Eagle Materials is moving further into the energy sector by buying a company that sells an ingredient crucial to the hydraulic fracturing techniques now widely used to extract oil and natural gas.
The building materials company announced the a $225 million acquisition of CRS Proppants LLC and its subsidiaries, which it said Friday will roughly double its frack sand production and expand its reserves of the material.
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Frack sand is a high-purity quartz material that is pumped into shale formations to free oil and gas that is trapped there. Demand for the sand has skyrocketed over the past decade with the rapid expansion of hydraulic fracturing in places like the Permian basin, which spans western Texas and parts of New Mexico.
"This acquisition will enable us to immediately serve the Permian basin, in particular, with increased production, while creating synergies with our other operations in Texas that are currently serving the Eagle Ford with sand from our Illinois mine," said CEO Steven Rowley.
The Eagle Ford formation is also in Texas.
The Dallas company expects to book $5 million in savings within the first year as it adds CRS to its current operations. The acquisition is expected to close during Eagle Materials' fiscal third quarter.
Shares of Eagle Materials rose $1.54 to $86.95 in premarket trading.