Emerge Energy Services LP Investor Presentation June 2017 www.emergelp.com PAGE 1
Agenda I. Strategic Initiatives Update II. Osburn Transaction Recap III. Appendix www.emergelp.com PAGE 3
Competitive Strengths High Quality, Technology Strategically Driven New Located Assets Products Diversified Intrinsic Product Logistics Offering Advantages Trusted Reputation w/ Low Cost Customers and Operating…
Accomplishing Our Strategic Initiatives Reduced Costs Expanded 1 3 Sold Fuel Business 5 During Downturn Footprint Implemented lower Received an attractive Osburn Materials cost mining methods valuation offers high quality…
Expanding Footprint with Local Sands - Osburn Materials Local & regional sands have proved effective for certain completion designs and are now approximately 3035% of the frac sand market Delivered cost of sand to the Eagle Ford…
Introducing Technology-Driven Proppants We are excited about our two technology-driven proppant products: our self-suspending sand SandMaxXTM and our dustless proppant SandGuardTM. These products have unique properties compared to…
Building Out a Comprehensive Logistics Platform Our sand facilities have direct access to four Class One rail lines and can reach all major shale plays in North America on single-line hauls. Logistics Highlights Wide Geographic…
Regaining Market Share We have experienced rapid growth in volume over the last several quarters relative to our competitors, and we are expecting further market share gains with the addition of the San Antonio plant expansion.…
Deleveraging Our Balance Sheet We have taken drastic measures to lower our debt burden and improve our liquidity, which have positioned us well for the current recovery in the market. Change in ABL Balance ( in mm) Change in Debt…
Obtained Attractive Acquisition Financing Financed acquisition with a new 40mm second Transaction Sources and Uses lien term loan issued in April Sources of Capital in mm's Uses of Capital in mm's Second lien priority on all…
Financial Performance Estimates During the downturn, we undertook substantial corrective actions to improve the competitive positioning of our business. Now we are estimating significant improvements in volume and Adjusted EBITDA for…
Capitalizing on a Strong End Market: Increasing Proppant Usage Total industry proppant consumption started to recover in the third quarter of 2016 across the major US basins, and the amount of proppant used per horizontal well has…
Capitalizing on a Strong End Market: Robust Demand Projections Estimates from Wall Street analysts indicate 2017 sand demand could surpass historical peak levels. The current recovery in the sand market is being driven by increased…
Agenda I. Strategic Initiatives Update II. Osburn Transaction Recap III. Appendix www.emergelp.com PAGE 15
Introduction to Osburn Materials Located 25 miles south of San Antonio, TX 650 total owned acres (surface and sand mineral Property Details rights) Estimated over 80 million(1) tons of reserves as of the acquisition date Wet…
San Antonio Plant: Best in Class Business Model High quality reserves Large property and deposit In-basin location Dual rail service Minimal overburden All production operations located on site (avoids trucking) Owned reserves…
Growing Demand for Frac Sand in Eagle Ford Basin While the Permian basin receives most of the attention, activity in the Eagle Ford basin, the second most active shale play, is gaining momentum with several notable operators in the…
San Antonio Plants Strategic Location Major drilling activity is clustered in South and West Texas Overview Most of the Eagle Ford activity is within 40100 miles of the Osburn site for direct to wellhead trucking Closest…
Industrial Sands End Market Central Texas (San Antonio and Austin metro areas) is one of the fastest growing regions in the country Approximately 4.5 million residents estimated as of 2016 Our San Antonio plant currently…
San Antonio Plant Expansion Plan Phase 1 Phase 2 Phase 3 3,700 Frac Sand Production Cumulative Capacity (000 tons per year) 600 300 Timing Fully permitted Permit amendment in Secure contracts & financing…
Attractive Valuation for Local Sands Acquisition ( in mm's, except per EMES San ton metrics) Competitor A Competitor B Antonio Site (1) Announced Purchase Price 20 275 214 (2) (3) Est. Capex for Plant Expansion 53 48 n/a Total…
Expanded Footprint and Balanced Mix The San Antonio site provides a more balanced footprint with a diversified mix of northern white and local sands. Before Acquisition After Acquisition Reserves(1) Local 26% Northern…
Agenda I. Strategic Initiatives Update II. Osburn Transaction Recap III. Appendix www.emergelp.com PAGE 24
Summary Quarterly Performance in thousands, except per ton 2017 2016 2015 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Continuing Operations: Tons Sold (tons in 000's) 1,251 826 493 399 439 581 799 861 1,151 Revenue 75,344 42,619 31,285 24,825 29,670…
Oil Price Breakevens by Basin Breakeven oil prices for most US shale plays are below the current WTI price. Several plays including areas in the Permian basin, Eagle Ford, and MidCon remain viable with WTI in the mid to high 30s.…
Management and Board of Directors Years of Name Title Professional Experience Senior Management Team Rick Shearer Chief Executive Officer of EMES; CEO of SSS 43 Warren B. Bonham Vice President of EMES 32 Deborah Deibert Chief…
From Mine to Railcar 1) Extract 2) Wash 3) Dry 4) Ship www.emergelp.com PAGE 29
Asset Summary Wet Plant Location Proven Recoverable Primary Reserve Plant Capacity 2016 Production Reserves (1) Composition (Thousands of Tons) (Thousands of Tons) New Auburn, WI 15.5 mm tons 14-60 mesh 2,000 - Thompson Hills, WI…
North American Sand Markets We have single-line access to four Class One railroads, which provide direct rail access to every major basin in North America National Network BNSF CN/GTW CP/SOO CSX /NS KCS/KSCSM UP Basin…
Consolidated Net Income to Adjusted EBITDA Reconciliation in thousands 2017 2016 2015 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Net income (11,390) (20,775) 5,117 (22,897) (34,215) (9,888) (11,898) 2,884 9,491 Depreciation, depletion and…
Guidance: Net Income to Consolidated Adjusted EBITDA ( in millions) Full Year 2017 2018 Low 2018 High Net Income (13.0) 97.0 115.0 Interest expense, net 17.0 18.0 19.0 Depreciation, depletion and amortization 23.0 23.0 24.0…
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