Today's Luncheon - July 19

[dan_s]

I was impressed by the management of both companies that presented at our luncheon on Tuesday.

SGR Energy is a private company which hopes to go public within three years. Through August 7 they are offering preferred equity units that pay dividends with a 12% annual yield.
> Their presentation will be on our website later today.
> If you want more information about the equity offering, call Craig Hicks, SVP Investor Relations at 832-286-1524

Select Sands is a public company based in Vancouver. They are in the early stages of developing a Tier 1 frac sand deposit in NE Arkansas.
> Their presentation will be on our website later today.
> The company is debt free and generating some revenues today by selling sand to industrial users.
> They should have an advantage over the much larger sand companies (EMES, HCLP) because they are much closer to the shale plays in Arkansas, Texas and SCOOP/STACK in Oklahoma
> As I mentioned at the luncheon, Tudor Pickering Holt recently issued a report that forecasts a SIGNIFICANT increase in frac sand demand starting in the 4th quarter of this year when they expect a lot of DUCs to be completed. If you'd like to see a copy of the report, send me an e-mail (dmsteffens@comcast.net).
> Frac sand demand is going up because horizontal wells in the shale plays now use 2X to 3X more sand to complete.
> Plus, Northern White sand will be the preferred sand going forward, which is why HCLP spiked when this report came out on June 3
> In 2013 the average horizontal well was completed with 3.9 million pounds of sand. In 2015 the average HZ well was completed with 6.5 million pounds and TPH predicts that the average HZ well in 2017 will be completed with 8.0 million pounds of sand.

TPH: "ASSUMING THE UPTICK IN PROPPANT DEMAND PER WELL DOESN’T CONTINUE TO MIGRATE HGHER, THE OUTLOOK
FOR SAND DEMAND REMAINS BRIGHT AND FRAC SAND PRICING IS BIASED TOWARDS / ABOVE 2014 PRIOR PEAK
DEMAND LEVELS. SEE BELOW FOR OUR SAND DEMAND OUTLOOK ASSUMING FRAC SAND WELLS MIRROR THE
~8MM LBS PER HORIZONTAL WELL AVERAGED IN Q1’16. BASED ON RECENT DISCUSSIONS WITH OUR E&P TEAM AND
MACRO DATA WE’VE ANALYZED, WE BELIEVE PROPPANT LOADING COULD BE BIASED MATERIALLY HIGHER TO
>11MM LBS PER WELL, WHICH MAKES THE BELOW ASSUMPTIONS, WHILE STILL BULLISH, APPEAR CONSERVATIVE."

[dan_s]

SGR Energy Video: https://www.youtube.com/watch?v=AjAvRdD ... e=youtu.be

Keep in mind that this is a private company, so there is now liquidity in the investment discussed in the video.