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Oct 29 (Reuters) - Frac sand miner U.S. Silica Holdings reported a bigger-than-expected loss for the third quarter on Tuesday, battered by weaker prices and softer demand from shale oil drillers.
Shares of the Katy, Texas-based company fell about 7.8% to $7.20 in low volume before the bell.
Sand prices have been dropping as shale producers in the Permian and other basins have been sourcing more from local basins to cut transportation costs involved in buying Northern White sand from Wisconsin.
Sand is used to open cracks in shale rocks to release oil and gas and is the most widely used proppant in fracking.
The company sold 3.9 million tons from its oil & gas segment in the third quarter, down 1% from the prior quarter. For the fourth quarter, it expects the slowdown in well completions in North America to hit volumes by 10% sequentially.
Price per ton of sand was also hit in the quarter as multiple new mines came online in West Texas, worsening conditions in an already oversupplied market.
According to the company's estimates, the frac sand demand for the year is just about 100 million tons to 110 million tons, whereas the total effective supply is estimated at a much higher 140 million tons to 150 million tons.
U.S. Silica said it has already taken out about 5 million tons per year of supply from the market by completely idling some plants or cutting shifts and working days.
The company's Sandbox unit, which provides transportation and storage facilities for proppant used in fracking, also moved fewer tons in the third quarter compared with the second. The company expects this sequential decline to continue in the fourth quarter.
U.S. Silica reported a net loss of $23 million, or 31 cents per share, for the quarter ended Sept. 30, compared with a profit of $6.3 million, or 8 cents per share, a year earlier.
Adjusted loss came in at 17 cents per share, well below analysts' average estimate of 3 cents, according to Refinitiv IBES data.
Revenue fell 14.5% to $361.8 million, missing estimates of $395.5 million. (Reporting by Shariq Khan and Taru Jain in Bengaluru; Editing by Vinay Dwivedi)