Canadian Pacific and U.S. Silica Holdings, Inc. Announce Multi-year Agreement for the Transport of Frac Sand
June 22, 2012
U.S. Silica to construct new frac sand facility in Wisconsin, Canadian Pacific to be exclusive rail service provider
Minneapolis, MN - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) and U.S. Silica Holdings, Inc. (NYSE: SLCA), today announced a multi-year agreement for the movement of frac sand from U.S. Silica’s newest mining and processing facility in Sparta, Wisconsin.
U.S. Silica is the second largest domestic producer of commercial silica, a specialized mineral that is a critical input into oil and gas shale production and various industrial and specialty products. The Company is building a new frac sand facility located on the CP’s rail line in Sparta, Wisconsin that will produce high quality Northern White sand for use in shale basins across the United States and Canada.
Under the agreement, CP will become the exclusive rail service provider at this facility for the movement of U.S. Silica’s frac sand to destination markets. The design of the Sparta facility will allow U.S. Silica to build unit trains of frac sand with a focus on shipments into the Bakken shale in North Dakota to support the area’s growing need for proppant. The facility will produce and ship three different grades of dry sand and is expected to be fully operational in the first quarter of 2013.
Bryan Shinn, U.S. Silica’s President and Chief Executive Officer, said the company is “very excited to partner with the Canadian Pacific to further enhance our extensive logistics capabilities. We plan to deliver unit trains of high quality frac sand into the Bakken shale and other basins throughout the U.S. and Canada. This new partnership will provide U.S. Silica greater access to critical, rapidly growing markets, and will significantly strengthen our overall offering.”
"Canadian Pacific has proven expertise and has been serving the energy industry in North America for many years. We are pleased to continue to grow this important market through our partnership with U.S. Silica," said Jane O'Hagan, Canadian Pacific's Chief Marketing Officer and EVP Marketing & Sales, who noted CP’s agreement with U.S. Silica is an important component of the railway’s growing energy strategy, which focuses not just on outbound crude oil, but also on the flow of input materials into shale and other energy developments."
"Our agreement with U.S. Silica leverages the strength of CP's network through Wisconsin with service to key energy regions throughout North America" said O'Hagan. “We are pleased to be in a position to provide the capacity to our partners like U.S. Silica to respond to the strong growth in the energy-related markets."
Canadian Pacific is the only North American railroad to serve the Bakken Formation, the Alberta Industrial Heartland and the Marcellus Shale. In addition, CP is the only Class I railway to connect the energy hubs of the U.S. Midwest, Alberta and Saskatchewan to the Northeast U.S. Through its network to the Northeast U.S. and through the Kansas City gateway to the U.S. Gulf Coast, CP is able to partner with the energy industry to facilitate growth in moving oil and energy-related materials. Each year, CP moves hundreds of thousands of carloads of energy-related products, including crude oil, sulphur, fuels, diluents and materials key to the energy industry, such as pipe and frac sand.
Note on Forward-Looking Information
This news release contains certain forward-looking statements relating but not limited to our operations, anticipated financial performance and business prospects. Undue reliance should not be placed on forward-looking information as actual results may differ materially. Forward-looking statements are not guarantees of future performance. By its nature, CP's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments, including long-term floating rate notes; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CP's annual and interim reports, Annual Information Form and Form 40-F.
Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.
About U.S Silica Holdings Inc.
U.S. Silica Holdings, Inc., a Delaware corporation, is the second largest domestic producer of commercial silica, a specialized mineral that is a critical input into the oil and gas proppants end market and a variety of attractive industrial and specialty products end markets. During its 112-year history, U.S. Silica Holdings, Inc. has developed core competencies in mining, processing, logistics and materials science that enable it to produce and cost-effectively deliver over 200 products to customers across these end markets. U.S. Silica Holdings, Inc. is headquartered in Frederick, Maryland.
For more information on U.S. Silica contact: Anita Willis-Boyland at 301-682-0676 or Willis-Boyland@USSilica.com
About Canadian Pacific
Canadian Pacific (CP: TSX) (NYSE: CP) operates a North American transcontinental railway providing freight transportation services, logistics solutions and supply chain expertise. Incorporating best-in-class technology and environmental practices, CP is re-defining itself as a modern 21st century transportation company built on safety, service reliability and operational efficiency. Visit cpr.ca and see how Canadian Pacific is Driving the Digital Railway.
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