The big news in the frac sand world last week is that Carbo Ceramics, one of the five frac sand companies that are still publicly traded, was delisted from the New York Stock Exchange. Its stock price had fallen to 29 cents from a high of $5.11 last year and all-time peak of more than $45 in May of 2015. This means that anyone buying near the peak lost more than 99 percent of their money if they held on through the end of 2019. The company had warned several months ago that it was not sure that it could sustain itself as an ongoing operation after it lost its main customer.
Carbo Ceramics troubles reflect more general problems in both the frac sand industry and in the fracking industry more generally. The Wall Street Journal had a piece noting the rising debt of fracking companies. According to the piece, industry analysts are projecting a substantial drop in spending on exploration in 2020 compared to 2019. This will mean declining production and therefore a reduced demand for frac sand.
It is worth noting that oil prices have been rising in recent months, crossing $60 a barrel before the end of 2019. Prices jumped further after the attack on Iran’s general, Qassim Suleimani. If tensions remain high in the region, or a full-fledged war breaks out, this will keep oil prices high, increasing the profitability of fracking in the United States. However, having been recently burned by over-investment, oil companies are unlikely to substantially increase spending unless they are fairly certain that oil prices will stay high and not fall back to their levels of early 2019.