Black Mountain Sand

In basin. In spec. In demand

Business View Magazine interviews Hayden Gillespie, Chief Commercial Officer of Black Mountain Sand, for our focus on the American Oil & Gas Industry

Headquartered in Fort Worth, Texas, Black Mountain Sand is an in-basin frac sand provider delivering superior products and solutions to the E&P (exploration and production) industry. This fast-tracking growth company that began as a start-up in 2017, currently produces 17 million annual tons of mine capacity of 40/70 & 100 mesh and is the premier in-basin frac sand provider in the Permian Basin, Eagle Ford Shale, and Mid-Continent regions. E&P is known as the upstream segment of the oil and gas industry, which includes the search, exploration, drilling, and extraction phases.

Black Mountain Sand’s team of experts have a mission to deliver the best product possible for the job; helping customers improve the underlying economics of their wells through the use of high quality, cost-effective in-basin frac sand solutions to maximize production, while controlling costs. Opened in 2018, Black Mountain’s two flagship facilities, Vest and El Dorado in Winkler County, Texas, boast a combined 10 million annual tons of nameplate capacity in the Permian Basin alone. And the company has expanded operations with three state-of-the-art facilities in the Eagle Ford Shale and Oklahoma’s Mid-Continent region. Today, about 550 employees work at the combined facilities.

In total, the company’s facilities boast the largest in-basin mining capacity at 17MM annual tons. Its custom-designed throughput route averages just 2.5 minutes truck fill time with total time gate-to-gate averaging under 10 minutes. With significant overhead storage and a tried-and-true throughput system, Black Mountain is equipped to mine and maintain inventory, thereby quickly and efficiently handling high-volume orders to support clients’ tight completion targets.

By definition, frac sand is a naturally occurring crystalline silica (quartz) sand that is processed from high-purity sandstone. In its make-up, frac sand differs only slightly from other types of sand, as grains of quartz silica are a major constituent of most inter-coastal sands. The difference is that other sand is a mixture of several minerals and rocks types, which are less durable than quartz. Frac sand grains are unique in their resistance to being crushed, as well as their very round granule shape. This makes them ideal for use in the process of fracking.

In-basin sand had just started making waves in the industry in the 2015/16 downturn. Historically, the alternatives were to procure sand from northern light sand, which originated in the hot spots of Illinois, Minnesota, and Wisconsin. That required a logistical cost burden of rail to bring sand from the origins in those Midwest states down to the ultimate basin where it would be used. So 2015/16 got its first foothold of using in-basin sand, particularly in the Haynes field. At that time, Black Mountain Sand’s focus was on upstream. It had an oil and gas operating company, a mineral company, a saltwater disposal company, and a saltwater midstream company, and started to see this trend towards in-basin sand.

Hayden Gillespie, Chief Commercial Officer of Black Mountain Sand, reports, “I was working for another local service company that was also noticing the trend and we ultimately ended up joining forces. I came over in late 2016 and we began in earnest in 2017, launching a really strong ground game looking at different sites within different basins – South Texas, West Texas, Oklahoma. The first site we identified was the dune complexes in Winkler County, Texas on the Permian Basin, centrally located to the Midland and Delaware Basins. Being an upstream company with a lot of land experience, we felt that was an area where we could capture a lot of value to be first movers; securing land from landowners and very quickly transitioning to the construction and commercialization phase.”

In 2017, the Black Mountain team was small and lean, only a handful working on the project, including the CEOs and CFOs of both companies, and Gillespie was the first Sand-specific employee. They were a motivated crew and immediately started working with EPC contractors to design and facilitate the build; meeting with clients to promote the product; figuring out what kind of contracts to pursue. That was the origin phase. Gillespie admits, “We’ve moved so quickly in the last three years that the early days feel like a lifetime ago. We went from start-up phase into full-scale mode pretty fast. And since then we’ve built three facilities in the Permian Basin – two are large flagship facilities; one of them is a smaller satellite facility. Our next step after that was building two facilities in South Texas and a third in Oklahoma. Six facilities in three years, totaling about 17 million tons of annual capacity at those mines. The next phase is about execution. We’ve done all the building we’re going to do for the near-term and so it’s incumbent upon us to take the facilities we have and figure how to maximize production and lower costs to deliver consistently for our customers.”

Oilfield services is a highly competitive market, especially in the Permian Basin. As a private equity backed firm, Black Mountain Sand started out being the small fish in a big pond, up against many publicly traded companies that had been around over 100 years in the industrial mining industry. So the company had to work hard to gain an edge and make a name for itself. The team focused on being diligent and aggressive in the pursuit process, spending a lot of time in front of every potential customer defining their value proposition to illustrate how they could be good partners. How Black Mountain Sand could make them money. How they were building facilities that would be sustainable. And that they would ultimately deliver on and exceed the service quality that even the “big guys” were offering at the time.

“We’ve really made good on our promises and our customers have appreciated that,” says Gillespie. “We do what we say we’re going to do. When we advertise start-up dates, we hit those dates. And we make every effort to be there for our customers. We’ve been credible, forward thinkers in the space. In front of every environmental issue, every transportation issue. We’ve built high tech facilities that can manage the throughput and reliability and consistency that our customers demand. Much of the credit for that goes to our team. They feel they have ownership in the business and nobody draws hard lines on what is and isn’t their job. Instead, they focus on getting the job done and delivering for our customers. Everyone’s willing to go the extra mile and when you have that buy-in from the people inside the company, I think we can do a lot.”

Another plus for Black Mountain Sand – the benefit of good partners throughout the growth of the company. In that vein, Gillespie gives a shout-out to Illinois-based Turnkey Processing Solutions (TPS); Mill Creek Engineering; Louisville Dryer Company; Carrier; Rotex – “It’s been a busy few years for all of them and we certainly felt we got the service quality from them that we needed to deliver on our value proposition.”

The oil and gas industry is under a lot of pressure these days in every sector – from E&Ps to the service companies – to generate increased cash flow for shareholders, execute on the business, pay down debt… and Black Mountain Sand wants to be aligned with its customers in that respect. Looking at better ways of billing, transparency, upgrading technology for efficiency on mining sites. “When you’re growing fast, you have an iterative process where you try to get better and better at things,” Gillespie explains. “We got our first mover advantage and we delivered on time for our customers but how can we take it to the next level? And that’s what ultimately will make us a sustainable company in the long run.”

Achieving healthy growth in such a hyper-competitive market is not without challenges. But that is exactly what separates the strong companies from the latecomers to the trends. Black Mountain Sand has invested in its facilities and partnerships with customers and the company believes that will be the differentiator in difficult times. Building a sustainable business model with the right customers and executing it successfully is key. According to Gillespie, “I anticipate Black Mountain Sand being able to do that. And while we’re currently focused on the facilities we have right now, we certainly appreciate that the thesis that drove the business up to this point will persist going forward. Whether that’s moving to new basins or innovating to get closer to the wellhead to deliver at a lower cost to our customers, we will continue to be thought leaders in the space.

“What is novel about Black Mountain Sand is we have taken a contrarian approach to our builds and our customers. We come up with creative and dynamic solutions for everybody we target – no matter the size of their business. Smaller companies sometimes have difficulty finding counterparts in their supply chain, so we always pride ourselves on filling that gap, and no customer is too small. No challenge is too big. Customers really do come first – that’s what motivates us.”

AT A GLANCE

Black Mountain Sand

What: An in-basin frac sand provider to the E&P industry

Where: Headquartered in Fort Worth, Texas

Website: www.blackmountainsand.com