Atlas Energy Solutions Inc. (NYSE:AESI) Q4 2023 Earnings Call Transcript

For the future, the combined synergies that we’ve identified some modeling so far. I mean, we’ve taken 2024, we’re going to be around $9 a ton. And then once we — and that’s on the identified synergies, I mean, there’s probably going to be other synergies that we’re going to be able to accomplish. And over time, we think we’re going to be able to get their cost — the entire company’s cost down to around $7 a ton. So when you look at it, I think, overall, I didn’t incorporate any sort of synergies from G&A or maintenance CapEx there. I think those costs are going to come down. So over time, I think it’s going to actually be — we’re going to be producing sand at a lower cost per ton than we would as a stand-alone.

Don Crist: I appreciate all the answers. I’ll turn it back.

Bud Brigham: Yeah. You’re welcome.

Operator: Our next question is from Luke Lemoine with Piper Sandler. Please proceed.

Luke Lemoine: Hey, good morning. John, you loosely alluded to — but when you’re at your current facility, you can see the 2 high-pressure mines right next door. Can you just talk about any plans to tie this Dune Express? And then you kind of hit on it earlier as well, but then your ability to convert the Hi-Crush mines to dredging from yellow iron.

John Turner: Yes, that’s something, Luke, that we can definitely — like you said, I mean, the proximity does monitor within two miles of our current mine. That’s something that we haven’t fully vetted on what the cost would be, but it’s something that we definitely think will be synergistic from the Dune Express point of view. Obviously, connecting a mine or two mines via conveyor is going to be going to be less expensive than building — bringing out an additional 5 million tons to 6 million tons of capacity. So yes, we obviously see significant cost savings there. On the dredging front, that is something that we are investigating. We haven’t been fully evaluated that, but that’s something that we’re definitely looking at.

And I do think that we are going to have an extra drag here at some point here pretty soon, and that’s something we may run over there and see if we can see if we can then start to drag money over in their location. They definitely do have water like we did. We just have to figure out how we’re going to — if it’s going to work. And — but then there’s other things that we may be able to do. If we can’t fully dredge mine over there, I mean, the other thing is the dredges that we have arriving on location are going to be — they’re going to be able to provide a significant amount of feed into our current mines. There may be ways that we could even be took those dredges up over to their minds and then feed their process will be dredges as well.

So there’s — I guess what I want to say is there’s just a lot of things, a lot of opportunity here, a lot of optionality that we don’t have a full handle on, but that’s something that we’re definitely going to be looking at over here as we progress forward.

Luke Lemoine: Okay. And then on the Encore Mobile Mini mines, can you just talk about your opportunity and comfort with what sand, the mining operations? And maybe if you can see some opportunity just to kind of improve the operations as well.

Bud Brigham: Yeah, this is Bud. I might just start, but John will probably add to it. I think some of you probably heard us already on. We were concerned about the challenges associated with wet sand. And obviously, we can sold out of dry sand. So we weren’t particularly motivated to move that direction. It’s really a credit to Hi-Crush and their team and again, their culture, their innovative culture that they’ve really sought those challenges and doing a great job with the web sand. So that, combined with the fact that it’s logistically advantaged to operators there over in the East side of the Midland Basin, particularly made it compelling. And again, it’s corrected for those guys, and it’s very complementary to what we’re doing. John, do you want to add to that?

John Turner: I mean we — I do think that — I agree with that. I think the Hi-Crush team has done an amazing job on the wet sand front. I think that on the logistics side as well. I think that we’re going to — as a company, what we’re going to do is we’re going to come together, and we’re going to bring in the best ideas and see if there’s anything that they’re doing that we can apply it within — in our operations, and we’re also going to do the same thing or the things that we can do at their operations, like I said, they’re on core mines that we’re doing in…

Bud Brigham: Automation…

John Turner: Automation and things like that, it incorporate that in. So I definitely think there’s going to be some opportunity there as well.

Luke Lemoine: Okay. Thanks bunch and Congrats on the deal.

Bud Brigham: Thank you.

Operator: Our next question is from Jim Rollyson with Raymond James. Please proceed.

Jim Rollyson: Hey, good morning, guys. Congrats on the transaction. John, maybe can you split out just — obviously, you guys break out the sand side from the logistics side, the way you report financials. Maybe just — I know we don’t have all the financial details yet because it’s not closed, but I’d love to get just kind of a rough split of maybe revenues and EBITDA from Hi-Crush between their actual sand operations versus the logistics, so we can kind of think about that from a modeling perspective.