FA Alpha Daily

This company triumphs in the post-invasion energy chaos

Following the Russian invasion of Ukraine in 2022, Atlas Energy Solutions (AESI) benefitted from the ensuing global energy crisis. As a result, the company generated significant growth in revenue and profitability. In today’s FA Alpha Daily, we explore how AESI strategically navigated the energy crisis, capitalizing on the surge in oil prices and positioning itself for sustained success.

FA Alpha Daily:
Wednesday Credit
Powered by Valens Research

The Russian invasion of Ukraine in 2022 triggered a major global energy crisis that continues to reshape international fuel markets.

By disrupting Russian natural gas exports to Europe, the conflict spurred sharp rises in the prices of oil, LNG, and other hydrocarbons. This crisis has significantly benefited leading energy services providers operating in key North American shale basins.

Atlas Energy Solutions (AESI) is one of the top firms capitalizing on opportunities arising from global energy market disruptions.

The company provides proppant, frac sand, and integrated logistics services to oil and gas producers throughout the Permian Basin in West Texas and New Mexico.

In the twelve months following the invasion, benchmark international oil prices averaged over $100/barrel, supporting increased drilling and completion activity in the Permian.

Atlas reported strong financial results, with full-year 2023 revenues of $614 million, up 250% since 2021. Net income grew to $162 million from $4 million over this period, while Uniform return on assets (”ROA”) jumped to 24% from 11%.

To further scale its integrated platform, in February 2024, Atlas acquired Hi-Crush for $450 million, adding substantial frac sand production assets and logistics infrastructure across multiple basins.

The deal expanded Atlas’ total proppant capacity to over 15 million tons per year and cemented its leadership position in the Permian.

Goldman Sachs analysts predict European oil demand could increase by over 1 million barrels per day through 2024 as the region seeks to replace lost Russian supply. This bodes well for continued drilling activity levels in key shale plays.

Going forward, Atlas is well-positioned to capitalize on projected multi-year strength in global hydrocarbon consumption and prices.

The company’s integrated Permian Basin platform provides essential energy services to top E&P operators, while its scale and low-cost assets generate significant free cash flow even at lower price points.

This positions Atlas to deliver strong returns for shareholders over the long term.

That is why it is a great FA Alpha 50 name.

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Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

This analysis of Atlas Energy Solutions (AESI)’s credit outlook is the same type of analysis that powers our macro research detailed in the member-exclusive FA Alpha Pulse.

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