Q4 2023 Atlas Energy Solutions Inc Earnings Call

Participants

Kyle Turlington; VP, IR; Atlas Energy Solutions Inc

Ben Brigham; Executive Chairman, Chief Executive Officer; Atlas Energy Solutions Inc

John Turner; President & CFO; Atlas Energy Solutions Inc

Don Crist; Analyst; Johnson Rice

Luke Lemoine; Analyst; Piper Sandler

Jim Rollyson; Analyst; Raymond James

Presentation

Operator

Greetings. Welcome to Atlas Energy Solutions acquisition of Hi-Crush and 2023 fourth-quarter results. (Operator Instructions) Please note, this conference is being recorded.
I'll now turn the conference over to Kyle Turlington, Vice President of Investor Relations. Thank you. You may begin.

Kyle Turlington

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the fourth quarter of 2023. With us today are Bud Brigham, CEO; and John Turner, President and CFO. Bud and John will be sharing their comments on the company's operational and financial performance for the fourth quarter and full year 2023 and insights on the acquisition of Hi-Crush that we announced today. After which, we will open the call up for Q&A.
Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined in the US securities laws. Such statements are based on the current information and management's expectations as of this statement and are not guarantees of future performance. Forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict. As such, our actual outcomes and results could differ materially. You can learn more about these risks in the prospectus we filed with the SEC on September 12, 2023, in connection with our recent corporate reorganization, our quarterly reports on Form 10-Q, and our other SEC filings.
You should not place undue reliance on forward-looking statements, and we undertake no obligation to update these forward-looking statements. We will also make reference to certain non-GAAP financial measures, such as adjusted EBITDA, adjusted free cash flow, and other operating metrics and statistics. You will find the GAAP reconciliation comments and calculations in this morning's press release.
With that said, I will turn the call over to Bud Brigham.

Ben Brigham

Thank you, Kyle. Today is an exciting day not only for Atlas, but for Hi-Crush and their stakeholders, the Permian Basin sand and logistics market, and our customers.
Atlas is acquiring Hi-Crush for $450 million, which consists of $175 million in equity, $150 million in cash, and a $125 million deferred cash payments in the form of a seller's note. The acquisition of Hi-Crush further strengthens Atlas' position as a leading provider of proppant and proppant logistics in the Permian Basin. Our increased scale and enhanced offerings are tailored to meet the needs of our large-scale customers in the Permian Basin.
As it relates to the importance of scale and reliability, we recently heard a high-level executive from a leading oil service company, coin the phrase, quote, more sand, more barrels, unquote; and he is exactly right. With service intensity rising, scale and reliability are paramount today, with the leading edge frac crews now pumping of a 100,000 tonnes of sand per month.
In my opinion, Atlas and Hi-Crush have been the two most innovative proppant companies within the Permian Basin with the rollout of Hi-Crush's on-core mobile mines and the development of our Dune Express conveyor system, which remains on-time and on-budget, coupled with our innovative multi-trailer delivery solution. These disruptive offerings are currently helping to take trucks off the public roads and making the communities in the heart of the Permian Basin safer places to live and work. And we anticipate that the Dune Express will further enhance things benefits.
We have the utmost respect and appreciation for what the team at Hi-Crush has bill, and we are looking forward to combining best practices from our respective organizations to help our customers become even more efficient. The $450 million acquisition of Hi-Crush includes all its Permian Basin operations consisting of two plants at Kermit, which share the giant open dune as our existing Kermit facilities; seven currently deployed on-core mobile mines, of which five are in the Midland Basin and two in the Delaware Basin with an additional Midland Basin deployment slated for the second quarter of 2024 and a night deployment planned for later in 2024.
Atlas is also acquiring 100% of Pronghorn Energy Services with this acquisition of Hi-Crush, which is a leading provider of damp sand last-mile solutions. We are excited to combine Pronghorn's last-mile expertise with Atlas' innovative multi-trader last-mile offering. We believe that the broadened offering will be well received by our customers.
The acquisition of Hi-Crush will add 12 million tonnes to our production capacity, which consists of 5 million tonnes of dry sand production at the two Kermit mines and approximately 7 million tonnes in the aggregate of wet sand production across our on-core mines. In (techincal difficulty) pro forma, Atlas will have approximately 21 million tonnes of dry sand production capacity and around 7 million tonnes of wet sand production capacity for a total of 28 million tonnes of overall production capacity. This scale is unmatched in the Permian Basin.
The merits of this acquisition are numerous. First and foremost, this transaction enhances our geographic footprint and customer base in the Midland Basin, logistically advantaging us to more Midland Basin operators while also providing a complementary damp sand offering through the on-core mobile mine portfolio. This is a significant improvement in our ability to compete for work in a subset of the market in the Midland Basin.
Similarly, there is little customer overlap between the two companies, and Hi-Crush has very strong relationships with certain key operators in the Midland Basin. The broadening of our customer base as a result of acquisition will be very beneficial, further aligning Atlas with more of the largest operators in the Permian.
With the recent consolidation that has taken place in the Permian, size and scale has quickly become an absolute imperative to aptly service the development programs of these large-scale Permian operators and to help drive further efficiencies in the industry. We believe the acquisition pushes us to the forefront of the industry in that regard.
This acquisition adds meaningfully to Atlas's competencies, product, and logistics offerings and makes us a better organization as a whole, more fit to lead the industry from the front. Atlas and Hi-Crush are two of the lowest cost producers of proppant in the Permian Basin. This acquisition will provide us with valuable insights for optimization of our production and logistics strategies and methods to lower costs and enhanced efficiency.
Hi-Crush has been one of the most innovative companies in sand and logistics, and our acquisition of its techniques, processes, and technologies should be exciting to our customers in the Permian. Atlas pro forma for the acquisition is its double-digit accretion across key share metrics. We expect to fully realize $20 million in annualized synergies by 2026. We now have a potential low cost solution to increase volumes down the Dune Express, and we accomplished this without adding new supply to the market by absorbing Hi-Crush's Kermit operations, which sit about 2 miles from our plants at Kermit where the Dune Express begins.
Finally, with the acquisition of Pronghorn, we will have created the largest logistics and last-mile service in the Permian with the capacity to move more sand on a yearly basis than anyone else that we know of. The acquisition allows us to further leverage our logistics off-price with additional scale, which should also increase efficiencies. Ultimately, our scale should provide even greater growth opportunities with market share expectations that better align with our sand production share.
In summary, 2024 is already set up to be a very exciting year for Atlas. First, we are just a few quarters away from the commencement of the Dune Express, which remains on-time and on-budget and which should have a very positive impact on our cash flows next year. Second, the highly accretive acquisition of Hi-Crush provides our shareholders with greater visibility for 2024 and beyond due to the heavily contracted nature of our combined production and our more diverse customer base.
And third and partly as a result, Atlas is uniquely positioned to match up with the growing scale of our Permian Basin customers such that we can uniquely provide the differentiated capacity and throughput as well as associated efficiencies and reliability the Permian operators need. Our pro forma production capacity of over 28 million tonnes following the completion of acquisition is easily the largest in the Permian. It also makes us the largest proppant manufacturer in North America. Furthermore, this production is nearly 80% contracted for 2024.
I will now turn the call over to our President and CFO, John Turner.

John Turner

Thanks, Bud, and I also echo your enthusiasm for the Hi-Crush acquisition. In addition to providing more color on the transaction, I will also provide some initial commentary on our fourth-quarter 2023 standalone results and provide some additional guidance on our outlook for 2024 post acquisition.
As Bud mentioned earlier, following the closing of the acquisition, on a combined basis, we will have 28 million tonnes of annualized production capacity, increasing to about 29 million tonnes in 2025, with a full year's contribution and the benefit of the additional on-core deployments. The effective date of the transaction is February 29, 2024.
As our contracted volumes and Permian activity levels remain strong and completion efficiencies continue to compound profit usage, we'd expect to continue to operate at greater than 85% to 90% utilization going forward. Taking into account Hi-Crush's contracts, we expect our sand prices for 2024 to average between $26 and $28 a tonne.
Assuming just over three quarters of contribution from Hi-Crush, we expect 2024 adjusted EBITDA to range between $425 million to $475 million. We expect total CapEx for 2024 should be between $335 million and $360 million. This includes between $285 million and $305 million in growth CapEx consisting of $220 million for the construction of the Dune Express for 2025, and $45 million on on-core deployments, and another $40 million in other CapEx. We are forecasting maintenance CapEx for 2024 to be between $50 million and $55 million.
The $175 million equity component of the acquisition consideration consist of approximately $9.7 million of newly issued shares of our common stock, which amounts to just under 9% of our outstanding shares on a pro forma basis. The upfront cash portion of the consideration and the near-term capital expenditures of Hi-Crush had been financed with a new $150 million acquisition term loan with Stonebriar Commercial Finance under an amendment to our existing credit facility and with a draw a $50 million under our amended and upsized ABL facility.
The $ 125 million in deferred cash consideration is secured by a seller's note, which bears interest at either 5% in cash or 7% when paid in kind at our option. The maturity of the seller's note is in 2012, six that can be paid off at any time prior to that without penalty.
Our net debt as of December 31, 2023, pro forma for the acquisition and related financing, is approximately $245 million, consisting of to $505 million of debt less $260 million of cash. We will have a modest 0.5 net leverage ratio at closing and plant o methodically pay down debt using a portion of our significant expected free cash flow while also returning capital to shareholders as we have done consistently in the past.
Our acquisition of what is the leading profit suppliers in the Permian Basin greatly enhances our ability to increase shareholder returns. As Bud highlighted earlier, our anticipated enhanced cash flows from the acquisition supports a 5% increase in our total dividend, which is now $0.21 per share, comprised of a $0.16 per share base dividend and a $0.05 per share variable dividend.
Pro forma maintenance CapEx beyond 2024 is expected to be between $50 million and $60 million annually, providing Atlas with multiple avenues to further increase CapEx associated with the Dune Express and additional on-core mines in sites. The heavily contracted nature of our operations post acquisition reduces our cash flow volatility.
And with the commissioning of the Dune Express, our ability to increase shareholder return is strengthened by this transaction. Given the transaction structure, which includes an equity component and a deferred payment, our balance sheet and liquidity will remain healthy. The acquisition of Hi-Crush sets Atlas up to thrive in tough market conditions and positions Atlas to deliver enhanced returns in a normalized environment.
I will now turn my attention to our standalone fourth-quarter and full-year 2023 results. 2023 was a remarkable year. We sold 18 million shares and raised approximately $324 million in gross proceeds in our initial public offering in March. Accounting for our latest dividend amount, we will have paid out $146 million in total dividends and distributions to our investors since inception.
We delivered full year total company revenue of $614 million, an increase of 27% year over year. Total company adjusted EBITDA was $330 million, up 25% year over year. We achieved our first sand delivery with our assets in January, our first double trailer delivery in March, and our first chip will triple trailer delivery in April.
Our logistics revenue was $146 million, up 96% year over year. We completed our new Kermit plant facility in December on time and on budget, increasing our standalone as production capacity to 16 million tonnes, up from 10 million tonnes.
In October, we announced a corporate reorganization transaction or [up see] simplification that enables us to trade under a single class of common stock. 2024 will be another exciting year, as we look forward to the integration of our new operations following completion of the Hi-Crush acquisition, the completion of the Dune Express, and the arrival of our two new state-of-the-art dredges.
For the fourth quarter of '23, we reported total sales of $141 million. Our revenue from product sales was $100 million. Our profits sales volumes were down more than expected quarter over quarter to 2.6 million tonnes. Aside from typical holiday and weather slowdown, we saw our customers take an extended holiday breaks, given budget exhaustion driven by efficiencies. However, we have seen our customers return to normal activity levels in the first quarter of '24. Our average sales price for the fourth quarter was $39 per ton.
Moving to service sales, which is revenue generated by our logistics operations, we reported $41 million in revenues for the quarter. As of February 1, we have taken delivery of all 120 trucks, which is up from 27 trucks from our third-quarter update. In total, cost of sales, excluding DD&A, for the quarter decreased by $1 million to $67 million.
For the fourth quarter, our per-tonne plant operating costs were $10.63 per tonne, which is above the prior period, driven by lower volumes. Further, we expect the delivery of our new specialized dredging equipment in early 2024 to provide incremental improvements and operational performance and further reductions in our mining costs once these assets are fully commissioned by the middle of this year.
Royalty expenses for the quarter were down 17% to $3 million, due again to lower volumes. Sg&a expense for the quarter was $14 million. Gross interest expense for the quarter was $5 million, which is offset by $3 million of interest income generated during the period, resulting in net interest expense of $2 million. We expect our interest income to decline in future quarters as we draw down on our cash reserves to a normalized level as we complete our growth projects.
Depreciation, depletion, and accretion expense for the quarter was $12 million. We generated net income of $36 million for the quarter, representing a strong net income margin of 26% and earnings per share of $0.36. Net cash provided by operating activities for the quarter was $86 million compared to $55 million during the third quarter.
Adjusted EBITDA for the period was $69 million, representing a sequential decrease of 18% and an adjusted EBITDA margin of 49%. Adjusted free cash flow, which we define as adjusted EBITDA less maintenance CapEx, for the quarter was $57 million, representing a sequential decrease of 18% and adjusted free cash flow margin of 40%.
Lastly, we spent a total of $106 million on growth projects in the fourth quarter, which includes our new Kermit facility, the Dune Express, our wellsite delivery asset, and production enhancement at our existing facilities. We incurred $12 million of maintenance CapEx during the quarter.
With that, I will now turn the call back over to Bud.

Ben Brigham

The near term (technical difficulty) prior to this acquisition, but the real value will be created over the next five years, as the entire basin will benefit from a larger, more innovative, and more reliable proppant and logistics provider. We will have the ability to supply incremental sand in a tight market, similar to the first half of 2023, and adjust production in periods of low activity, creating a more stable market for our investors and our customers.
Since our inception, Atlas has looked for ways to bring proppant closer to the well side in order to lower costs and reduce traffic on public roads. We are innovators and disruptors. And with this acquisition, we're in even better position to deliver further innovations and advancements to the most prolific shale basin in the world.
That concludes our prepared remarks, and we will now let the operator open the line for questions. Thank you all for joining us on our fourth-quarter call.

Question and Answer Session

Operator

(Operator Instructions) Don Crist, Johnson Rice.

Don Crist

Morning, gentlemen. I think most of us were pretty surprised with the announcement this morning. But after looking -- stepping back and looking at it, the proximity of the Kermit mines and the addition of the wet sand mobile mines makes a lot of sense. But in your eyes, how does this make Atlas a better company going forward not only for '24, but '25 and '26 and beyond?

Ben Brigham

Thank you (technical difficulty) with that, and John might may want to add, too. But you're right. We've talked about the fact that it's been a high bar for us, given our differentiated margins and, associated with that, low cost structure. But this deal is really special, as you touched on.
Two things: one, extremely complementary asset base. It's really a one plus one equals three transaction. That combined with the fact these guys like us have been the leading innovators. And so we share similar cultures and values and innovative entrepreneurial environment. So it is going to be more apparent how powerful those synergies playout are going to become more evident over the next five years.
A couple of more specifics. And you've heard us say over and over that scale is really important. I mean, operators are demonstrating that, and scale gives you the opportunity to drive down cost, drive up margins, increase automation. And we need to match up with that.
And on proppant, it's about throughput and reliability associated with that scale. This gives us more redundancy in the field, more options for the operator, so that we can de-bottleneck sand. We had said that it ties in with logistics. We want to be logistically advantaged to every single operator in the Permian. This is Al. This is a big step forward for us in that regard, particularly in the Midland Basin.
Associated with that, it's really a complementary customer base because because it brings logistically advantaged assets and and logistics in the Midland Basin, it brings complementary customers into our portfolio. So so that that's beneficial to our shareholders.
And and and last and John may want to add to the U.S. I mean, this is a very accretive transaction even before, you know, all the synergies and application of best practices on our respective assets than. And so we believe over time is really get them to help us to accelerate returning capital to our shareholders. John, do you want to add anything yet?

John Turner

To me, Dan, when we looked at this looked at the acquisition, we needed something that was going to meet both our financial and operational goals in life. I've said on and it is very complementary on the on the operational side, what we what what our goals are and what we want to accomplish it. I wanted on the logistics front, the logistics providers in that in the Permian. But when you look at what Concord has as well, they had they are one of the largest logistics providers in the Caribbean.
So when you look at that on day one, you're going to have the largest logistics of sand logistics, frac sand provider in the Permian. So met on the operational side. There were other day that Met Life, but that it expands our footprint into the Midland Basin where, you know, we'll have more sand on logistically advantaged located to well sites and then also did express.

Don Crist

I mean, you know, obviously that there's been some questions about our plate capabilities and the ability to produce there $10 million. How does that mean the proximity of their target mines, relet relative will be very complementary. What's going to happen with the did express and as we as we get to do express up and launch and that also operationally on OpEx side,

John Turner

I mean, we're going to obviously there's going to be a lot of synergies on that side of that. On the financial side of me, Venus, this met our goals as a company AMI, very high return rate of return from internal rate of return projects, you know, less than a three year payback. Yes, on heavily contracted volumes, it's got to support any acquisition or anything that we did in the investment that we make in the future or whether it be this, what are in the other one is going to have to really support our rich, our return profile that includes a significant return of cash to shareholders through dividends. And so this one really supports that.
So look, I mean, over and over Tom, I mean, a larger company reduced work will reduce our cost to produce is going to we're still going to have the leading margins in the industry. And I mean, across all the oilfield service up that space. Yes, we think that supports us our future on as a company going forward, our goals and then also that for our shareholders. Hope that helps, Dan.

Don Crist

Yes. And just one comes to the My related follow-up. You know, as you are bringing in the electrical dredges this year, we had the analyst and your costs coming down quite a bit for 2024. As you roll in the high crush assets, I don't know their operation, each operational costs are today to produce. Can you give us a little bit of guidance around that and this is going to increase that what we had previously.

Ben Brigham

You know, on back in 21, we were at 50 a ton on our when we had 100% dredge feed into our in our mining process numbers come up to 30 as we increase production in our grocers couldn't keep up these two new dredges that that one has already been commissioned out there and other was a lot of it here shortly. Once we get those drugs, it is incorporated into our mining operation. You know, we're expecting our cost is our long-term mining laws is going to be down in the say mid said it sets a mid centers per ton letters from money at Hi-Crush in their OpEx in 23. I was just over $11 a ton on.
Obviously, that's higher than our seven. But we do think there's going to be that we are I mean, we are optimistic that we're going to be able to get this number down over time. For the future as the combined synergies that we buy, the device of model is the farming. We've taken 2020 from what we're going to be around $9 a ton in the US. We and that's on the identified synergies. I mean, there's probably going to be other synergies that we're going to be able to accomplish and overtime.
We think we're going to be able to get their costs at the entire company's cost downs around $7 per ton. So when you look at it, I think overall, I didn't incorporate any sort of synergies from G. and A. or maintenance CapEx there. I think those costs are going to come down. So over time, I think it's going to actually be we're going to be producing stand at a lower cost per ton than we would as a standalone.

Don Crist

I appreciate all the answers, and I'll turn it back.

Ben Brigham

Welcome.

Operator

Luke Lemoine, Piper Sandler.

Luke Lemoine

Hey, good morning. John, you've been at loosely alluded to in the morning when you're at your current facility, you can see the two high personal lines right next door. Do you sort of on any plans to tie this in the June Express and then you kind of hit on earlier as well, but been your ability to convert the high cost mines to dredging from Yellow? Arne?

Ben Brigham

Yes, that's something we looked at that we can definitely on, like you said, I mean, across them a dozen major within two miles of our current mine, that something that we have it fully vetted on on what the cost would be. But it's something that we definitely think will be a synergistic from the did express point. Have you on you obviously know that connecting a mine or two mines via the conveyor is going to be going to be less expense than building bringing out an additional 5 to 6 million tons of capacity. So yes, we obviously see significant significant cost savings there.
On the dredging front, I that is something that we are we are at we are investigating, you know, we have it fully evaluated that, but that's something that we're definitely looking at. And I do think that on we are going to have an extra extra extra address here at some point here pretty soon. And that's something we make we may run over there.
See if we could see if we can see if we can then start red light of our own their location, they definitely do have water on it like we did. We have set to figure out how we're going to if it's going to work and you know, but then there's other things that we may be able to do if we can't fully dredge mine over there. I mean the other thing is is the dredges that we have arrived on location are going to be there going to be able to provide a significant amount of feed into our into our current mines.
There may be ways that we could even be held those dredges that over to their fee to their to their mine and then the process of the strategies as well. So there's there's a I guess what I want to say is there's just a lot a lot of things are a lot of opportunity here. A lot of optionality that, you know, we don't have a full handle on it, but that's something that we're definitely going to be looking out over here as we as we progress forward.

Luke Lemoine

Okay. Then on the Encore Mobile Mini mines. Can you just talk about your opportunity in concert with wet sand mining operations? And maybe you can see some opportunities just kind of improve the operations as well?

Ben Brigham

Yes, this but I'll just start by John. John, I'll probably add to it. You know up. I think some of you probably heard us early on. We were concerned about the challenges associated with wet sand. Obviously, we've been sold out who have dry sand, and so we weren't particularly motivated to move that direction. It's really a credit to Hi-Crush and their team and again, their culture, their innovative culture, that type really solve with the brand.
So that's that combined with zero, the fact that it's logistically advantaged to operators there over on the east side of the Midland Basin, particularly in made it made a compelling. And again, it's credit those guys and it's very complementary to what we're doing. And John, you want to add to them? Ami?

John Turner

We I do think that I agree with that. I think the Hi, Christina, at an amazing job on the West and front, I think that it on the logistics side as well. And I think that we're going to as a company, what we're going to do is we're going to come together and we're going to bring in the best ideas and see if there's anything at that they're doing that. We can apply it in within our operations.
And we're also going to say they are there things that we can do it there. If their operations like say, they're all hormones that we're doing is they don't have a motion that automation and things like that incorporate that as I definitely think there's going to be some some opportunity there as well.

Luke Lemoine

Okay. Thanks a bunch and congrats on the deal.

Operator

Thank you. Jim Rollyson, Raymond James.

Jim Rollyson

Hey, good morning, guys, and congrats on the transaction. John, maybe can you split out just you're obviously you guys break out the sand side from the logistics side. The way you report financials, maybe just I know we don't have all the financial details yet because it's not closed, but I'd love to get this kind of a rough split of maybe revenues and EBITDA from Hi-Crush between their actual sand operations. It's just the logistics that we can kind of think about that from a modeling perspective?

Ben Brigham

Hey, I'm going to let Brian answer that Jim is

John Turner

it's pretty close to 50 50. And there are also very heavily weighted in the logistics business like us.

Jim Rollyson

And do you think Bryan margin-wise, is their logistics business somewhere running close to what you guys have been doing historically? Just kind of trying to ferret that part out to get to the one-tenth of 1.5 of the guidance,

John Turner

we have been very similar and obviously, we've got a change coming up with the with the data Express to expand margins. But historically, it's pretty simple.

Jim Rollyson

Yes. My Brad, just kind of need for medically to help you think about the logistics when you when do you think about

John Turner

and we've talked about this as we were at a conference recently on the fact that historically, you know, OpEx is 70%. Opex has been labor made in the state. And when you look at what we're doing with what they're doing at Express were completely eliminate even better than say for that 42 mile haul in the most prolific producing province in the country there and the center, the center of the Delaware, Northern Delaware Basin, and then we've got last mile from there.
But then you look at so that that's going to be a real leapfrog forward in time. Obviously in terms of cost structure and margin capture for us and will be additive to 25. And then on top of that, you look what we're doing with a higher capacity, trucking, double triple trailering, significantly reducing the cost per ton delivered with that. And then similar only in the Midland Basin, what Hi-Crush's been doing with the proximal Encore mines of taking trucks off the road and the dosing of Dr. Tom?
So so there's real exciting when you think about over time, what we're going to be able to do to really to change the logistics business and really move that more towards when you look at the don't express it really is of midstream enterprise. And so the margin impact over time is really going to be exciting. And as you go forward and and you look at the margins of this company, we have a slide, slide 14 and the investor deck that shows, I mean, nobody has enjoyed some margins that we do, and we tried to about half the multiple of those companies approach us even on the margin.
So. So it's really exciting issue as you roll forward with this company with the scale of what the complementary assets we're adding and the innovative culture that we're going to be able to further drive down our cost structure and drive up our margins, which already a very exciting levels of natural gas want to add to that. But yes, I think that if you take this well covered it.

Jim Rollyson

Thanks for that color. But and then, John, last thing, just on the 26 to $20 a ton kind of full year pacing, maybe a little color. We sat here a quarter ago, you guys were kind of talk in the market was in the mid upper 20s, low 30s and you are still feeling about 40% contracted. Obviously on a combined basis, you guys are 80% contracted. Maybe how some color on how the Hi-Crush contracting weighed on that versus just knew where the markets that were weak market we've had had career to back half of the fourth quarter. Just kind of how how you ended up at this range versus where we have been historically?

John Turner

Yes, the high pressure, high pressure was that they have a contract profile, but there were heavily contracted there at a more lower price than what we were contracted at. So really what you're seeing there an adjustment to is it reflective of what their with their contract position. As you know there, I'd say that they're almost 100% contracted on number 24 volumes. And with that said, it's at a lower price than where we were as high as it will or our contract profile as

Jim Rollyson

Got it. Thanks, guys. Got you.

Operator

Sean McGowan, Daniel Energy Partners.

Good morning, guys. Congrats on the deal, but I think you addressed this a little bit in your opening comments, but can you just talk a little bit about customer overlap in particular and Kermit maybe for in the Delaware? Because obviously the Midland is somewhat new, but what's the overlap and the cost number mix here in can comment?

Ben Brigham

Well, there's not much it's very complementary in terms of customers, John, I don't know if there's any specific. I mean the fact that their their assets are certainly weighted towards the Midland Basin and then and their logistics is weighted towards the Midland Basin and logistics. What we've been doing, of course, what they're doing Xpress and the high capacity trucking is really had more impact in the Delaware Basin.
So it's kind of been natural organic that we have very complementary customer bases. We've been logistically challenged on the on the far eastern side of the Midland Basin, given that the distances to to move our proppant over there. So it's just it's a very high. It's very beneficial in that regard. On the I mean, like I said, I think it's there's very little overlap. Obviously some of the largest, most of the largest producer operator in the Permian Basin.
I think in at a progress has done a great job with those customers in those customers, value those relationships just like our soon, we look forward to getting to make hay those relationships for important serving those customers have already hired top tier customers look forward to serving that going forward. I mean, I think part of it is, you know, the logistics is so key to your to your proppant sales.
And so that's been natural that even our Kermit plant has been more weighted to the Midland Basin because that's where their logistics assets are. And we dominate the Delaware as our logistic assets are second to none, the Delaware. So it's really worked out well and very complementary in both or

John, as you look at the combined assets, are the assets of the combined company, where do you guys see maybe an opportunity for growth? I mean, where are you most excited about in terms of what what are you most excited about when you look at the combined assets?

Ben Brigham

Maybe I'll just make a general comment. John may have some specifics on. I mean, I'd just like it's really exciting were Atlas's position, particularly after this transaction that that that this base and darling of the shale, as I have some better significant evolution. And maybe we're in bid early, mitigating some of this evolution to a more I took more of a factory type operation. And so it's all about scale. And you're saying that I'm operator side and and other service side, we're uniquely positioned with the scale on logistics and profit to match the scale of the operator.
So there are going to be be a lot of opportunities associated with this distribution network. It took to make operators jobs easier and to eliminate the bottlenecks, particularly on on sand in the blender, and we're uniquely positioned to do that. So I'd just like we're going to have a lot of opportunities to add them to grow and other green shoots that we can even imagine right now. John, do you want to add to that?

John Turner

Yes, you know, I may nothing in particular other than these two companies have been have been really the only ones that have been investing in the press and logistics space that we have significantly as of today are Matt, I don't we can't necessarily tell you where the future growth is going to be. But I think what I can assure you is that we're going to continue making those investments, working with our partners by the operating partners to make to make sure that the efficiencies are well size continued to improve.
And overall, you know, frac sand intensity is going to continue to increase. Both mentioned that this will underscore this fall. We're going to be looking at opportunities to help our customers the increase that intensity. And John real quick, you talked about growth. I think one thing we're trying to balance growth and distributions, which this acquisition certainly enhances that.

So absolutely, guys, thanks for the time, and congrats again on the deal. Thank you. Really appreciate it.

Operator

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing comments.

Ben Brigham

Yes, we want to thank everybody for joining us for this call. This is an exciting and really transformational our company's history. Um, we really look forward to following up in subsequent quarters. So thank you all very much affect us.

Operator

Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect.