Form 8-K Hi-Crush Partners LP For: May 06

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May 6, 2015 6:05 AM EDT


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
   _______________________________
Form 8-K
  _______________________________ 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2015
  _______________________________ 
Hi-Crush Partners LP
(Exact name of registrant as specified in its charter)
   _______________________________
Delaware
(State or other jurisdiction of incorporation)
 
001-35630
 
90-0840530
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
Three Riverway
Suite 1550
Houston, Texas
 
77056
(Address of principal executive offices)
 
(Zip Code)
(713) 960-4777
(Registrant’s telephone number, including area code)
(Not Applicable)
(Former name or former address, if changed since last report)
  _______________________________
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following (See General Instruction A.2 below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 








Item 2.02. Results of Operations and Financial Condition
On May 6, 2015, Hi-Crush Partners LP (the “Partnership”) issued a press release announcing its first quarter 2015 May 6, 2015 conference call. The press release and presentation slides are being furnished with this Current Report on Form 8-K as Exhibits 99.1 and 99.2, respectively.
In accordance with General Instruction B.2 to Form 8-K, the information provided under this Item 2.02 and the information attached to this Form 8-K as Exhibit 99.1 and Exhibit 99.2 shall be deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
 
Exhibit Number
  
Exhibit Description
 
 
99.1
  
Press Release dated May 6, 2015 announcing first quarter 2015 financial results.
 
 
 
99.2
 
Presentation slides.










































SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
Hi-Crush Partners LP
 
 
 
 
 
 
 
 
 
 
 
By:
 
Hi-Crush GP LLC, its general partner
 
 
 
 
 
 
 
Date: May 6, 2015
 
 
 
By:
 
/s/ Laura C. Fulton
 
 
 
 
 
 
Laura C. Fulton
 
 
 
 
 
 
Chief Financial Officer



















































INDEX TO EXHIBITS
 
Exhibit Number
  
Exhibit Description
 
 
 
99.1
  
Press Release dated May 6, 2015 announcing first quarter 2015 financial results.
 
 
 
99.2
 
Presentation slides





Exhibit 99.1
News Release

Hi-Crush Partners LP Reports First Quarter 2015 Results

•
1Q15 Revenues of $102 million vs. $71 million in 1Q14
•
1Q15 EBITDA of $30 million vs. $24 million in 1Q14
•
$0.61 basic earnings per unit; $0.60 diluted earnings per unit

Houston, Texas, May 6, 2015 - Hi-Crush Partners LP (NYSE: HCLP), “Hi-Crush” or the “Partnership”, today reported first quarter 2015 results. Net income for the quarter was $23.9 million. The limited partners' interest in net income of $23.7 million for the first quarter of 2015 represents earnings of $0.64 per weighted average common and subordinated units outstanding during the period. For purposes of calculating earnings per unit, $1.3 million of limited partners' interest in net income was allocated to the holder of incentive distribution rights, resulting in reported basic and diluted earnings per unit of $0.61 and $0.60 per common and subordinated unit, respectively.

The Partnership reported earnings before interest, taxes and depreciation and amortization (“EBITDA”) of $29.6 million for the first quarter of 2015. Distributable cash flow of $24.9 million attributable to the common and subordinated unitholders for the first quarter of 2015 corresponds to distribution coverage of 1.00 times the $24.9 million in distributions to be paid to common and subordinated unitholders on May 15, 2015.

“The first quarter was challenging due to the decline in drilling activity and adverse weather conditions, particularly in February, in the Northeast,” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush.  “While we see the impact of fewer well completions and reduced demand for sand continuing through the second quarter, the long-term fundamental trends for sand demand remain favorable. As such, we continue to emphasize Hi-Crush's key advantages of efficiency, quality, execution and logistics to deliver sand and related services to our customers. We are focused on further enhancing our competitive position during this downturn, as well as ensuring that we remain agile and ready to take full advantage of the recovery.”

Revenues for the quarter ended March 31, 2015 totaled $102.1 million on sales of 1.2 million tons of frac sand sold, and transload services. Approximately 44% of volumes were sold in-basin for the first quarter of 2015.

“During the quarter, we provided temporary price discounts to contract customers, generally receiving something in return, such as additional volumes or additional term, over the course of these multi-year contracts. We also took meaningful strides with our customers in removing inefficiencies throughout the logistics chain, delivering cost reductions on delivered product, and strengthening relationships in the process.” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “Our balance sheet remains strong, enabling us to not only withstand market volatility, but to retain the financial flexibility to take advantage of the many opportunities we are likely to see in 2015 and beyond.”

Production cost for sand produced and delivered from the Wyeville and Augusta facilities was $16.28 per ton during the quarter. Of the 1.2 million tons sold, approximately 78% were produced and delivered from the Partnership's facilities, with the remainder being purchased from the sponsor's Whitehall facility or from third parties.

On April 15, 2015, Hi-Crush declared its first quarter cash distribution of $0.675 per unit for all common and subordinated units, or $2.70 on an annualized basis. The distribution will be paid on May 15, 2015 to all common and subordinated unitholders of record on May 1, 2015.

Conference Call
A conference call for investors will be held on Wednesday May 6, 2015 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Hi-Crush’s first quarter results. Hosting the call will be Robert E. Rasmus, Co-Chief Executive Officer, James M. Whipkey, Co-Chief Executive Officer and Laura C. Fulton, Chief Financial Officer. The call can be accessed live over the telephone by dialing (877) 407-3982, or for international callers, (201) 493-6780. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517. The passcode for the replay is 13606765. The replay will be available until May 20, 2015.




Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush’s website at www.hicrushpartners.com in the Investors-Event Calendar and Presentations section. A replay of the webcast will also be available for approximately 30 days following the call.
The slide presentation to be referenced on the call will also be on Hi-Crush’s website at www.hicrushpartners.com in the Investors-Event Calendar and Presentations section.
Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measure of EBITDA, Distributable Cash Flow and Production Costs, which may be used periodically by management when discussing our financial results with investors and analysts. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). EBITDA, Distributable Cash Flow and Production Costs are presented as management believes the data provides a measure of operating performance that is unaffected by historical cost basis and provides additional information and metrics relative to the performance of our business.

About Hi-Crush
Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit www.hicrushpartners.com.

Forward-Looking Statements
Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “could,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush’s reports filed with the Securities and Exchange Commission (“SEC”), including those described under 1A of Hi-Crush’s Form 10-K for the year ended December 31, 2014 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any litigation, claims or assessments, including unasserted claims; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush’s forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor contact:
Investor Relations
(713) 960-4811





Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
 
Three Months
 
Ended March 31,
 
2015
 
2014(a)
Revenues
$
102,111

 
$
70,578

Cost of goods sold (including depreciation, depletion and amortization)
68,639

 
44,166

Gross profit
33,472

 
26,412

Operating costs and expenses:
 
 
 
General and administrative expenses
6,218

 
6,425

Accretion of asset retirement obligation
83

 
57

Income from operations
27,171

 
19,930

Other income (expense):
 
 
 
Interest expense
(3,317
)
 
(1,410
)
Net income
23,854

 
18,520

Income attributable to non-controlling interest
(169
)
 
(148
)
Net income attributable to Hi-Crush Partners LP
$
23,685

 
$
18,372

Earnings per unit:
 
 
 
Common units - basic
$
0.61

 
$
0.49

Subordinated units - basic
$
0.61

 
$
0.49

Common units - diluted
$
0.60

 
$
0.49

Subordinated units - diluted
$
0.60

 
$
0.49

(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC.





Unaudited EBITDA and Distributable Cash Flow
 
Three Months
 
Ended March 31,
(in thousands)
2015
 
2014
Reconciliation of distributable cash flow to net income:
 
 
 
Net income
$
23,854

 
$
18,520

Depreciation and depletion expense
1,677

 
1,476

Amortization expense
733

 
2,536

Interest expense
3,317

 
1,410

EBITDA
$
29,581

 
$
23,942

Less: Cash interest paid
(2,905
)
 
(1,272
)
Less: Income attributable to non-controlling interest
(169
)
 
(148
)
Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1)
(1,259
)
 
(969
)
Add: Accretion of asset retirement obligation
83

 
57

Add: Unit based compensation
884

 
—

Distributable cash flow
$
26,215

 
$
21,610

Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2)
—

 
(4,188
)
Distributable cash flow attributable to Hi-Crush Partners LP
26,215

 
17,422

Less: Distributable cash flow attributable to holders of incentive distribution rights
(1,311
)
 
—

Distributable cash flow attributable to common and subordinated unitholders
$
24,904

 
$
17,422

(1)
Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton produced and delivered during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital.
(2)
The Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the acquisition by the Partnership on April 28, 2014 of substantially all of the remaining equity interests in Hi-Crush Augusta LLC (the "Augusta Contribution").





Unaudited Condensed Consolidated Cash Flow Information
(Amounts in thousands)
 
Three Months
 
Three Months
 
Ended
 
Ended
 
March 31,
 
March 31,
 
2015
 
2014(a)
Operating activities
$
36,307

 
$
22,666

Investing activities
(21,772
)
 
(3,477
)
Financing activities
(14,268
)
 
(28,226
)
Net (decrease) increase in cash
$
267

 
$
(9,037
)
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC.





Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)
 
March 31,
 
December 31,
 
2015
 
2014
Assets
 
 
 
Current assets:
 
 
 
Cash
$
4,913

 
$
4,646

Restricted cash
691

 
691

Accounts receivable
63,111

 
82,117

Inventories
20,140

 
23,684

Prepaid expenses and other current assets
4,756

 
4,081

Total current assets
93,611

 
115,219

Property, plant and equipment, net
258,538

 
241,325

Goodwill and intangible assets, net
66,017

 
66,750

Other assets
12,481

 
12,826

Total assets
$
430,647

 
$
436,120

Liabilities, Equity and Partners’ Capital
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
18,053

 
$
24,878

Accrued and other current liabilities
10,876

 
12,248

Due to sponsor
5,475

 
13,459

Current portion of long-term debt
2,000

 
2,000

Total current liabilities
36,404

 
52,585

Long-term debt
210,435

 
198,364

Asset retirement obligation
6,813

 
6,730

Total liabilities
253,652

 
257,679

Commitments and contingencies
—

 
—

Equity and Partners’ capital:
 
 
 
General partner interest
—

 
—

Limited partner interests, 36,958,770 and 36,952,426 units outstanding, respectively
174,347

 
175,962

Total partners’ capital
174,347

 
175,962

Non-controlling interest
2,648

 
2,479

Total equity and partners' capital
176,995

 
178,441

Total liabilities, equity and partners’ capital
$
430,647

 
$
436,120






Unaudited Per Ton Operating Activity
 
Three Months
 
Ended March 31,
 
2015
 
2014
Sand sold (in tons)
1,195,343

 
898,243

Sand produced and delivered (in tons)
932,755

 
718,166

Production costs ($ in thousands)
$
15,188

 
$
14,836

Production costs per ton
$
16.28

 
$
20.66






Unaudited Net Income per Limited Partner Unit
(Amounts in thousands, except units and per unit amounts)
 
Three Months
 
Ended March 31,
Weighted average limited partner units outstanding:
2015
 
2014
Common units - basic
23,317,926

 
15,233,529

Subordinated units - basic
13,640,351

 
13,640,351

Common units - diluted
23,560,693

 
15,233,529

Subordinated units - diluted
13,640,351

 
13,640,351

Reconciliation of net income and the assumed allocation of net income under the two-class method for purposes of computing earnings per unit:
 
General Partner and IDRs
 
Common Units
 
Subordinated Units
 
Total
Declared distribution
$
1,311

 
$
15,740

 
$
9,207

 
$
26,258

Assumed allocation of distributions in excess of earnings
—

 
(1,624
)
 
(949
)
 
(2,573
)
Limited partners’ interest in net income
$
1,311

 
$
14,116

 
$
8,258

 
$
23,685

 
 
 
 
 
 
 
 
Earnings per unit - basic
 
 
$
0.61

 
$
0.61

 
 
Earnings per unit - diluted
 
 
$
0.60

 
$
0.60

 
 



1ST QUARTER 2015 RESULTS MAY 6, 2015

 
Forward Looking Statements Some of the information included herein may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements give our current expectations and may contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “could,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no expected results of operations or financial condition or other forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush Partners LP’s (“Hi-Crush”) reports filed with the Securities and Exchange Commission (“SEC”), including those described under Item 1A, “Risk Factors” of Hi-Crush’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 and any subsequently filed Quarterly Report on Form 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any litigation, claims or assessments, including unasserted claims; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward- looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush’s forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. 2

 
Drop in Rig Count Felt in Q1 2015 3 (1) Represents distributions declared during the quarter. • 2015 activity decline in perspective against strong growth from prior year • Decline in frac sand demand in Q1 2015 due to steep decline in rig count • Focused on customer relationships to navigate current conditions and grow long-term market share • Long-term fundamentals regarding sand demand remain strong Q1 2015 Q4 2014 Q1 2014 ($ in 000s, except per unit) Revenues $102,111 $130,929 $70,578 EBITDA $29,581 $44,567 $23,942 Sales volumes 1,195,343 1,481,914 898,243 Production costs per ton $16.28 $15.72 $20.66 Earnings per unit Basic $0.61 $0.85 $0.49 Diluted $0.60 $0.85 $0.49 Distributions per unit 1 $0.675 $0.675 $0.525

 
Balance Sheet Remains Strong 4 (1) Revolving credit facility: $130.5mm available at L+2.75% ($150mm capacity less $12.5mm of borrowings and $7.0mm of LCs); includes accordion feature to increase to $200mm. (2) Senior secured term loan: $200mm face value at L+3.75%; rated B2 and B+ by Moody's and Standard & Poor's, respectively; includes accordion feature to increase to $300mm. Leverage (as of March 31, 2015) ($ in 000s) Cash 4,913$ Revolver 12,500$ 1 Term loan 196,259 2 Other notes payable 3,676 Total debt 212,435$ Net debt 207,522$ Net debt / LTM EBITDA 1.35x

 
Committed to Long-Term Distribution Growth 5 • Distribution declared for Q1 2015 held flat • Annualized rate of $2.70 per unit up 12.5% over distributions of $2.40 per unit paid in 2014 — Distribution increases possible when market visibility strengthens — Expect at a minimum to maintain distribution at current level Distributions Per Unit Paid (Annualized) * * $1.90 represents the Minimum Quarterly Distribution per unit $1.90 $1.96 $2.04 $2.10 $2.30 $2.50 $2.70 $2.70 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15

 
Coverage Maintained During Tough Quarter 6 • Maintaining and prudently growing distributions to unit holders are key priorities — Coverage ratio averaging 1.23x since Q1 2013, above target coverage of 1.20x • Strong coverage in prior quarters allowed for investment in organic growth with little debt (1) Actual coverage ratio was 1.0x including $0.525 per unit distribution paid on 4.25 million units issued in April 2014 (2) Excludes impact of the August 15, 2014 conversion of Class B units to common units and related distribution paid upon conversion (3) Excludes the portion of DCF allocable to the Incentive Distribution Rights held by our Sponsor (1) (2) (3) (3) (3) (3) 1.12x 1.14x 1.24x 1.38x 1.15x 1.35x 1.40x 1.31x 1.00x – 0.20x 0.40x 0.60x 0.80x 1.00x 1.20x 1.40x $0 $5 $10 $15 $20 $25 $30 $35 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 $ i n M ill io n s Declared Distributions (Total $/Q) - LHS Coverage Ratio - RHS

 
Industry Backdrop

 
Fundamentals Still Support Long-Term Demand “We also continue to make progress on our frac optimization learnings, where we are now consistently placing our laterals in the portion of the reservoir where the best rock properties occur, and we are placing more sand per foot of lateral while controlling costs by varying the stage phasing of the completions.” Q1 2015 Earnings Call “As operators drop horizontal rigs, they drill longer and longer laterals, with some operators now consistently drilling 8,000 foot to 10,000 foot laterals. In addition, the number of frac stages increased, and the spacing between stages decreased, and sand concentrations went up. All of this led to higher production.” Q1 2015 Earnings Call • E&P operators are using fracture stimulation techniques, such as longer laterals, increased frac stages per well, increased proppant per stage, and infill drilling to drive well performance and sand demand 8 “But for the most part, you're really just not getting the bang for the buck by using ceramic, so we're able to trim quite a bit of cost off by sticking with white sand.” Q1 2015 Earnings Call Targeting of Shale & Unconventional Reservoirs Increased Use of Horizontal Drilling More Wells per Rig Longer Laterals More Stages per Lateral Foot More Proppant per Stage Long-Term Proppant Demand

 
Timing & Magnitude of Recovery Remain Unclear 9 • Since the peak in U.S. land rigs, rig count has dropped for 23 consecutive weeks — Vertical rig count has decreased by 68% — Directional rig count has declined by 55% — Horizontal rig count has fallen by 49% • Competition among oilfield service providers fierce — Some pressure pumpers bidding jobs at cash costs to maintain market share — Others choosing to stack equipment to avoid wear and tear at unjustifiable margin — Increased competition decreasing supply chain visibility and contributing to logistics and production planning challenges • Growing inventory of drilled but uncompleted wells contributing to drop in proppant demand — Limited number of well capitalized operators deferring completions for better economics — Completion costs have come down, following a quicker drop in drilling expenses — Sand demand may rebound faster than rig count during recovery given backlog

 
Current Environment 10 • Continued supply chain improvements and market share consolidation — Oilfield service providers still seeking efficiencies through supply chain enhancements • Sand suppliers working with customers to lower all-in pricing at well head through better origin/destination matching, increased unit trains, and more in-basin services • Service providers continuing to consolidate vendors down to key partners, capable of delivery large quantities, efficiently, and on-time • Potential for refracs in early stages — Could represent an initial spike in demand when recovery begins — Operators testing results using comparable amounts of sand as original frac job • As of May 1, 2015, the U.S. land permit count increased by 225 (30%) from the prior week — May signal higher activity level in the second half of 2015

 
Hi-Crush Operations

 
Hi-Crush’s Competitive Advantages • Long-Term Contracted Cash Flow • Low-Cost Producer • Long-Lived, High Quality Reserves • Prime Portfolio of Assets • Focused Strategy • Visible Avenues to Growth 12 8 Long-Term Contracts, 4.2 Average Years Remaining >75% of Production Capacity Contracted Long-Term Northern White Frac Sand Demand Key Strategic Network in Marcellus/Utica Strong Balance Sheet Future Whitehall Drop-Down, Sponsor’s 4th Facility, Expansion of Terminal Facilities

 
Logistics Flexibility Critical Sandstone Formations • Access to all major North American oil and gas basins • Direct loading and unloading of unit trains • Multiple in-basin terminals across Marcellus and Utica shales, two located in Permian Basin, and one in DJ Basin1 • ~7,000 railcars under management — ~2,900 owned/leased by Hi-Crush as of March 31, 2015 • Strong relationships with multiple Class-1 and short-line railroads Sponsor’s Whitehall Facility 13 Sponsor Sand Facilities Terminal Under Development Basin Play HCLP Sand Facilities Existing Distribution Terminals (1) New Permian Basin and DJ Basin terminals expected to be operational early 2016 and late 2015, respectively.

 
A Strategy for the Current Market 14 • Northern White still in highest demand relative to other proppant types • Migration to in-basin sales as a way for customers to lower supply chain costs • Organic growth of distribution network • Dropdown of Sponsor’s Whitehall facility when the timing is right • Fourth facility permitted by Sponsor — Facility planned to be 3mm tons per year capacity of high-quality Northern White, including 100 mesh — Positioned to capture long-term market share during recovery

 
Financial Results

 
1st Quarter 2015 Summary 16 Three Months Ended March 31, 2015 2014(a) Revenues $ 102,111 $ 70,578 Cost of goods sold (including depreciation, depletion and amortization) 68,639 44,166 Gross profit 33,472 26,412 Operating costs and expenses: General and administrative expenses 6,218 6,425 Accretion of asset retirement obligation 83 57 Income from operations 27,171 19,930 Other income (expense): Interest expense (3,317 ) (1,410 ) Net income 23,854 18,520 Income attributable to non-controlling interest (169 ) (148 ) Net income attributable to Hi-Crush Partners LP $ 23,685 $ 18,372 Earnings per unit: Common units - basic $ 0.61 $ 0.49 Subordinated units - basic $ 0.61 $ 0.49 Common units - diluted $ 0.60 $ 0.49 Subordinated units - diluted $ 0.60 $ 0.49 (a) Financial information has been recast to include the financial position and results attributable to Hi -Crush Augusta LLC.

 
1st Quarter 2015 Summary 17 Three Months Ended March 31, (in thousands) 2015 2014 Reconciliation of distributable cash flow to net income: Net income $ 23,854 $ 18,520 Depreciation and depletion expense 1,677 1,476 Amortization expense 733 2,536 Interest expense 3,317 1,410 EBITDA $ 29,581 $ 23,942 Less: Cash interest paid (2,905 ) (1,272 ) Less: Income attributable to non-controlling interest (169 ) (148 ) Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) (1,259 ) (969 ) Add: Accretion of asset retirement obligation 83 57 Add: Unit based compensation 884 — Distributable cash flow $ 26,215 $ 21,610 Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2) — (4,188 ) Distributable cash flow attributable to Hi-Crush Partners LP 26,215 17,422 Less: Distributable cash flow attributable to holders of incentive distribution rights (1,311 ) — Distributable cash flow attributable to common and subordinated unitholders $ 24,904 $ 17,422 (1) Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton produced and delivered during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital. (2) The Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the acquisition by the Partnership on April 28, 2014 of substantially all of the remaining equity interests in Hi- Crush Augusta LLC (the "Augusta Contribution").

 

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