A few days ago, I took the shares of $SND (+4,11%) into my portfolio. I was looking for another profiteer from rising oil prices. This week I read an interesting report, excerpts of which I would like to share with you.
Sand? Sounds boring. But it's not. Because almost nothing works without sand in fracking. This is precisely why smart sand is one of the most exciting
levers for an upturn in the fracking story in the USA. The connection is simple.
The connection is simple: fracking involves injecting water, chemicals
and sand are injected into the rock. The sand keeps the resulting cracks
cracks - without it, production would quickly collapse. It is
It is therefore not just a filling material, but a decisive production factor.
factor. Not all sand is the same. Smart Sand relies on high-quality "Northern White Sand". The focus is on fine mesh sizes
such as 40/70 and 100 mesh. The capacity is around ten million tons
tons per year, with reserves of over 450 million tons. This ensures a secure supply for decades to come. Although such premium sand is often 50 to 100 percent more expensive than simple fracking sand, it can deliver significantly higher production yields. An analysis by Rystad, an independent research company for the energy sector, shows that Wells drilled with premium sand perform better in 85 percent of cases within one to two years. The reason: up to 3.4 to 4.5 times higher conductivity. For
frackers, it is not the cheapest sand that counts in the end, but the highest
cash flow per well. Frackers who save on sand are therefore saving in the wrong
the wrong place. Especially as sand only accounts for 10 to 20 percent of the total fracking costs. Frackers only use cheap sand when they want to reduce costs in the short term. This is particularly the case when oil and gas prices are at rock bottom. However, the higher the oil price, the more the focus shifts from cost savings to maximum extraction - and therefore to premium sand. The boom starts above 80 dollars. The rough formula is surprisingly easy to break down.
Below around 65 dollars, things get tough for many US producers. Exactly there
According to the Dallas Fed, this is currently the average oil price that producers
producers need to profitably develop a new well. In such
environment, close attention is paid to costs. Premium sand
is then harder to buy because the industry is more interested in cost savings than growth. Between 70 and 80 dollars, the picture improves significantly. New drilling is more profitable, nervousness decreases and producers start to grow selectively again. "If prices rise to the high $60s and $70s, US shale oil production will return to a growth trajectory for a few years," Ryan L.
years," said Ryan Lance, CEO of US oil giant Cono-
co Phillips, in May 2025. However, this does not automatically mean full throttle.
The US shale oil industry is much more disciplined today than in previous boom phases. Many companies are paying more attention to free cash flows, dividends and share buybacks. This zone is nevertheless important for Smart Sand
important: this is where the story starts to work. Cautiously at first,
then increasingly noticeable. The first additional frac jobs bring
demand for sand - even if the big leaps are often still to come.
Above 80 dollars, things get really exciting for Smart Sand. Because from this level onwards, the focus of many producers shifts much more strongly from cutting costs to maximizing production. And this is precisely when premium sand becomes more important. Those who want to get more output from every well are reluctant to save on the material that keeps the cracks in the rock open. If the oil price remains above 80 dollars for several weeks or months, more wells are initially completed and later more new drilling rigs are deployed - and thus the demand for Smart Sand increases sharply. An oil price of over 90 dollars turns a good story into a potentially high leverage story.
Plenty of catching up to do
It is important to note that the sheer number of active drilling rigs (rig counts) is
no longer as important as it used to be. The US Energy Information Administration (EIA) also points out that the traditional link between rig count and production has become weaker.
between rig count and production has become weaker because producers are working more efficiently, drilling longer and getting more out of each individual rig.
However, this is not a disadvantage for smart sand - on the contrary. If
If each individual well is worked more intensively and has longer running times
the sand requirement per job increases. The number of active drill holes
doesn't have to explode for the demand for sand to increase - it's enough if
is enough if more material is used per borehole. Nevertheless, it is also worth taking a look at the number of boreholes. In a historical comparison, there is still plenty of room for improvement here. In 2008, the Baker Hughes rig count stood at 2,031 rigs. Today there are around 550. 2022 has shown that the number can increase significantly. After the war in Ukraine, rig counts rose by a third to around 800 over the course of the year. According to EIA data, there are currently around 5,000 fracking wells on call in the USA. These so-called DUC wells can be brought into production relatively quickly when oil prices rise.
can be brought into production comparatively quickly when oil prices rise.
Flexible energy for AI
It's not just oil that drives the story, but also gas - especially as an energy source for AI data centers. This is exactly where Smart Sand is perfectly positioned. The company is strongly positioned in Appalachia and Canada - regions where natural gas plays a key role. This story is becoming increasingly concrete in the Appalachians in particular. In July 2025, the quantum computing specialist CoreWeave announced plans to invest up to six billion
to invest up to six billion dollars in an AI data center in Lancaster, Pennsylvania.
Pennsylvania. The project will start with 100 megawatts and can grow to 300 megawatts.
grow.
For Smart Sand, this does not mean that every new server will automatically trigger a new sand train tomorrow. But it does show where the region is heading: more demand for electricity, more focus on reliable energy and therefore more strategic importance for gas. After all, the entire hunger for electricity of AI data centers cannot be met immediately by wind, solar or nuclear power.
be met immediately. Especially in the bridging years, more gas is therefore
more gas. And where gas production increases, sooner or later the
sooner or later, the relevance of service providers and suppliers in the chain will also increase. The EIA expects the strongest 4-year phase in US electricity consumption since 2000 and explicitly names large computing centers as drivers. In addition to data centers, the booming export of LNG to Europe is also causing gas demand in the USA to rise sharply.
Long-term growth market
The hunger for AI energy and higher oil prices are reinforcing existing growth. According to the analysis company Future Market Insights
global fracking production will increase from 29.2 trillion cubic feet in
2021 to 92.5 trillion cubic feet by 2036. This corresponds to
more than tripling in 15 years and an annual growth rate of eight percent. Fracking is therefore not a short-term boom,
but a long-term growth trend. Mind you, these figures are from the period before the Iran war. Even without very high oil prices, fracking production and thus the demand for key components such as frac sand is therefore likely to grow structurally.
grow structurally.
Full service right up to the borehole
However, Smart Sand not only supplies sand, but the entire chain:
Mines, rail connection, own terminals in North Dakota, Pennsylvania
and Ohio. The latest highlight is SmartSystems - mobile storage and management
management solutions directly at the borehole. They are designed to
simplify processes, reduce costs and increase safety. 2025 Smart
Sand has been working on a revised design. The first field deployment of the new SmartSystems is scheduled for the first quarter.
Solid finances
Despite several difficult years in the US fracking industry, Smart Sand is not a highly indebted gambling house. On the contrary. The
debt has been almost halved since 2020. Smart Sand has even been buying back its own shares since the beginning of 2023. A dividend was also paid for the first time in 2024. In 2025, this was increased by 50 percent to 0.15 dollars per share. In 2026, the dividend is likely to remain at least constant. At the current level, this corresponds to 3.4 percent.
Even with low oil prices, Smart Sand has also almost tripled its turnover from
almost tripled to 330.2 million dollars between 2021 and 2025. Due to
investments, net earnings per share only amounted to 0.05 dollars.
dollars remained. However, the past has shown what is possible when
oil prices are not at rock bottom and no major investments in the future put pressure on the margin. In 2019, Smart Sands generated earnings per share of
share of 1.36 dollars in 2019. At the current share price level, this would mean a P/E ratio
of just 3. And at that time, turnover amounted to 233 million
million dollars. This time, the starting point for revenue is around half as high.
higher. There are no profit estimates for 2026 as yet, as there are only
only three analysts cover the share at all and none of them have published a current study. This shows how little even experts have this investment story on their radar.
- Sand on top
Smart Sand is completely under the radar. If oil remains above 80 or
or at least above 70 dollars, fracking production is likely to rise sharply - and with it Smart Sand.
A doubling is then easily possible.
