are able to squeeze out more natural gas and shale oil from wells using CRR’s products — about 20% more. That extra production, especially given the high price for oil, can mean the difference between whether a project is profitable or not.
For CRR stock, it means some hefty profits as well.
On its latest earnings release, CRR managed to produce a profit of $1.31 per share, trouncing analyst expectations by a whopping 48 cents per share — all driven by increased demand for its products. More importantly, CARBO predicts that it will sell about 40 billion more pounds of its ceramic proppant in the new few years.
All in all, that mean more big gains for CRR stock.