As filed with the Securities and Exchange Commission on August 13, 2018.

Registration No. 333-222539

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 3

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Vista Proppants and Logistics Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

1400

82-0797817

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

4413 Carey Street

Fort Worth, Texas 76119

Telephone: (817) 563-3500

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Kristin Smith

Chief Financial Officer

Vista Proppants and Logistics Inc.

4413 Carey Street

Fort Worth, Texas 76119

Telephone: (817) 563-3500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Joshua Ford Bonnie

William R. Golden III

Simpson Thacher & Bartlett LLP

900 G Street, N.W.

Washington, DC 20001

Telephone: (202) 636-5500

Ryan J. Maierson

Thomas G. Brandt

Latham & Watkins LLP

811 Main Street, Suite 3700

Houston, Texas 77002

Telephone: (713) 546-5400

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement is declared effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 13, 2018

PRELIMINARY PROSPECTUS

LOGO

Shares

Vista Proppants and Logistics Inc.

Class A Common Stock

$ per share

This is the initial public offering of shares of Class A common stock of Vista Proppants and Logistics Inc. We are selling shares of our Class A common stock. We currently expect the initial public offering price to be between $ and $ per share of Class A common stock. We have applied to list our shares of Class A common stock on the NASDAQ Global Select Market (“NASDAQ”) under the trading symbol “VPRL.”

We have granted the underwriters an option to purchase up to additional shares of Class A common stock to cover over-allotments.

We are an “emerging growth company” as defined under the federal securities laws and, as such, will be subject to certain reduced public company reporting requirements. See “Summary—Implications of Being an Emerging Growth Company.”

Investing in shares of our Class A common stock involves risks. See “Risk Factors” beginning on page 22.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to Vista Proppants and Logistics Inc.	$	$

Please see the section entitled “Underwriting” for a description of compensation payable to the underwriters.

The underwriters expect to deliver the shares of our Class A common stock on or about , through the book-entry facilities of The Depositary Trust Company.

Joint Book-Running Managers


Citigroup	Credit Suisse	Simmons & Company International
		Energy Specialists of Piper Jaffray

Co-Managers


Cowen		Jefferies

Johnson Rice & Company L.L.C.		Raymond James

The date of this prospectus is , .

LOGO

Table of Contents


	Page
Summary		1
Risk Factors		22
Forward-Looking Statements		52
Market and Industry Data		52
Trademarks, Service Marks and Trade Names		52
Organizational Structure		53
Use of Proceeds		58
Dividend Policy		59
Capitalization		60
Dilution		61
Unaudited Pro Forma Condensed Consolidated Financial Information		63
Selected Historical Consolidated Financial Data		74
Management’s Discussion and Analysis of Financial Condition and Results of Operations		76
Industry		101


	Page
Business		110
Management		131
Certain Relationships and Related Person Transactions		144
Principal Stockholders		150
Description of Certain Indebtedness		151
Description of Capital Stock		155
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		163
Certain ERISA Considerations		167
Shares Eligible for Future Sale		169
Underwriting		172
Legal Matters		178
Experts		178
Where You Can Find More Information		178
Index to Financial Statements		F-1
Appendix A—Glossary of Terms		A-1

Neither we nor the underwriters have authorized any other person to provide you with information different from that contained in this prospectus and any free writing prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor the underwriters are making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our Class A common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. Please read “Risk Factors” and “Forward-Looking Statements.”

Unless the context suggests otherwise, references in this prospectus to “Vista Proppants and Logistics,” “Vista,” the “Company,” “we,” “us” and “our” refer (1) prior to the consummation of the Offering Transactions described under “Organizational Structure—Offering Transactions,” to Vista Proppants and Logistics, LLC (f/k/a Oilfield Sands Holdings, LLC) (“Vista OpCo”) and its consolidated subsidiaries and (2) after the Offering Transactions described under “Organizational Structure—Offering Transactions,” to Vista Proppants and Logistics Inc. and its consolidated subsidiaries. Gary B. Humphreys, our co-founder and Chief Executive Officer, and Martin W. Robertson, our co-founder, President and Chief Operating Officer, together with their respective affiliates, are referred to collectively as our “Founders.” Investment funds or vehicles associated with or designated by First Reserve Management L.P. are referred to herein as “First Reserve” or “our Sponsor.” We refer to our Founders and our Sponsor collectively as our “Principal Stockholders,” and to our Principal Stockholders and the management and other equity holders who are the owners of Vista Proppants and Logistics, LLC immediately prior to the Offering Transactions collectively as the “existing owners” or “pre-IPO owners.”

Our business has historically been conducted through three affiliated entities and their respective subsidiaries: (i) Lonestar Prospects, Ltd., a Texas limited partnership (“Lonestar”), was formed on November 3, 2010 and is in the business of mining, processing, transporting and selling frac sand; (ii) MAALT, LP, a Texas limited partnership (“MAALT”), was formed on August 18, 2004 and specializes in the transloading of

sand from rail to truck and the implementation of frac sand logistics solutions focused on the transportation of sand from in-basin terminals to the wellhead; and (iii) Maalt Specialized Bulk, LLC, a Texas limited liability company (“Bulk”), was formed on June 30, 2011 and provides commercial trucking services through its fleet of commercial trucks, trailers and related assets, used in the transport of frac sand and related commodities. Lonestar is our predecessor for accounting purposes.

On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista OpCo. More specifically, Lonestar Prospects Holding Company, L.L.C. (“LS Holdings”), which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, an affiliate of First Reserve Management, L.P. (“First Reserve”) purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to this transaction in this prospectus as the “March 2017 Transaction.”

The sums or percentages, as applicable, of certain tables and charts included in this prospectus may not foot due to rounding.

Unless indicated otherwise, the information included in this prospectus assumes no exercise by the underwriters of their option to purchase up to an additional shares of Class A common stock from us and that the shares of Class A common stock to be sold in this offering are sold at $ per share of Class A common stock, which is the midpoint of the price range indicated on the front cover of this prospectus.

SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in shares of our Class A common stock. You should read this entire prospectus carefully, including the section entitled “Risk Factors” and the financial statements and the related notes thereto included elsewhere in this prospectus, before you decide to invest in shares of our Class A common stock.

Vista Proppants and Logistics

We are a leading in-basin provider of frac sand solutions for oil and gas well completions in prolific producing regions in Texas and Oklahoma. We offer leading E&P and oilfield service companies the high-quality, fine grade white sand that is most in demand in these basins with the cost advantages of a regional provider. Through our vertically integrated logistics network of 12 transload terminals throughout Texas and Oklahoma, and fleet of approximately 100 “last-mile” transport vehicles, our customers benefit from our mine-to-wellhead frac sand supply chain solutions and assured security of supply in the most active oil and gas regions of the United States, including the Permian Basin, Eagle Ford Shale and SCOOP/STACK. We mine all of our sand in Texas and believe we are the largest supplier of frac sand mined in the state, as measured by produced tonnage per year.

We produce high-quality, fine grade 40/70-mesh, 100-mesh and 200-mesh sand. Marketed as “Texas Premium White,” our sand is comparable to sand mined in Wisconsin and Illinois, commonly referred to as “Northern White,” and meets applicable industry specifications and customer requirements for a large addressable market of wells. We believe the low overburden, homogeneous geology, and strategic location of our mines near sustainable water and power sources provide us with cost advantages over other Texas-based sand mines. The proximity of our mines and transload terminals to active demand centers enables significantly lower logistics costs as compared to Northern White sand providers because our costs of transportation (based on published tariff rates of Class I and shortline railroads) are lower than Northern White sand providers for proppant delivered into the basins we serve. Our mines are located near multiple rail lines, providing us with flexible logistics infrastructure and multiple rail delivery options into the major Texas and Oklahoma basins. We believe these advantages not only assure lower delivered cost, but also increase security of supply from mine-to-wellhead.

The following table summarizes key characteristics of our mining facilities:


Location	Reserves	Annual Production Capacity	Logistics Access	Basins Served	Commencement of Operations
Cresson, Texas	37.7 million tons (proven reserves) 64.9 million tons (probable reserves) 8% 40/70-mesh 79% 100-mesh 13% 200-mesh(1)	4.5 million tons	BNSF Railway, Union Pacific Railroad, Texas Pacífico Transportation Railway, trucking	Permian Basin, Eagle Ford Shale, SCOOP/STACK	2011

Tolar, Texas	12.4 million tons (proven reserves) 100% 100-mesh	1.0 million tons	BNSF Railway, Union Pacific Railroad, Texas Pacífico Transportation Railway, trucking	Permian Basin, Eagle Ford Shale, SCOOP/STACK	November 2017

Location

Reserves

Annual
Production
Capacity

Logistics Access

Basins Served

Commencement of
Operations

Winkler County, Texas

236.5 million tons (proven reserves)

38% 40/70-mesh

62% 100-mesh

5.0 million tons(2)

Trucking

Midland Basin and Delaware Basin (sub-basins of the Permian Basin)

March 2018(2)

(1)	Historically, 200-mesh sand from the Cresson mine has been sold as an industrial product.

(2)

Operations at our West Texas mine commenced in March 2018, with 3.0 million tons of annual production capacity available as of the third quarter of 2018. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits.

Our vertically integrated proprietary network of transload terminals and last-mile logistics capabilities enable us to provide our customers with complete mine-to-wellhead frac sand supply solutions. Our 12 existing transload terminals are strategically located in the most active U.S. basins, including the Permian Basin (six terminals), Eagle Ford Shale (two terminals) and SCOOP/STACK (two terminals). We utilize our transload terminals to deliver and store sand within trucking distance to the well site. To complement our network of transload terminals and complete our mine-to-wellhead capabilities, we own and operate a fleet of approximately 100 fit-for-purpose last-mile transport vehicles that can integrate with various wellsite storage solutions, including silo, box and portable conveyance solutions. Our vertically integrated operations allow us to provide our customers with greater control over their development plans, security of supply and efficient cost management of their hydraulic fracturing process.

For the year ended December 31, 2017 and the six months ended June 30, 2018, we generated pro forma consolidated net income of approximately $ million and $ million, respectively, and pro forma Adjusted EBITDA of approximately $ million and $ million, respectively. See “Unaudited Pro Forma Condensed Consolidated Financial Information.” For the definition of Adjusted EBITDA and a reconciliation to its most directly comparable financial measure calculated and presented in accordance with GAAP, please read “—Summary Historical and Pro Forma Financial and Other Data.”

Our Competitive Strengths

We believe that the following strengths position us to achieve our primary business objective of creating value for our stockholders:

•

Pure play, low-cost provider of high-quality Texas Premium White sand: We believe our low logistics costs, combined with low-cost mining, make us among the lowest cost in-basin frac sand producers in Texas. We refer to production facilities located in Texas, Oklahoma, Arkansas and Arizona as “regional.” All of our mines are regional and located in Texas, enabling a low cost of delivery relative to our publicly traded competitors with Northern White sand exposure. Additionally, our regional focus provides us with expertise and market intelligence that enable us to identify risks and incorporate best practices specific to the development of fine grade regional sand deposits. We believe the following factors further differentiate us from other regional providers:

•

Strategically Located Mines. The strategic location of our regional sand mines, owned transload terminals and access to multiple rail lines combined with our last-mile trucking capabilities enable our frac sand to be delivered in a low-cost manner to the most active plays in the Permian Basin, Eagle Ford Shale and SCOOP/STACK.

•

Texas Premium White Sand. As opposed to traditional “brown” regional sands, substantially all of our reserves meet API specifications for crush resistance, sphericity, solubility and turbidity, where applicable. We believe these characteristics differentiate our sand from most other existing regional sand providers in Texas and compare favorably with Northern White sand mined in Wisconsin and Illinois.

•

Fine Grade Reserves. Substantially all of our reserves consist of finer grain size sand, measured as either 40/70-mesh, 100-mesh or 200-mesh, which is fit-for-purpose for modern shale oil and natural gas hydraulic fracturing requirements and is in high demand relative to coarser grain sizes of frac sand. In addition, we believe we are one of the few commercially available sources for ultra-fine 200-mesh sand.

•

Low-Cost Production. We refer to our mines as “low cost” because we believe the minimal overburden, abundant access to low-cost water, natural gas and electricity to process mined sand and homogeneous nature of the geology at our operating mines provide us with cost advantages over other Texas-based sand mines, enabling us to consistently produce sand at low costs.

•

Advanced Logistics Infrastructure. Our transload rail terminals and in-basin mines are located close to customer wellheads, minimizing our customers’ exposure to the elevated truck rates and non-productive time (“NPT”) incurred during times of high trucking activity as a result of the 150- to 300-mile hauls from a typical regional mine operator.

•

Vertically integrated mine-to-wellhead frac sand solutions provider: In order to be a low-cost provider of frac sand supply solutions, we believe that logistics networks have to be streamlined, logistics costs have to be managed efficiently and solutions have to be tailored to the specific characteristics and locations of individual wells. By owning and operating our vertically integrated logistics infrastructure, we are able to improve cost efficiency and reliability of mine origin and rail distribution pairings, mitigate volatility in transportation costs, ensure transloading availability and capacity, provide security of supply at delivered locations close to, or at, the wellhead and offer a full portfolio of last-mile solutions, including the delivery of sand to customers using last-mile proppant delivery solutions, such as pneumatic trucks, portable sand silos, portable wellsite conveyance systems and boxes. We have increased the number of our transload facilities to 12 as of the date of this prospectus from one in 2006, three in 2011 and five in 2013. Over the last five years we have transloaded approximately 15 million tons of frac sand and delivered approximately six million tons of frac sand to the wellsite in the aggregate. These benefits represent a cost and customer service advantage over other frac sand providers and have greatly contributed to our success securing business from E&P operators, who typically do not have the personnel or relevant expertise to manage the complex frac sand supply chain and frequently require one or more last-mile proppant delivery solutions to most efficiently hydraulically fracture their wells. We believe our large network of terminals, fleet of last-mile vehicles, 24/7 real time logistics reports, onsite well coordinators and final mile experience delivering sand to a wide range of our customer’s customized proppant delivery solutions (including pneumatic trucks, portable silo, portable conveyance or boxes) would be difficult, costly and time-consuming for competitors to replicate. Our logistics assets also provide us with the ability to opportunistically generate revenue from handling of third-party sand and allow us to more quickly adapt to the growing challenges posed by an industry that is increasingly focused on high-intensity well completions.

•

Strong contracted relationships with blue chip customer base: Our contracted customer base includes some of the largest and most active E&P operators in the United States as well as premier oilfield services companies. Sand has become an increasingly important component of the oil and gas production process, and our ability to deliver sand from the mine to the wellhead and ensure low-cost, in-basin supply has been a key factor in expanding our relationship with blue chip companies that have turned to us for our differentiated logistics capabilities, particularly E&P operators. Even during the recent industry downturn from late 2014 to mid-2016, our customers continued to purchase sand from us at their contracted volumes, evidencing the quality of our customer base and the strength of our relationships. As of July 31, 2018, approximately 85% and 65% of our frac sand volumes were contracted for 2018 and 2019, respectively. For the year ended December 31, 2017 and the six months ended June 30, 2018, nearly all of the frac sand volumes we sold were to customers utilizing our integrated services.

•

capacity at our Cresson facility from under 300,000 tons in 2011 to 1.6 million tons by the end of 2013, to 3.1 million tons by the end of 2015 and to 4.5 million tons as of December 31, 2017 by completing three brownfield expansion projects. We commenced operations at our Tolar mine and our mine in Winkler County, Texas, which we refer to as the “West Texas” mine, in November 2017 and March 2018, respectively. The addition of the Tolar and West Texas mines have increased our total production capacity to approximately 8.5 million tons annually as of the second quarter of 2018. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits, which will increase our total production capacity to approximately 10.5 million tons annually. With approximately 351.5 million tons of reserves, consisting of 286.6 million tons of proven reserves and 64.9 million tons of probable reserves, our operations have been designed to enable up to six million tons of additional capacity expansion, most of which would occur at our West Texas mine, including a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits. Moreover, since inception we have constructed five transload terminals. We believe our demonstrated ability to identify and successfully develop high-quality sand reserves and transload sites in attractive basins will allow us to continue to opportunistically and profitably expand our business.

•

Consistent profitability and financial flexibility through the cycle: Lonestar, our predecessor for accounting purposes, was able to consistently generate positive net income and Adjusted EBITDA throughout the recent industry downturn from late 2014 to mid-2016, while continuing to increase its sales volumes and expand its capacity and footprint. Our low fixed cost structure and integrated mine-to-wellhead frac sand solution offerings allowed us to operate profitably in 2016 on both a net income and Adjusted EBITDA basis, a period during which many of our publicly traded competitors were operating at or below breakeven Adjusted EBITDA levels and/or curtailed their operations. Our definition of Adjusted EBITDA may not be comparable to a similarly titled measure of other companies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Evaluate Our Business—Adjusted EBITDA.” After giving effect to this offering, we expect to have approximately $ million of liquidity in the form of cash on hand and undrawn borrowing capacity under our $60.0 million line-of-credit, and we believe that we will have ample liquidity to pursue attractive initiatives.

•

Highly experienced and aligned management and operating team: The members of our senior management team have considerable experience in constructing and operating frac sand mines and logistics assets, including frac sand-specific industry experience and last-mile logistics industry experience. In addition to our strong senior management team, we have an operating and technical team with experience and expertise in the best practices of regional sand mining, logistics and delivery solutions. Our management has experience operating a total of 18 mines, and our logistics team has an average of over 30 years of experience, which includes over 45 years of our Founders’ combined experience in trucking. We believe our management team is invested in our success through their significant economic interest in the equity of our company. Before giving effect to this offering, members of our senior management team beneficially own approximately 68% of our outstanding equity. See “Principal Stockholders.”

Our Business Strategy

We believe that we will be able to achieve our primary business objective of creating value for our stockholders by executing on the following strategies:

•

produce coarser grain sand, as is typical for many regional proppant providers in Texas that have less homogeneous reserves. As industry trends have shifted toward a preference for fine grade sand, and as proppant demand in the Permian Basin has come to represent an increasingly significant amount of total U.S. sand demand, Northern White sand sold as a percent of total proppant volume sold in the United States has decreased from 72% in 2014 to 63% in 2016, and is expected to account for only 52% in 2018 based on effective supply, according to Coras Research. We believe our ability to maintain our position as a low-cost supplier of proppant to the Permian, Eagle Ford and SCOOP/STACK basins while growing our proppant volumes to meet rising demand in our core markets will position us to capitalize on a continued recovery and enable us to increase our market share.

Proppant Demand by Basin

(Millions of tons)

LOGO

Source: Spears & Associates, December 2017.

•

Execute greenfield and brownfield regional sand mine and transload terminal expansion: We intend to continue to expand our base of regional sand reserves and grow our network of transload terminals. We commenced operations at our Tolar and West Texas greenfield sand mines in November 2017 and March 2018, respectively. We are currently undertaking a two million ton capacity expansion at our West Texas mine and expect to expand annual production capacity at the mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits. Additionally, we constructed a transload terminal in West Texas, which commenced operations in August 2017. We also constructed a rail-to-truck transload terminal in Gonzales, Texas during the first quarter of 2018. These projects all have access to critical utility infrastructure such as clean water, natural gas and electricity, the lack of which has the potential to create significant bottlenecks in Texas-based regional expansion projects. We take a disciplined and risk-adjusted, returns-focused approach to evaluating expansion projects, which are typically supported by contracted customer demand. Our strategic planning for greenfield expansion opportunities typically includes accommodating low-cost incremental brownfield expansions. In addition to our current projects and other identified greenfield opportunities in our strategic pipeline, we believe we have ample opportunity for continued brownfield expansion of our existing asset base to meet customer demand. Our purpose-built sand processing facilities were constructed in a manner that provides us with the ability to increase production by six million tons of proppant per year, most of which relates to a potential expansion of our West Texas facility, including a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits.

•

Capitalize on our ability to provide customer specific vertically integrated sand solutions: We plan to continue to leverage our fully integrated platform to provide our customers with a complete sand supply solution that manages the proppant supply chain from the sand mine to the wellhead. According to Coras Research, regional and in-basin sand supply is expected to represent 48% of total sand supply in 2018, up from 37% of total sand supply in 2016. We believe existing proppant logistics infrastructure will become increasingly constrained due to proppant demand outpacing logistics supply growth, road infrastructure limitations leading to congestion and increasing proppant loads at the wellhead. These factors are likely to impact each E&P operator differently. We believe we are well positioned to develop efficient, customized solutions as a result of our:

•

established track record of delivering sand to E&P operators that have directly contracted for or purchased portable silo, portable conveyance or box solutions, allowing for a broad array of customizable solutions;

•

diverse mix of flexible transload assets and regional in-basin, rail-focused sand supply assets that enable low-cost, in-basin deliveries while reducing truck loading times and exposure to individual railroads and road systems;

•

ability to couple fully managed sand delivery from mine-to-wellhead with streamlined invoicing; and

•

integrated reporting systems that enable real-time tracking of inventory.

We believe our ability to offer a complete sand solution, including proppant delivery logistics, will continue to make us a proppant provider of choice to E&P customers seeking alternatives to oilfield service companies for proppant delivery logistics support and will allow us to increase the quantity of our sand that is sold at the wellhead.

•

Develop and expand customer relationships while tactically approaching long-term contracts: We have established relationships with more than 33 E&P and oilfield service companies that have turned to us for proppant and proppant delivery logistics in our primary markets. Since the beginning of 2016, we have supplied proppant solutions to more than 10 new customers that we had not previously served. We actively work with customers to evaluate the benefits of finer grain sand and to develop a market for ultra-fine 200-mesh sand, for which we believe we are one of the few commercially available sources. We carefully manage the volume of proppant demand that we have contracted to provide to our customers in order to balance the benefits of earnings visibility with the benefits of exposure to increases in market pricing.

•

Selectively pursue accretive acquisitions of high-quality complementary assets: We intend to remain a pure play regional proppant solutions company and benefit from the continued shift in proppant demand from Northern White sand to regional sand, and from coarser grain size to finer grain size. We may seek to bolster our existing business line through accretive acquisitions by strategically adding reserves and annual capacity to our proppant mining activities as well as adding assets to complement our existing logistics solutions. We will focus on opportunities that fit with our strategy of providing high-quality proppant at low cost of production and delivery. Additionally, we may evaluate opportunities to use accretive acquisitions to enter complementary business lines, such as the transportation of water, chemicals, consumables or other wellsite materials, that capitalize on our ability to provide superior wellsite logistics support. We plan to continue exploring opportunities to acquire additional assets in our current operational footprint as well as monitor opportunities to acquire and integrate operations in other active basins in our region. As a public company, we believe our increased access to capital and a publicly traded currency will enhance our ability to pursue accretive acquisition opportunities.

•

Maintain financial flexibility: At the closing of this offering we expect to have approximately $ million of liquidity in the form of cash on hand and undrawn borrowing capacity under our $60.0 million line-of-credit. We plan to use and maintain this financial flexibility to opportunistically grow our business and effectively manage our business through potential changes in market conditions.

Industry Trends Impacting Our Business

Demand for our proppant and proppant logistics services is primarily driven by both the level of well completion activity by E&P companies and the intensity of those well completions, each of which has increased since the beginning of 2016. Depressed industry conditions in 2015 and 2016 resulted in decreased drilling and completion activities and proppant demand from the highs observed in 2014. However, recent increases in crude oil and natural gas commodity prices have driven significant increases in U.S. drilling and completion activity and proppant demand growth in excess of commodity price and rig count growth.

We believe that we are well positioned to benefit from numerous secular trends that we expect to further increase demand for our product and service offering beyond a rising commodity price environment:

E&P companies are focused on drilling and completion activities in core regions. Our frac sand logistics services are focused on the most active oil and gas regions in the United States, including the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. Rystad Energy estimates the wellhead breakeven drilling and production price in both the Permian Basin and Eagle Ford Shale is expected to average $42 per barrel (“Bbl”) in 2018, which has driven favorable economic returns for E&P companies in these regions. These attractive economics are expected to drive continued drilling and completion investment in the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. According to Spears & Associates, the Permian Basin and Eagle Ford Shale will account for 48% of overall active land rigs in the United States in 2020. Our in-basin mine and transload terminals allow us to serve an undersupplied fine mesh market in the Permian Basin, which accounted for approximately 60% of the proppant we sold during the first six months of 2018. Our network of transload terminals allows us to take a targeted approach to where we deploy our proppant to better serve our customers experiencing supply challenges in other undersupplied markets. Our Permian Basin activities support the highly active Midland Basin (West Texas) and Delaware Basin (West Texas and New Mexico). The Midland Basin and the Delaware Basin are expected to remain two of the most active regions in the United States, supported by considerable oil and natural gas reserves and drilling and completion activity by large E&P companies. In 2016, the United States Geological Survey released its assessment of the Wolfcamp shale in the Midland Basin, estimating that the formation contains 20 billion barrels of oil and 16 trillion cubic feet of natural gas. Additionally, a number of the largest E&P companies in the United States have consolidated acreage positions in the Midland and Delaware Basins, which indicates a continuing commitment to developing assets in the region and supports long-term forecasts for increased drilling and completion spending.

Proppant demand per well continues to rise with advanced drilling and completion techniques. Over the past decade, E&P companies have increasingly utilized advanced drilling and completion techniques, such as horizontal drilling and hydraulic fracturing, in order to cost-effectively develop and produce hydrocarbon resources in North America. These advancements require drilling increasingly long laterals and more hydraulic fracturing stages per horizontal well, both individually leading to increased levels of proppant per well. According to Spears & Associates, the average lateral lengths of horizontal and directional wells will increase from approximately 7,300 feet in 2015 to approximately 8,700 feet in 2018. Additionally, according to Spears & Associates, the average number of fracturing stages per new U.S. horizontal well has increased from 23 stages per well in 2014 to 34 stages per well in 2016, and is expected to further increase to an average of 48 stages per new U.S. horizontal well in 2018. The combination of these trends is expected to result in a considerable increase in proppant demand per well, which Spears & Associates estimates to increase from an average of 4,700 tons per well in 2016 to an average of approximately 7,100 tons per well in 2018. The increase in proppant per well has stressed supply chains at transload terminals, last-mile trucking operations and well pads, requiring innovations that we believe would be difficult to implement without captive and controlled infrastructure solutions. These same factors were present in 2014 and resulted in increases in NPT for service companies and increased costs of well completions in North America. To reduce NPT, operators were forced to delay completion activity or implement new well completion designs based on what sand was available in-basin.

Insufficient supply from regional providers to meet demand. Attractive economics for E&P companies in the Permian Basin, Eagle Ford Shale and the SCOOP/STACK are expected to drive increased levels of drilling and completion spending, creating considerable demand for proppant in Texas, Oklahoma and New Mexico. Spears & Associates estimates annual proppant demand in the Permian Basin and Eagle Ford Basin will increase from 14.3 million tons and 5.6 million tons in 2016 to 52.2 million tons and 18.6 million tons in 2018, respectively. Despite the approval of a number of West Texas-based sand mine permits, we believe several of these mines will face regulatory and environmental hurdles, lack access to sufficient water, electricity or natural gas supply, and/or contain high levels of overburden, which may increase the cost of proppant production or delay operations of those mines. We believe increased demand, limited supply and barriers to entry will drive a supply deficit for regional sand in close proximity to the Permian Basin, Eagle Ford Shale and the SCOOP/STACK. We believe we are well positioned to capitalize on this supply deficit because our delivered cost into the Permian Basin is significantly lower than the delivered cost of the lowest cost providers of proppant outside Texas.

Increasing preference for integrated proppant logistics solutions. The increase in demand for proppant is expected to decrease the availability of in-basin proppant transload and last-mile logistics assets and increase the difficulty of transporting proppant from rail lines to the wellhead. As transloading and last-mile logistics availability becomes increasingly constrained, we believe proppant end users, primarily E&P operators that typically lack dedicated in-house proppant logistics teams, are increasingly focused on ensuring proppant supply to the wellhead due to the critical importance of proppant to their drilling and completion programs. E&P operators have relied on oilfield service companies and fully integrated proppant suppliers to provide security of proppant supply to the wellhead and manage the complexities surrounding proppant logistics. Additionally, as the proppant intensity of hydraulic fracturing has increased, proppant costs have increased. The high cost of proppant relative to the cost of hydraulic fracturing and total well cost has led E&P companies to place increased strategic importance on proppant supply. As a result, we believe E&P companies will seek alternatives to oilfield service companies in order to ensure proppant supply programs are met, providing competitive advantages to suppliers with fully integrated proppant mining and logistics capabilities.

Increasing industry preference for finer grade sand. Before 2014, coarser grades of sand (API specification 20/40-mesh and API specification 30/50-mesh) were prevalent in oil and liquids rich regions while finer grades (API specification 40/70-mesh and 100-mesh) were typically more prevalent in gas rich regions. During the broader energy downturn from late 2014 to mid-2016, cost pressure and performance benefits realized by early adopters of micro-fracturing techniques encouraged more E&P companies to experiment with finer grades of sand. As the adoption of micro-fracturing techniques increased and E&P companies began to realize production benefits from using basin-specific mixes of sand, the demand for fine grade sand increased. Currently, E&P companies have shown a preference for finer grade sand as a result of the demonstrated success of leading E&P companies such as EOG Resources, which has publicly released production results that support the use of fine grade sand. Additionally, since 2013, in order to save costs and increase production, E&P companies have increasingly utilized slickwater fracturing fluid instead of crosslinked gel fracturing fluid, which has further bolstered the shift from coarse grade sand to fine grade sand. Due to the low viscosity of slickwater fluid, the coarser grades of sand traditionally used in crosslinked gel fluid cannot be as easily suspended or conveyed by slickwater fluid. Today, the vast majority of well completions are slickwater or a hybrid treatment with a slickwater portion. According to Rystad Energy, approximately 94% of U.S. horizontal well completions in the second quarter of 2018 utilized slickwater or hybrid fluids. As a result, E&P operators have increasingly shifted from coarser grades of sand to finer grades of sand to accommodate the use of slickwater fluid. We believe we are one of the largest producers of fine grade sand and the single largest producer of fine grade sand in Texas. We believe the trend toward finer grades of sand is likely to continue, creating a long-term demand for fine grade sand products, including ultra-fine 200-mesh, of which we believe we are one of only a few providers in the market.

Our Sponsor

First Reserve is a leading global private equity investment firm exclusively focused on energy. With nearly 35 years of industry insight, investment expertise and operational excellence, First Reserve has cultivated an enduring network of global relationships and raised approximately $31 billion of aggregate capital since inception. First Reserve has completed over 600 transactions (including platform investments and add-on acquisitions), creating several notable energy companies throughout the firm’s history. Its portfolio companies operate on six continents, spanning the energy spectrum from upstream oil and gas to midstream and downstream, including resources, equipment and services and associated infrastructure.

Investment Risks

An investment in shares of our Class A common stock involves substantial risks and uncertainties that may adversely affect our business, financial condition and results of operations and cash flows. Some of the more significant challenges and risks relating to an investment in our company include, among other things, the following:

•

Our business and financial performance depend on the level of activity in the oil and natural gas industries and the price of oil and natural gas.

•

Increasing logistics costs, a lack of dependability or availability of transportation services or infrastructure and geographic shifts in demand could have a material adverse effect on our business.

•

Our operations are dependent on our rights and ability to mine our properties and on our having renewed or received the required permits and approvals from governmental authorities and other third parties.

•

The demand for frac sand fluctuates, which could adversely affect our results of operations.

•

Our operations are subject to the cyclical nature of our customers’ businesses, and we may not be able to mitigate that risk.

•

We may be adversely affected by decreased demand for the finer grade frac sand we produce or the development of either effective alternative proppants or new processes to replace hydraulic fracturing.

•

Our proppant sales and supply chain solutions offerings are subject to fluctuations in market pricing.

•

The construction of new assets or the expansion or modification of existing assets may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition.

•

A large portion of our sales is generated by a limited number of customers, and the loss of, or a significant reduction in purchases by our largest customers could adversely affect our operations.

•

Our operations are subject to operating risks that are often beyond our control and could adversely affect production levels and costs, and such risks may not be covered by insurance.

•

Any adverse developments at our mines could have a material adverse effect on our business, financial condition and results of operations.

•

We may face competition from additional in-basin sand mines.

•

Inaccuracies in our estimates of the quantity and quality of our sand reserves could result in lower than expected sales and higher than expected costs.

•

Our production process consumes large amounts of natural gas and electricity. An increase in the price or a significant interruption in the supply of these or any other significant raw material costs could have a material adverse effect on our business, financial condition or results of operations.

•

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related litigation could result in increased costs and additional operating restrictions or delays for our customers, which could cause a decline in the demand for our sand-based proppants and negatively impact our business, financial condition, and results of operations.

•

We and our customers are subject to extensive environmental and health and safety regulations which impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations.

•

Vista Proppants and Logistics Inc. is controlled by our pre-IPO owners, whose interests may differ from those of our public stockholders.

•

Upon the listing of our shares on NASDAQ, we will be a “controlled company” within the meaning of NASDAQ rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

Please see “Risk Factors” for a discussion of these and other factors you should consider before making an investment in shares of our Class A common stock.

Implications of Being an Emerging Growth Company

As a company with less than $1.07 billion in revenue during our most recently completed fiscal year prior to the initial filing date of the registration statement of which this prospectus forms a part, we qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies that are not emerging growth companies. These provisions include:

•

presentation of two years of audited financial statements rather than three years and the inclusion of two years of selected historical financial information rather than five years in this prospectus;

•

reduced disclosure about our executive compensation arrangements;

•

exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved; and

•

exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of: (1) the end of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year during which our annual gross revenue was $1.07 billion or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (4) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have elected to take advantage of the provisions permitting presentation of two years of audited financial statements and selected financial information and reduced disclosure regarding executive compensation arrangements in this prospectus, and we may choose to take advantage of some but not all of these reduced disclosure obligations in future filings. If we do, the information that we provide stockholders may be different than you might get from other public companies in which you hold stock.

The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Organizational Structure

The March 2017 Transaction

Our business has historically been conducted through three affiliated entities and their respective subsidiaries: (i) Lonestar, which is in the business of mining, processing, transporting and selling frac sand; (ii) MAALT, which specializes in the transloading of sand from rail to truck and the implementation of frac sand logistics solutions focused on the transportation of sand from in-basin terminals to the wellhead; and (iii) Bulk, which provides commercial trucking services through its fleet of commercial trucks, trailers and related assets, used in the transportation of frac sand and related commodities.

On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista OpCo. More specifically, LS Holdings, which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, an affiliate of First Reserve purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to this transaction in this prospectus as the “March 2017 Transaction.” Lonestar is our predecessor for accounting purposes.

Our Organizational Structure Following this Offering

Following this offering, Vista Proppants and Logistics Inc. will be a holding company and its sole material asset will be a controlling equity interest in Vista OpCo. Vista Proppants and Logistics Inc. will operate and control all of the business and affairs and consolidate the financial results of Vista OpCo and its subsidiaries. Prior to the completion of this offering, the limited liability company agreement of Vista OpCo will be amended and restated to, among other things, modify its capital structure by reclassifying the interests currently held by our pre-IPO owners into a single new class of units that we refer to as “LLC Units.” We and our pre-IPO owners will also enter into an exchange agreement under which they (or certain permitted transferees) will have the right, from and after the completion of this offering (subject to the terms of the exchange agreement), to exchange their LLC Units for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. For a description of the amended and restated limited liability company agreement of Vista OpCo and the exchange agreement, please read “Certain Relationships and Related Person Transactions.” In addition, prior to this offering Vista Proppants and Logistics Inc. will acquire the LLC Units beneficially owned by one of our pre-IPO owners, which we refer to as the Merged Owner, in exchange for the issuance to the Merged Owner of an equal number of shares of Class A common stock. Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock).

number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units of Vista OpCo held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. The voting power afforded to holders of LLC Units by their shares of Class B common stock will be automatically and correspondingly reduced as they exchange LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. pursuant to the exchange agreement. If at any time the ratio at which LLC Units are exchangeable for shares of our Class A common stock changes from one-for-one as described under “Certain Relationships and Related Person Transactions—Exchange Agreement,” the number of votes to which Class B common stockholders are entitled will be adjusted accordingly. Holders of shares of our Class B common stock will vote together with holders of our Class A common stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise required by law.

The simplified diagram below depicts our organizational structure immediately following this offering. For additional detail, see “Organizational Structure.”

LOGO

(1)

Includes shares of Class A common stock that will be acquired by the Merged Owner immediately prior to this offering pursuant to certain reorganization transactions. Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock). See “Organizational Structure—Blocker Merger.”

(2)

The Class B common stock will provide each of our pre-IPO owners with a number of votes that is equal to the aggregate number of LLC Units held by such pre-IPO owner. Immediately following this offering, the Founders, our Sponsor, and the other pre-IPO owners will hold %, %, and % of the voting power in Vista Proppants and Logistics Inc., respectively. For additional information, see “Organizational Structure—Organizational Structure Following this Offering.”

(3)	Immediately following this offering, the Founders, our Sponsor and the other pre-IPO owners will hold %, %, and % of the outstanding LLC Units of Vista OpCo, respectively.

Vista Proppants and Logistics Inc. was incorporated in Delaware on July 19, 2017. Our principal executive offices are located at 4413 Carey Street, Fort Worth, Texas 76119 and our telephone number is (817) 563-3500.

The Offering

Class A common stock offered by Vista Proppants and Logistics Inc.

shares (plus up to an additional shares at the option of the underwriters).

Class A common stock outstanding after
giving effect to this offering

shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Class A common stock outstanding after this
offering assuming exchange of all LLC Units held by our pre-IPO owners

shares (or shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Voting power held by holders of Class A common stock after giving effect to this
offering

% (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock), of which % relates to shares of Class A common stock that will be acquired by the Merged Owner immediately prior to this offering pursuant to certain reorganization transactions. See “Organizational Structure—Blocker Merger.”

Voting power held by our pre-IPO owners as holders of all outstanding shares of Class B common stock after giving effect to this
offering

% (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Use of proceeds

We estimate that the net proceeds to Vista Proppants and Logistics Inc. from this offering, after deducting estimated underwriting discounts, will be approximately $ (or $ if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Vista OpCo will bear or reimburse Vista Proppants and Logistics Inc. for all of the expenses payable by it in this offering (excluding underwriting discounts and commissions), which we estimate will be approximately $ .

Vista Proppants and Logistics Inc. intends to cause Vista OpCo to use these proceeds, as described in “Unaudited Pro Forma Condensed

Consolidated Financial Information,” to repay indebtedness and for general corporate purposes. See “Use of Proceeds.”

Voting rights

Each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally.

Our pre-IPO owners hold all of the outstanding shares of our Class B common stock. The shares of Class B common stock will have no economic rights but will entitle each holder, without regard to the number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. Holders of shares of our Class B common stock will vote together with holders of our Class A common stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise required by law. See “Description of Capital Stock—Common Stock—Class B Common Stock.”

Dividend policy

The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors. Our board of directors may take into account general economic and business conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries (including Vista OpCo) to us, and such other factors as our board of directors may deem relevant.

Vista Proppants and Logistics Inc. is a holding company and has no material assets other than its ownership of Vista OpCo. We intend to cause Vista OpCo to make distributions to us in an amount sufficient to cover our taxes and obligations under the tax receivable agreement, as well as any cash dividends declared by us. If Vista OpCo makes such distributions to us, the other holders of LLC Units will be entitled to receive equivalent distributions.

Exchange rights of holders of LLC Units

Prior to this offering we will enter into an exchange agreement with our pre-IPO owners so that they may, from and after the completion of this offering (subject to the terms of the exchange agreement) exchange their LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. See “Certain Relationships and Related Person Transactions—Exchange Agreement.”

Tax receivable agreement

Future exchanges of LLC Units for shares of Class A common stock are expected to result in increases in the tax basis of the tangible and intangible assets of Vista OpCo. These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions

and therefore reduce the amount of tax that Vista Proppants and Logistics Inc. would otherwise be required to pay in the future. Prior to the completion of this offering, we will enter into a tax receivable agreement with our pre-IPO owners that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of these increases in tax basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

Directed share program

The underwriters have reserved for sale, at the initial public offering price, up to shares of our Class A common stock being offered for sale to our directors, officers and certain employees and other parties with a connection to us. We will offer these shares to the extent permitted under applicable regulations. The number of shares available for sale to the general public in this offering will be reduced to the extent these persons purchase reserved shares. Any reserved shares not purchased will be offered by the underwriters to the general public on the same terms as the other shares. Please read “Underwriting.”

Risk factors

See “Risk Factors” for a discussion of risks you should carefully consider before deciding to invest in our Class A common stock.

Certain United States federal income and estate tax consequences to non-U.S. holders

For a discussion of certain United States federal income and estate tax consequences that may be relevant to non-U.S. stockholders, see “Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders.”

Proposed NASDAQ Global Select Market symbol

“VPRL”

In this prospectus, unless otherwise indicated, the number of shares of Class A common stock outstanding and the other information based thereon does not reflect:

•

shares of Class A common stock issuable upon exercise of the underwriters’ option to purchase additional shares of Class A common stock from us;

•

shares of Class A common stock issuable upon exchange of LLC Units that will be held by the pre-IPO owners immediately following this offering; or

•

shares of Class A common stock that may be granted under the 2018 Vista Proppants and Logistics Inc. Omnibus Incentive Plan (the “2018 Omnibus Incentive Plan”), including up to shares (assuming an offering price of $ per share of Class A common stock, which is the midpoint of the range on the front cover on this prospectus) issuable pursuant to restricted stock units that may be granted to our non-employee directors at the time of this offering. See “Management—Executive and Director Compensation—Actions Taken in Connection with the Offering—Vista Proppants and Logistics Inc. 2018 Omnibus Incentive Plan” and “—Director Compensation.”

Summary Historical and Pro Forma Financial and Other Data

The following tables set forth our summary historical and pro forma condensed consolidated financial and other data for the periods ended and at the dates indicated below. We derived the summary historical consolidated statements of income data and the summary statements of cash flows data for the years ended December 31, 2017 and 2016 and the summary balance sheet data as of December 31, 2017 and 2016 from our consolidated financial statements included elsewhere in this prospectus, including our accounting predecessor, Lonestar, for periods as of or prior to March 20, 2017. We derived the summary historical condensed consolidated statements of income data and the summary statements of cash flows data for the year ended December 31, 2015 and the summary balance sheet data as of December 31, 2015 from the audited consolidated financial statements of Lonestar, which is our accounting predecessor, that are not included in this prospectus. We derived the summary historical consolidated statements of income data and the summary statements of cash flows data for the six months ended June 30, 2018 and 2017 and the summary balance sheet data as of June 30, 2018 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Historical results are not necessarily indicative of the results expected for any future period and the historical results of Lonestar for periods prior to March 20, 2017 also do not reflect the impact of the March 2017 Transaction and are not comparable to historical periods beginning on or after March 20, 2017.

The unaudited summary pro forma financial information has been prepared to give effect to the March 2017 Transaction and the other transactions as described under “Unaudited Pro Forma Condensed Consolidated Financial Information.” The pro forma adjustments associated with the foregoing transactions assume that each transaction was completed as of January 1, 2017 for purposes of the unaudited pro forma condensed consolidated statements of income information and as of June 30, 2018 for purposes of the unaudited pro forma condensed consolidated pro forma balance sheet information. The following unaudited summary pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results or financial position.

You should read the summary historical and pro forma financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Selected Financial Data,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other financial information included elsewhere in this prospectus.


	Pro Forma				Historical
(Amounts in thousands, except per share data)	Six Months Ended June 30, 2018		Year Ended December 31, 2017		Six Months Ended June 30, 2018			Six Months Ended June 30, 2017			Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Summary Statements of Income Data:
Net sales	$		$		$	201,163		$	109,653		$	265,693		$	124,884		$	119,137
Cost of sales						132,169			73,722			171,807			102,118			73,250

Gross profit						68,994			35,931			93,886			22,766			45,887
Selling, general and administrative expenses						22,618			13,329			32,818			9,565			9,342
(Gain) loss on disposals of property, plant and equipment						(415	)		383			1,835			1,645			2,695

Income from operations						46,791			22,219			59,233			11,556			33,850

Other income (expense):
Interest expense						(12,303	)		(4,896	)		(13,736	)		(7,094	)		(7,049	)
Early extinguishment of debt						(6,566	)		(1,673	)		(1,673	)		—			—
Other income (expense), net						218			63			86			80			986

Total other expense, net						(18,651	)		(6,506	)		(15,323	)		(7,014	)		(6,063	)

Net income before taxes						28,140			15,713			43,910			4,542			27,787
State franchise taxes						754			229			375			136			242

Net income	$		$		$	27,386		$	15,484		$	43,535		$	4,406		$	27,545

Less: Net income attributable to non-controlling interests						—			—			—			—			—
Net income attributable to members	$	—	$	—	$	27,386		$	15,484		$	43,535		$	4,406		$	27,545

Net income attributable to Vista Proppants and Logistics Inc.	$		$		$	—		$	—		$	—		$	—		$	—

Per share:
Net income per Class A share:
Basic	$		$
Diluted	$		$

Weighted-average number of Class A shares:
Basic
Diluted

Summary Balance Sheet Data (at period end):
Cash and cash equivalents	$				$	46,741					$	32,525		$	4,504		$	139
Property, plant and equipment, net						363,490						252,202			67,425			76,980
Total assets						556,354						415,055			113,582			122,731
Long-term debt (including current portion and net of unamortized debt issuance costs)						354,547						277,634			71,946			73,783
Total partners’ capital/Members’ interest						93,688						66,302			17,369			15,109

Summary Statements of Cash Flows:
Net cash provided by (used in) operating activities	$		$		$	55,924		$	18,687		$	62,578		$	18,947		$	35,347
Net cash provided by (used in) investing activities						(137,877	)		(36,995	)		(153,689	)		(4,420	)		(19,855	)
Net cash provided by (used in) financing activities						96,179			73,010			117,634			(10,162	)		(31,993	)

Summary Operational and Other Data:(1)
Capital expenditures	$		$		$	135,749		$	36,048		$	153,009		$	9,556		$	23,063
Adjusted EBITDA(2)	$		$		$	66,795		$	35,243		$	90,466		$	26,505		$	48,116


(Amounts in thousands, except per ton data)	Six Months Ended June 30, 2018		Six Months Ended June 30, 2017		Year Ended December 31, 2017		Year Ended December 31, 2016		Year Ended December 31, 2015
Total capacity (frac sand)		8,500		4,500		5,500		3,600		2,500
Total tons sold (frac sand)		2,786		1,657		3,750		2,370		2,338
Average selling price (per ton) (frac sand)		64.43		58.81	$	63.26	$	51.00	$	48.70
Production costs (per ton) (frac sand) (3)		36.46		33.54	$	35.00	$	34.78	$	23.48

(1)

We use a number of operational and other metrics in order to evaluate performance and make decisions about our business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Evaluate Our Business” for additional information regarding our use of these metrics.

(2)

We define EBITDA as net income plus interest expense (income), tax expense (benefit) and depreciation, depletion and amortization expense. We evaluate our operating performance using a metric we refer to as “Adjusted EBITDA,” which is defined as EBITDA further adjusted to exclude share-based compensation, other non-cash charges and extraordinary or other items not core to our operations.

Adjusted EBITDA is not a term recognized under U.S. generally accepted accounting principles (“GAAP”) and should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. In addition, our definition of Adjusted EBITDA may not be comparable to a similarly titled measure of other companies.

We believe that Adjusted EBITDA provides useful information to investors about us and our results of operations for the following reasons: (i) Adjusted EBITDA is among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it either in isolation or as a substitute for net income (loss) or other methods of analyzing our results as reported under GAAP. Some of the limitations are:

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;

•

Adjusted EBITDA does not reflect our interest expense or the cash requirements to service interest or principal payments on our indebtedness;

•

Adjusted EBITDA does not reflect our tax expense or the cash requirements to pay our taxes;

•

Adjusted EBITDA does not reflect the impact on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

•

although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and

•

other companies may calculate Adjusted EBITDA differently, limiting its usefulness as a comparative measure.

Adjusted EBITDA is not a liquidity measure and should not be considered as discretionary cash available to us to reinvest in the growth of our business or to distribute to stockholders or as measures of cash that will be available to us to meet our obligations.

The following table provides a reconciliation of our net income (loss) to Adjusted EBITDA:


	Pro Forma		Historical
(Dollars in thousands)	Six Months Ended June 30, 2018	Year Ended December 31, 2017	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017			Year Ended December 31, 2017		Year Ended December 31, 2016		Year Ended December 31, 2015
Net income (loss)	$	$	$	27,386		$	15,484		$	43,535	$	4,406	$	27,545
Add (subtract):
Interest expense				12,303			4,896			13,736		7,094		7,049
Depreciation, depletion and amortization				20,177			12,554			25,701		13,114		10,348
State franchise taxes				754			229			375		136		242

EBITDA	$	$	$	60,620		$	33,163		$	83,347	$	24,750	$	45,184

Adjustments:
Share-based compensation(a)				—			—			—		110		220
Unrealized (gain) loss on investments(b)				—			(6	)		—		—		17
Litigation expense(c)				24			30			511		—		—
(Gain) loss on abandonments and disposals of property, plant and equipment(d)				(415	)		383			1,835		1,645		2,695
Loss on extinguishment of debt(e)				6,566			1,673			1,673		—		—
Other(f)				—			—			3,100		—		—

Adjusted EBITDA	$	$	$	66,795		$	35,243		$	90,466	$	26,505	$	48,116

(a)	Reflects an adjustment for equity based compensation granted to an employee of Lonestar.

(b)	Reflects a loss on short-term investment held on balance sheet at year-end 2015.

(c)	Reflects legal fees relating to a litigation matter involving Bulk. See Note O to our consolidated financial statements and Note N to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

(d)	Reflects the trade-in and early termination of capital leases as well as disposal of mine assets.

(e)	Reflects a write-off of deferred borrowing costs associated with the extinguishment of the related debt.

(f)	Reflects an adjustment to exclude a non-recurring accrual relating to an estimated future earnout payment under a contract entered into in connection with the development of the West Texas mine that was recorded in 2017.

(3)

We define production costs as cost of sales, excluding royalty expense and depreciation, depletion and amortization expense. We use production costs to evaluate our performance. We believe production costs is a meaningful measure to management and external users of our financial statements, such as investors and lenders, because it provides a measure of operating performance that is unaffected by historical cost basis. Cost of sales is the GAAP measure most directly comparable to production costs. Production costs is not a term recognized under GAAP and should not be considered as a substitute for other measures of financial performance reported in accordance with GAAP. In addition, our definition of production costs may not be comparable to similarly titled measures of other companies.

The following table provides a reconciliation of our costs of sales to production costs:


	Pro Forma		Historical
(Dollars in thousands)	Six Months Ended June 30, 2018	Year Ended December 31, 2017	Six Months Ended June 30, 2018		Six Months Ended June 30, 2017		Year Ended December 31, 2017		Year Ended December 31, 2016		Year Ended December 31, 2015
Cost of sales	$	$	$	132,169	$	73,722	$	171,807	$	102,118	$	73,250
Depreciation, depletion and amortization expense				20,177		12,554		25,701		13,114		10,348
Royalty expense				10,411		5,600		14,866		6,574		8,019

Production Costs	$	$	$	101,581	$	55,568	$	131,240	$	82,430	$	54,883

Cost of sales per ton (frac sand) (i)			$	47.44	$	44.49	$	45.82	$	43.09	$	31.33
Production costs per ton (frac sand) (i)			$	36.46	$	33.54	$	35.00	$	34.78	$	23.48

(i)

There is no incremental cost associated with the production of industrial sand, which is a byproduct of our frac sand mining operations. Accordingly, cost of sales per ton (frac sand) for a given period represents total cost of sales for such period divided by the total tons of frac sand produced in such period and production costs per ton (frac sand) for a given period represents total production costs for such period divided by total tons of frac sand produced in such period.

RISK FACTORS

An investment in shares of our Class A common stock involves risks. You should carefully consider the following information about these risks, together with the other information contained in this prospectus, before investing in shares of our Class A common stock.

Risks Related to Our Business and Industry

Our business and financial performance depend on the level of activity in the oil and natural gas industries and the price of oil and natural gas.

Approximately 98% and 97% of our revenues for the years ended December 31, 2017 and 2016, respectively, were derived from sales to companies in the oil and gas industry. As a result, our operations are materially dependent on the levels of activity in oil and natural gas exploration, development and production. More specifically, the demand for the frac sand we produce is closely related to the number of oil and natural gas wells completed in geological formations where sand-based proppants are used in fracture treatments. These activity levels are affected by both short- and long-term trends in oil and natural gas prices, among other factors. In recent years, oil and natural gas prices and, therefore, the level of exploration, development and production activity, have experienced significant fluctuations. Worldwide economic, political and military events, including war, terrorist activity, events in the Middle East and initiatives by the Organization of the Petroleum Exporting Countries (“OPEC”), have contributed, and are likely to continue to contribute, to price volatility. A prolonged reduction in oil and natural gas prices would generally depress the level of oil and natural gas exploration, development, production and well completion activity and result in a corresponding decline in the demand for the frac sand we produce. Such a decline could result in us selling fewer tons of frac sand at lower prices or selling lower priced products, which would have a material adverse effect on our results of operations and financial condition. When demand for frac sand increases, there may not be a corresponding increase in the prices for our products or our customers may not switch back to higher priced products, which could have a material adverse effect on our results of operations and financial condition. According to Rystad Energy, the average price of frac sand delivered to the wellsite in the Eagle Ford and Permian Basin in 2014 was approximately $134 per ton, compared to approximately $104 per ton in 2016. As activity recovered during 2017, the average price of delivered frac sand increased to approximately $125 per ton, recovering only a portion of the previous price decrease. As in-basin supply continues to come online in 2018, average frac sand pricing is expected to decrease to $117 per ton. In addition, any future decreases in the rate at which oil and natural gas reserves are discovered or developed, whether due to increased governmental regulation, limitations on exploration and drilling activity, including hydraulic fracturing, or other factors, could have a material adverse effect on our business and financial condition, even in a stronger oil and natural gas price environment.

Increasing logistics costs, a lack of dependability or availability of transportation services or infrastructure, and geographic shifts in demand could have a material adverse effect on our business.

Transportation and handling costs are a significant component of the total delivered cost of our products. As we continue to expand our sand-based proppant production, we may decide to increase investment in transportation infrastructure, including terminals, railcars, trucks and wellsite sand management solutions. We contract with rail services to move sand-based proppants from our production facilities to our internal and third-party distribution terminals. Labor disputes, derailments, adverse weather conditions or other environmental events, increased railcar congestion, and other changes to rail freight systems could interrupt or limit available transportation services or result in a significant increase in transportation service rates. A significant increase in transportation service rates, a reduction in the dependability or availability of transportation, a shift in demand away from areas where we have significant distribution infrastructure, or relocation of our customers’ businesses to areas farther from our mines, processing facilities or transload terminals could impair our ability to deliver our products economically to our customers and to expand our markets. Further, declining volumes could result in additional railcar over-capacity, which would lead to demurrage charges or railcar storage fees while, at the same time, we would continue to incur lease costs for underutilized railcars and railcars in storage, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We hold numerous governmental, environmental, mining and other permits, water rights and approvals authorizing operations at each of our facilities. A decision by a governmental agency or other third party to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to commence or continue operations at the affected facility. Expansion or modification of our existing operations, commencement of operations under development and construction of other new assets are also predicated on securing the necessary environmental and other permits, water rights or approvals, which we may not receive in a timely manner or at all. State and local governments could impose a moratorium on mining operations in certain areas.

Our reserves are leased from third party landowners, and our mining operations are dependent on these leasehold interests. To the extent we are unable to renegotiate for extensions of these leasehold interests or if a third party takes action to suspend these leasehold interests, and we are unable to obtain replacement leasehold or fee interests, our business, financial condition and results of operations could be materially adversely affected.

Title to, and the area of, mineral properties and water rights may also be disputed. Mineral properties sometimes contain claims or transfer histories that examiners cannot verify. A successful claim that we, or the owners of our leased mining facilities, do not have title to one or more of our properties or lack appropriate water rights could cause us to lose any rights to explore, develop and extract any minerals on that property, without compensation for our prior expenditures relating to such property. Our business may suffer a material adverse effect in the event one or more of our owned or leased properties are determined to have title deficiencies.

In some instances, we have received access rights or easements from third parties, which allow for a more efficient operation than would exist without the access or easement. A third party could take action to suspend the access or easement, and any such action could be materially adverse to our results of operations or financial condition.

The demand for frac sand fluctuates, which could adversely affect our results of operations.

Demand in the end markets served by our customers is influenced by many factors, including the following:

•

demand for oil, natural gas and petroleum products;

•

fluctuations in energy, fuel, oil and natural gas prices and the availability of such fuels;

•

the use of alternative proppants, such as ceramic proppants, in the hydraulic fracturing process;

•

global and regional economic, political and military events and conditions;

•

changes in demand for our products due to technological innovations, including the development and use of new processes for oil and gas production that limit proppant usage or do not require proppants;

•

changes in laws and regulations (or the interpretation thereof) related to the mining and hydraulic fracturing industries, silica dust exposure or the environment;

•

prices, availability and other factors relating to our products; and

•

increases in costs of labor and labor strikes.

We cannot predict or control the factors that affect demand for our products. Negative developments in the above factors, among others, could cause the demand for frac sand to decline, which could adversely affect our business, financial condition, results of operations and cash flows.

Our operations are subject to the cyclical nature of our customers’ businesses, and we may not be able to mitigate that risk.

Demand for our products and services is highly correlated with the activity levels of E&P and oilfield service companies, which has historically been cyclical. During periods of economic slowdown, our customers often reduce their production and also reduce capital expenditures and defer or cancel pending projects. Such developments occur even among customers that are not experiencing financial difficulties. When oil and natural gas prices decrease, as they did from late 2014 to mid-2016, exploration and production companies may reduce their exploration, development, production and well completion activities. The reduced level of such activities could result in a corresponding decline in the demand for frac sand and an oversupply of frac sand. In periods where sources of supply of frac sand exceed market demand, market prices for frac sand may decline and our results of operations and cash flows may decline or be volatile or otherwise adversely affected. Much of our production is sold through long-term contracts with indexes tied to oil prices and, as a result, in periods where market demand exceeds supply of frac sand we may not participate in price increases in full or at all. Weakness in the E&P and oilfield service companies we serve has had, and may in the future have, an adverse effect on sales of our products and our results of operations. An economic downturn in exploration, development, production and well completion activities, or in Texas, the other areas in the United States that we serve or in the worldwide economy, could cause actual results of operations to differ materially from historical and expected results.

We may be adversely affected by decreased demand for the finer grade frac sand we produce or the development of either effective alternative proppants or new processes to replace hydraulic fracturing.

Frac sand is a proppant used in the completion and re-completion of oil and natural gas wells through hydraulic fracturing. Frac sand is the most commonly used proppant and is less expensive than ceramic and resin coated proppant, which is also used in hydraulic fracturing to stimulate and maintain oil and natural gas production. Our sand reserves consist of finer grain sizes, measured as either 40/70-mesh, 100-mesh or 200-mesh. A significant shift in demand from the frac sand we produce, or to other proppants, such as ceramic or resin coated proppants, could have a material adverse effect on our financial condition and results of operations. The development and use of other effective alternative proppants, or the development of new processes to replace hydraulic fracturing altogether, could also cause a decline in demand for the frac sand we produce and could have a material adverse effect on our financial condition and results of operations.

Our proppant sales and supply chain solutions offerings are subject to fluctuations in market pricing.

Historically, substantially all of our supply agreements involving the sale and/or transport of sand-based proppants have had market-based pricing mechanisms. Accordingly, in periods with decreasing prices, our results of operations may be lower than if our agreements had fixed prices. In periods with increasing prices, our agreements permit us to increase prices; however, the rate at which we are allowed to increase pricing may lag behind current market pricing at the time. Furthermore, a portion of our contracts allow a customer to purchase volume at contracted pricing levels in quantities exceeding that customer’s contracted minimum take-or-pay purchase requirement. If at any time, the contract price for such customer’s proppant falls below the price of proppant in the then current market environment, the customer’s ability to buy in excess of their minimum take-or-pay requirement may influence our ability to fully capture current market pricings. These pricing provisions may result in significant variability in our results of operations and cash flows from period to period.

Changes in supply and demand dynamics could also impact market pricing for proppants. A number of existing frac sand providers and new market entrants have recently announced reserve acquisitions, processing capacity expansions and greenfield projects. In periods where sources of supply of raw frac sand exceed market demand, market prices for frac sand may decline and our results of operations and cash flows may continue to decline, be volatile, or otherwise be adversely affected.

Our Tolar and West Texas mines, which commenced operations in November 2017 and March 2018, respectively, represent a significant portion of our anticipated future production capacity. We are currently undertaking a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits. Additionally, we constructed a rail-to-truck transload terminal in Gonzales, Texas during the first quarter of 2018. The construction of additions or modifications to our existing facilities and the construction of new facilities generally involve numerous regulatory, environmental, political and legal uncertainties beyond our control and may require the expenditure of significant amounts of capital. If we undertake these projects, they may not be completed on schedule or at the anticipated cost or at all. Moreover, upon the expenditure of future funds on a particular project, our revenues may not increase immediately, or as anticipated, or at all. For instance, we may develop or expand mining properties or transload terminals over an extended period of time and will not receive any material increases in revenues until the projects are completed. Moreover, we may develop or expand mining properties or transload terminals to capture anticipated future growth in a location in which such growth does not materialize. As we are not engaged in the hydraulic fracturing process, we may be unable to accurately predict the extent of drilling and completion activities to take place in future periods. To the extent we rely on estimates of future levels of drilling and completion activity in any decision to develop or expand mining properties or transload terminals, such estimates may prove to be inaccurate because there are numerous uncertainties inherent in forecasting the levels of drilling and completion activity. As a result, new or expanded mining properties or transload terminals may not be able to attract enough throughput to achieve our expected investment return, which could adversely affect our results of operations and financial condition. Additionally, substantial investments in transportation infrastructure may be required to effectively execute the capacity expansion, and we may not be successful in expanding our logistical capabilities to accommodate the additional production capacity. Locations where we expand may not have existing access to electricity, gas or water, and obtaining access may be costly and prolonged.

Our assets require capital for maintenance, upgrades and refurbishment and may require significant capital expenditures for new equipment.

Our sand mines, transload terminals and trucking assets require capital investment in maintenance, upgrades and refurbishment to maintain their usefulness and competitiveness. The costs of components and labor have increased in the past and may increase in the future with increases in demand. Any maintenance, upgrade or refurbishment of our assets could increase our indebtedness or reduce cash available for other opportunities. To the extent we are unable to fund such undertakings, our assets may become less productive over time. Additionally, competition or advances in technology within our industry may require us to update or replace existing components or build or acquire new facilities. Such demands on our capital or reductions in demand for our products and services and the increase in cost of labor necessary for such maintenance and improvement, in each case, could have a material adverse effect on our business, liquidity position, financial condition, prospects and results of operations and may increase our costs.

Our future performance will depend on our ability to succeed in competitive markets, and on our ability to appropriately react to potential fluctuations in the demand for and supply of frac sand and supply chain solutions.

We operate in a highly competitive market that is characterized by a small number of large, national producers and a larger number of small, regional or local producers. Competition in the industry is based on reliability of supply, quality of product, delivered price of proppant (including distribution and logistics), distribution and logistics capabilities, customer service and breadth of product offering.

We compete with large, national producers such as U.S. Silica Holdings, Inc., Hi-Crush Partners LP, Covia Holdings Corporation and others. Our larger competitors may have greater financial and other resources than we do, may develop technology superior to ours or may build production facilities that are located closer to key customers than ours. We also compete with smaller, regional or local producers. In recent years there has been an increase in the number of small producers servicing the sand-based proppants market which could result in increased competition and pricing pressure in certain market conditions. In addition, oil and natural gas exploration and production companies and other providers of hydraulic fracturing services could acquire their own frac sand reserves, expand their existing frac sand production capacity or otherwise fulfill their own proppant requirements and existing or new frac sand producers could add to or expand their frac sand production capacity, which may negatively impact pricing and demand for our frac sand. Because transportation and handling costs are a significant component of the total delivered cost of our products, expansion by our competitors in closer proximity to our target markets may impact the demand or pricing for our products and logistical services. A number of both larger and smaller competitors are currently undertaking projects to develop or increase production in Texas, which will increase the supply of frac sand being produced in-basin. We may not be able to compete successfully against either our larger or smaller competitors in the future, and competition could have a material adverse effect on our business, financial condition, results of operations and cash flows.

A large portion of our sales is generated by a limited number of customers, and the loss of, or a significant reduction in purchases by our largest customers could adversely affect our operations.

Our top four customers made up approximately 62%, 65% and 75% of our total net sales revenue during the six months ended June 30, 2018 and the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, we had long-term, competitively-bid take-or-pay supply contracts with seven customers in the oil and gas proppants end market, of which three were among our top four overall customers. As of June 30, 2018, we maintained long-term take-or-pay supply contracts with all of our top four customers. These agreements have initial terms expiring between December 31, 2019 and December 31, 2023. As of June 30, 2018, we estimate that the maximum aggregate amount that we could be penalized under these take-or-pay supply contracts if we fail to deliver the contracted volumes of proppant ranged from approximately $140.0 million to $160.0 million. However, we believe that the likelihood that we would be liable for such maximum aggregate amounts is remote. Additionally, while some of our largest customers have entered into supply contracts with us, these customers may not continue to purchase the same levels of our sand-based proppants in the future due to a variety of reasons, contract requirements notwithstanding. For example, some of our top customers could go out of business or, alternatively, be acquired by other companies that purchase the same products and services provided by us from other third-party providers. Our customers could also seek to capture and develop their own sources of sand-based proppants. If any of our major customers substantially reduces or altogether ceases purchasing our sand-based proppants, depending on market conditions, we could suffer a material adverse effect on our business, financial condition, results of operations and cash flows.

Unsatisfactory safety performance may negatively affect our customer relationships and, to the extent we fail to retain existing customers or attract new customers, adversely impact our revenues.

Our ability to retain existing customers and attract new business is dependent on many factors, including our ability to demonstrate that we can reliably and safely operate our business in a manner that is consistent with applicable laws, rules and permits, which legal requirements are subject to change. Existing and potential customers consider the safety record of their third-party service providers to be of high importance in their decision to engage such providers. If one or more accidents were to occur in connection with the use of our services, the affected customer may seek to terminate or cancel its use of our services and may be less likely to continue to use our services, which could cause us to lose substantial revenues. Furthermore, our ability to attract new customers may be impaired if they elect not to engage us because they view our safety record as unacceptable. In addition, it is possible that we will experience multiple or particularly severe accidents in the future, causing our safety record to deteriorate. This may be more likely as we continue to grow, if we experience high employee turnover or labor shortage, or hire inexperienced personnel to bolster our staffing needs.

Although we are focused on ensuring a healthy and safe work environment and continually seek to implement best practices in training, equipment, procedures and protocols, there are inherent risks in mining and logistics operations that cannot entirely be eliminated. In 2016, an accident at our transload facility in Pecos, Texas resulted in the death of one of our employees, and an accident at our Cresson mine resulted in the death of a contractor with one of our vendors.

We are subject to the credit risk of our customers, and any material nonpayment or nonperformance by our customers could adversely affect our financial results and cash available for distribution.

We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers, whose operations are concentrated in the oilfield services and E&P industries. In particular, as a result of volatility in oil and natural gas prices, cost fluctuations in drilling and completing wells and ongoing uncertainty of the global economic environment, our customers may not be able to fulfill their existing commitments or access financing necessary to fund their current or future obligations. Our credit procedures and policies may not be adequate to fully eliminate customer credit risk. If we fail to adequately assess the creditworthiness of existing or future customers or unanticipated deterioration in their creditworthiness, any resulting increase in nonpayment or nonperformance by them and our inability to re-market or otherwise sell the volumes could have a material adverse effect on our business, financial condition and results of operations.

Our operations are subject to operating risks that are often beyond our control and could adversely affect production levels and costs, and such risks may not be covered by insurance.

Our frac sand mining, production facilities, transload facilities and trucking operations are subject to risks normally encountered in the industrial silica, oil and gas and associated transportation industries. These risks include:

•

changes in the price and availability of transportation;

•

changes in the price and availability of natural gas, electricity or diesel fuel;

•

unusual or unexpected geological formations or pressures;

•

pit wall failures or rock falls;

•

unanticipated ground, grade or water conditions;

•

inclement or hazardous weather conditions, including flooding, tornadoes and hurricanes, and the physical impacts of climate change;

•

environmental hazards;

•

industrial accidents;

•

equipment failures and manufacturing defects;

•

physical security breaches at a mine, plant, transload or trucking operation;

•

changes in laws and regulations (or the interpretation thereof) related to the mining and hydraulic fracturing industries, silica dust exposure or the environment;

•

nonperformance of contractual obligations;

•

inability to acquire or maintain necessary permits or mining or water rights;

•

restrictions on mining, transloading or trucking operations, including potential moratoriums as a result of local activism or complaints;

•

inability to obtain necessary production equipment or replacement parts;

•

reduction in the amount of water available for frac sand production;

•

technical difficulties or key equipment failures;

•

labor disputes;

•

cybersecurity breaches;

•

late delivery of supplies;

•

fires, explosions or other accidents; and

•

facility shutdowns in response to environmental regulatory actions.

Any of these risks could result in damage to, or destruction of, our mining properties or production facilities, personal injury, environmental damage, delays in mining or processing, losses or possible legal liability. Any prolonged downtime or shutdowns at our mining properties or transload terminals could have a material adverse effect on us.

Not all of these risks are reasonably insurable, and our insurance coverage contains limits, deductibles, exclusions and endorsements. Our insurance coverage may not be sufficient to meet our needs in the event of loss and any such loss may have a material adverse effect on us.

Fuel conservation measures could reduce demand for oil and natural gas which would in turn reduce the demand for our services.

Fuel conservation measures, alternative fuel requirements and increasing consumer demand for alternatives to oil and natural gas could reduce demand for oil and natural gas. The impact of the changing demand for oil and natural gas may have a material adverse effect on our business, financial condition, prospects, results of operations and cash flows. Additionally, the increased competitiveness of alternative energy sources (such as wind, solar geothermal, tidal, and biofuels) could reduce demand for hydrocarbons and therefore for our services, which would lead to a reduction in our revenues.

Any adverse developments at our mines could have a material adverse effect on our business, financial condition, and results of operations.

A casualty event or other adverse event affecting the production at our mines or in the end markets served by our mines, including adverse developments due to catastrophic events or weather (including floods, windstorms, ice storms, or tornadoes), adverse government regulatory impacts, private actions by residents of surrounding communities, decreased demand for the products our mines produce, adverse developments affecting our mines’ customers, or transportation-related constraints, could have a material adverse effect on our business, financial condition, and results of operations.

Diminished access to water may adversely affect our operations.

The mining and processing activities in which we engage require significant amounts of water and are located in areas that are water-constrained. We have obtained water rights that we currently use to service the activities on our properties, and we plan to obtain all required water rights to service other properties we may develop or acquire in the future. However, the amount of water that we are entitled to use pursuant to our water rights must be determined by the appropriate regulatory authorities in the jurisdictions in which we operate. Such regulatory authorities may amend the regulations regarding such water rights, increase the cost of maintaining such water rights or eliminate our current water rights, and we may be unable to retain all or a portion of such water rights. For example, we have been notified that research may be commissioned to establish the necessity of a groundwater district in West Texas and surrounding counties. If any such changes, which could also affect local municipalities and other industrial operations, were to occur and be implemented, they could require us to incur new capital expenditures and/or increased operating costs in order to continue, expand and/or develop our mining and processing activities and otherwise interfere with our ability to conduct such activities, which could have a material adverse effect on our business, financial condition and results of operations.

We may face competition from additional in-basin sand mines.

Transportation and related logistics costs are a significant component of the total delivered cost to our customers. As a result, the cost of transporting proppant to the hydraulic fracturing site is a key factor in our customer’s purchasing decision. The development of additional in-basin sand mines could reduce demand for our frac sand or impact the delivered-to-the-wellhead price our customers are willing to pay and could have a material adverse effect on our financial condition and results of operation. For example, a number of publicly traded frac sand companies have announced plans to develop or acquire, are currently developing or expanding, or have recently acquired or completed sand mine projects in Texas.

If we cannot successfully complete acquisitions or integrate acquired businesses, our growth may be limited and our financial condition may be adversely affected.

Our business strategy includes supplementing internal growth by pursuing acquisitions. Any acquisition may involve potential risks, including, among other things:

•

the validity of our assumptions about sand reserves and future production, sales, capital expenditures, operating expenses and costs, including synergies;

•

an inability to successfully integrate the businesses we acquire;

•

the use of a significant portion of our available cash or borrowing capacity to finance acquisitions and the subsequent decrease in our liquidity;

•

a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions;

•

the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate;

•

the diversion of management’s attention from other business concerns;

•

an inability to hire, train or retain qualified personnel both to manage and to operate our growing business and assets;

•

the incurrence of other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation, or restructuring charges;

•

unforeseen difficulties encountered in operating in new geographic areas or product lines;

•

customer or key employee losses at the acquired businesses; and

•

the accuracy of data obtained from production reports and engineering studies, geophysical and geological analyses, and other information used when deciding to acquire a property, the results of which are often inconclusive and subject to various interpretations.

If we cannot successfully complete acquisitions or integrate acquired businesses, our growth may be limited and our financial condition may be adversely affected.

We may have the need to incur substantial debt in the future to enable us to maintain or increase our production levels and to otherwise pursue our business plan. We may not be able to borrow funds successfully or, if we do, this debt may impair our ability to operate our business.

We may be required to borrow in the future to enable us to finance the expenditures necessary to replace the reserves we extract or otherwise pursue our business plan. The cost of the borrowings and our obligations to repay the borrowings could have important consequences to us, because:

•

our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions, or other purposes may be impaired or such financing may not be available on favorable terms, or at all;

•

covenants contained in our existing and future debt arrangements will require us to meet financial tests that may affect our flexibility in planning for, and reacting to, changes in our business, including possible acquisition opportunities;

•

we may need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations and future business opportunities; and

•

our debt level may make us more vulnerable than our less leveraged competitors to competitive pressures or a downturn in our business or the economy generally.

Our ability to service our indebtedness will depend on, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or delaying business activities, acquisitions, investments and/or capital expenditures; selling assets; restructuring or refinancing our indebtedness; or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms or at all.

Restrictions in our Term Loan Facility and Line-of-Credit may limit our ability to capitalize on potential acquisition and other business opportunities.

The operating and financial restrictions and covenants in our existing senior secured credit facility with Ares Capital Corporation (the “Term Loan Facility”), our existing line-of-credit arrangement for short-term financing with a bank (the “Line-of-Credit”) and any other future financing agreements could restrict our ability to finance future operations or capital needs or to expand or pursue our business activities. For example, our Term Loan Facility restricts or limits the ability of VPROP Operating, LLC, our wholly owned subsidiary and the borrower under the Term Loan Facility (the “Borrower”), and its subsidiaries to:

•

incur additional indebtedness, make guarantees and enter into certain hedging arrangements;

•

create liens on assets;

•

enter into leases and make capital expenditures;

•

enter into sale and leaseback transactions;

•

engage in mergers or consolidations;

•

sell assets;

•

make fundamental changes;

•

pay dividends and distributions or repurchase our capital stock;

•

make investments, loans and advances, including acquisitions;

•

engage in certain transactions with affiliates;

•

make changes in the nature of our business; and

•

make prepayments of certain junior debt.

Similarly, our Line-of-Credit limits or restricts, subject to certain exceptions, the ability of Lonestar, the borrower under the Line-of-Credit, and its general partner to:

•

incur additional indebtedness and make guarantees;

•

create liens on assets;

•

engage in mergers or consolidations;

•

sell assets;

•

make fundamental changes;

•

pay dividends and distributions or repurchase Lonestar’s capital stock;

•

make investments, loans and advances, including acquisitions; and

•

make changes in the nature of their respective businesses.

Furthermore, the Term Loan Facility requires the Borrower to maintain a fixed charge coverage ratio at all times of at least 1.50:1.00. The Borrower must also maintain a consolidated leverage ratio based on its consolidated EBITDA, tested at the end of each quarter. The required ratio that the Borrower must maintain decreases over the life of the loan. As of May 4, 2018, the date we amended the credit agreement governing the Term Loan Facility, the Borrower was required to maintain a consolidated leverage ratio of no greater than 4.00:1.00. In addition, the Term Loan Facility requires the Borrower to maintain a reserve coverage ratio of no greater than 10.0:1.0, which is tested at the end of each quarter based on the ratio of Lonestar’s reserves to the annual reasonably forecasted sales volume. Our ability to comply with such covenants and restrictions may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Similarly, the Line-of-Credit requires Lonestar to maintain a debt service coverage ratio at all times of at least 1.10:1.00. Lonestar must also maintain a leverage ratio based on its EBITDA of no greater than 3.50:1.00, tested at the end of each quarter. In addition, the Line-of-Credit requires Lonestar to maintain a reserve coverage ratio of no greater than 9.0:1.0, which is tested at the end of each year and decreases over the life of the loan, based on the ratio of Lonestar’s reserves to the annual reasonably forecasted sales volume. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of these restrictions, covenants, ratios or tests, a significant portion of our indebtedness may become immediately due and payable, and any lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. Any subsequent replacement of our Term Loan Facility, Line-of-Credit or any other new indebtedness could have similar or greater restrictions. Please read “Description of Certain Indebtedness—Term Loan Facility” and “Description of Certain Indebtedness—Line-of-Credit”.

Increases in interest rates could adversely impact our ability to incur debt for acquisitions or other purposes.

Interest rates on future borrowings, credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly. A rising interest rate environment could have an adverse impact on our ability to incur debt for acquisitions or other purposes.

Inaccuracies in our estimates of the quantity and quality of our sand reserves could result in lower than expected sales and higher than expected costs.

We base our sand reserve estimates on engineering, economic and geological data assembled and analyzed by our engineers and geologists, which are reviewed by outside firms. However, sand reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable. There are numerous uncertainties inherent in estimating quantities and qualities of sand reserves and costs to mine recoverable reserves, including many factors beyond our control. Estimates of economically recoverable sand reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from actual results, such as:

•

geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;

•

assumptions concerning future prices of sand-based products, operating costs, mining technology improvements, development costs, and reclamation costs; and

•

assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.

Any inaccuracy in our estimates related to our sand reserves could result in lower than expected sales and higher than expected costs.

Mine closures entail substantial costs, and if we close one or more of our mines or supply chain assets sooner than anticipated, our results of operations may be adversely affected.

We base our assumptions regarding the life of our mines and supply chain assets on detailed studies that we perform from time to time, but our studies and assumptions do not always prove to be accurate. If we close any operation sooner than expected, sales will decline unless we are able to increase production at any of our other mines, transload or trucking terminals, which may not be possible. The closure of any of these operations also involves significant fixed closure costs, including accelerated employment legacy costs, severance-related obligations, reclamation and other environmental costs, and the costs of terminating long-term obligations, including energy contracts, mineral leases and equipment leases. We accrue for the costs of reclaiming open pits, stockpiles, tailings ponds, roads, and other mining support areas over their estimated useful lives, which can range from several months to as long as the remaining mining life of our property. If we were to reduce the estimated life of any of our mines, the fixed mine closure costs would be applied to a shorter period of production, which would increase production costs per ton produced and could materially and adversely affect our results of operations and financial condition. If our accruals for expected reclamation and other costs associated with mine closures for which we will be responsible were later determined to be insufficient, our business, results of operations and financial condition would be adversely affected.

Our industry overall has experienced a high rate of employee turnover. Any difficulty we experience replacing or adding personnel could have a material adverse effect on our liquidity, results of operations and financial condition.

We are dependent upon the available labor pool of skilled employees and may not be able to find enough skilled labor to meet our needs, which could have a negative effect on our growth. We are also subject to the Fair Labor Standards Act, which governs such matters as minimum wage, overtime and other working conditions. Our business requires skilled workers who can perform physically demanding work. As a result of our industry volatility, including the recent and pronounced decline in drilling activity, as well as the demanding nature of the work, many workers in our industry have left to pursue employment in different fields. Though our historical turnover rates have been significantly lower than those of our competitors, if we are unable to retain or meet growing demand for skilled technical personnel, our operating results and our ability to execute our growth strategies may be adversely affected.

A shortage of skilled labor together with rising labor costs in the transportation, mining and mineral processing industry may further increase operating costs, which could adversely affect our results of operations.

Efficient mining using modern techniques and equipment requires skilled laborers, preferably with several years of experience and proficiency in multiple mining tasks, including processing of mined sand. If the shortage of experienced labor continues or worsens or if we are unable to train the necessary number of skilled laborers, there could be an adverse impact on our labor productivity and costs and our ability to expand production at our existing facilities and at our locations under development.

With respect to our trucking services, difficulty in attracting or retaining qualified drivers could have a materially adverse effect on our growth and profitability. The truckload transportation industry periodically experiences a shortage of qualified drivers, particularly during periods of economic expansion, in which alternative employment opportunities are more plentiful and freight demand increases, or during periods of

economic downturns, in which unemployment benefits might be extended. The trucking industry suffers from a high driver turnover rate, which requires us to continually recruit a substantial number of drivers to operate our equipment. If we were unable to attract and hire qualified drivers, we could be forced to, among other things, limit our growth, decrease the number of our tractor trailers in service, adjust our driver compensation package or prior trucking experience requirements, or pay higher rates to independent contractors or third-party truckload carriers, which could adversely affect our profitability and results of operations if not offset by a corresponding increase in customer rates.

Energy costs, primarily natural gas, electricity and diesel fuel used to power pumps and heavy equipment, represented approximately 3% of our total sales in 2017. Natural gas is the primary fuel source used for drying sand in the production process and electricity is the primary energy source used in washing sand in the production process. As such, our profitability and production capacity is impacted by the price and availability of natural gas and electricity we purchase from third parties. The price and supply of natural gas are unpredictable and can fluctuate significantly based on international, political and economic circumstances, as well as other events outside our control, such as changes in supply and demand due to weather conditions, other oil and gas producers, regional production patterns, regulatory developments and associated costs and secondary impacts, and environmental concerns regarding fossil fuels. Furthermore, utility companies could enforce natural gas curtailments which affect our operations. In addition, potential climate change regulations or carbon or emissions taxes could result in higher production costs for energy, which may be passed on to us in whole or in part. In the past, the price of natural gas has been extremely volatile, and we expect this volatility to continue. For example, during the year ended December 31, 2017, the monthly closing price of natural gas on the New York Mercantile Exchange ranged from a high of $3.93 per million British Thermal Units (“BTUs”) to a low of $2.63 per million BTUs. In order to manage this risk, we may hedge natural gas prices through the use of derivative financial instruments, such as forwards, swaps and futures. However, these measures carry risk (including nonperformance by counterparties) and do not in any event entirely eliminate the risk of decreased margins as a result of natural gas price increases.

A significant increase in the price of energy or any other significant raw materials that is not recovered through an increase in the price of our products, or an extended interruption in the supply of natural gas or electricity to our mining properties or transload terminals, could have a material adverse effect on our business, financial condition, and results of operations.

Increases in the price of diesel fuel may adversely affect our results of operations.

Diesel fuel costs generally fluctuate with increasing and decreasing world crude oil prices, and accordingly are subject to political, economic and market factors that are outside of our control. Our operations are dependent on earthmoving equipment, railcars, last-mile transport vehicles and tractor trailers, and diesel fuel costs are a significant component of the operating expense of these vehicles. We use earthmoving equipment in our mining operations. We ship the vast majority of our products by railcar and transport both our sand and third party sand using tractor trailers we own and contract. To the extent that we perform these services with our fleet of commercial trucks or other equipment that we own, we are responsible for buying and supplying the diesel fuel needed to operate these vehicles. To the extent that these services are provided by independent contractors, we may be subject to fuel surcharges that attempt to recoup increased diesel fuel expenses. To the extent we are unable to pass along increased diesel fuel costs to our customers, our results of operations could be adversely affected.

Our business may suffer if we lose, or are unable to attract and retain, key personnel.

We depend to a large extent on the services of our senior management team and other key personnel. Members of our senior management and other key employees have extensive experience and expertise in

evaluating and analyzing sand reserves, designing, permitting and building new frac sand processing and transload facilities, maximizing production from such properties, marketing and delivering frac sand production, transportation and distribution services and developing and executing financing strategies. Our senior management team has substantial experience and relationships with participants in the oilfield services and exploration and production industries. Competition for management and key personnel is intense, and the pool of qualified candidates is limited. The loss of any of these individuals or the failure to attract or train additional personnel, as needed, could have a material adverse effect on our operations and could lead to higher labor costs or the use of less-qualified personnel. In addition, if any of our executives or other key employees were to join a competitor or form a competing company, we could lose customers, suppliers, know-how and key personnel. Although we maintain key-man life insurance for Gary Humphreys, our co-founder and Chief Executive Officer, and Martin Robertson, our co-founder, President and Chief Operating Officer, we do not maintain key-man life insurance with respect to any of our other senior management or employees. Our success will be dependent on our ability to continue to attract, employ and retain highly skilled personnel.

Our profitability could be negatively affected if we fail to maintain satisfactory labor relations.

Our employees are not currently represented by labor unions. If our employees engaged in union organizing efforts in the future, we could experience, among other things, strikes, work stoppages, or other slowdowns by our workers and increased operating costs as a result of higher wages, health care costs, or benefits paid to our employees. An inability to maintain good relations with our workforce could cause a material adverse effect on our business, financial condition and results of operations.

Silica-related legislation could have a material adverse effect on our business, reputation or results of operations.

We are subject to laws and regulations relating to human exposure to crystalline silica. Several federal and state regulatory authorities, including the Mine Safety and Health Administration (“MSHA”) and the Occupational Safety and Health Administration (“OSHA”), may continue to propose and implement changes in their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits (“PELs”) and required controls and personal protective equipment. In March 2016, OSHA published a final rule establishing a more stringent PEL for exposure to respirable crystalline silica and other provisions to protect employees, such as requirements for exposure assessment, methods for controlling exposure, respiratory protection, medical surveillance, hazard communication, and recordkeeping (“OSHA Silica Rule”). This final rule became effective in June 2016, with compliance required by September 2017 for the construction industry and June 2018 for general industry and maritime. For hydraulic operations in the oil and gas industry, compliance became required with all obligations of the standard in June 2018, except for engineering controls, which have a compliance date of June 2021. Several industry groups have filed suit in the United States Court of Appeals for the D.C. Circuit to halt implementation of the rule. New laws and regulations could have a material adverse effect on our operating results by requiring us to modify or cease our operations.

In addition, the inhalation of respirable crystalline silica is associated with the lung disease silicosis. There is evidence of an association between crystalline silica exposure or silicosis and lung cancer and a possible association with other diseases, including immune system disorders such as scleroderma. These health risks have been, and may continue to be, a significant issue confronting the frac sand industry. Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of frac sand, may have the effect of discouraging our customers’ use of our frac sand. The actual or perceived health risks of mining, processing and handling frac sand could materially and adversely affect frac sand producers, including us, through reduced use of frac sand, the threat of product liability or employee lawsuits, increased scrutiny by federal, state and local regulatory authorities of us and our customers or reduced financing sources available to the frac sand industry.

Failure to maintain effective quality control systems at our mining, processing, production and transload facilities could have a material adverse effect on our business, financial conditions and operations.

The performance, quality and safety of our products and services are critical to the success of our business. These factors depend significantly on the effectiveness of our quality control systems, which, in turn, depends on a number of factors, including the design of our quality control systems, our quality-training program and our ability to ensure that our employees adhere to the quality control policies and guidelines. Any significant failure or deterioration of our quality control systems could have a material adverse effect on our business, financial condition, results of operations and reputation.

Seasonal and severe weather conditions could have a material adverse impact on our business.

Our business could be materially adversely affected by weather conditions. Weather conditions may impact our operations, resulting in weather-related damage to our mining properties, transload terminals and equipment or an inability to deliver sand from our mining properties and transload terminals to our customers in accordance with contract schedules. Furthermore, climate change may lead to the increased frequency and severity of extreme weather events. Any such interference with our operations could force us to delay or curtail services and potentially breach our contractual obligations or result in a loss of productivity and an increase in our operating costs.

In addition to supply considerations, severe weather conditions may curtail our customers’ drilling activities and impair rail shipment and transportation services and, as a result, our sales volumes to customers may similarly be adversely affected. Unexpected winter weather conditions may compound these seasonal impacts, and could result in a material adverse effect on our business, financial condition, and results of operation.

Our employees could engage in misconduct that adversely affects us.

Our employees could engage in misconduct that adversely affects us. One of our former executives was convicted in 2014 of sexually assaulting and indecency with a minor. We terminated this executive and divested him of any ownership of our company. Although he has not subsequently had any role with our company, or participated in the operation or management of our business, and we do not have any legal exposure for this former executive’s personal misconduct, our reputation could nonetheless be adversely affected. It is not always possible to prevent or detect misconduct by our employees, either personal or in the course of their duties on behalf of the company, and the precautions we take to prevent and detect this activity may not be effective in all cases. If any of our employees were to engage in or be accused of misconduct, we could be exposed to legal liability and our business and reputation could be adversely affected.

We may be subject to claims for personal injury and property damage, which could materially adversely affect our financial condition, prospects and results of operations.

Our operations and service offerings are subject to inherent risks that can cause personal injury or loss of life, damage to or destruction of property, equipment or the environment or the suspension of our operations. Litigation arising from operations where our services are provided may cause us to be named as a defendant in lawsuits asserting potentially large claims including claims for exemplary damages. We maintain what we believe is customary and reasonable insurance to protect our business against these potential losses, but such insurance may not be adequate to cover our liabilities, and we are not fully insured against all risks.

We may be subject to interruptions or failures in our information technology systems.

We rely on our information technology systems to process transactions, summarize our operating results and manage our business. Our information technology systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events, such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage

errors by our employees. If our information technology systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations.

The reliability and capacity of our information technology systems is critical to our operations and the implementation of our growth initiatives. Any material disruption in our information technology systems, or delays or difficulties in implementing or integrating new systems or enhancing current systems, could have an adverse effect on our business, and results of operations.

Significant impairment losses related to goodwill, intangibles, and other assets could have a material adverse effect on our business, financial condition, and results of operation.

We assess the impairment of goodwill, intangibles, and other assets at least annually and also whenever events or changes in circumstances indicate that these assets may be impaired. Beginning in August 2014 and continuing through the second quarter of 2016, global crude oil and natural gas prices, particularly crude oil, declined dramatically and persisted at levels well below those experienced during the middle of 2014. This decrease in commodity prices had a negative impact on industry drilling and well completion activity, which affects the demand for frac sand. Should energy industry conditions deteriorate again, there is a possibility that goodwill, intangibles, and other assets may be impaired in a future period. Specific uncertainties affecting our estimated fair value include the impact of competition, the prices of frac sand, future overall activity levels and demand for frac sand, the activity levels of our significant customers, changing transportation rates and other factors affecting the rate of our future growth. These factors will continue to be reviewed and assessed going forward. Any significant impairment of goodwill, intangibles, or other assets could have a material adverse effect on our business, financial condition, and results of operations.

We rely upon trade secrets, trademarks and contractual restrictions to protect our proprietary rights. Failure to protect our intellectual property rights may undermine our competitive position, and protecting our rights or defending against third-party allegations of infringement may be costly.

Our commercial success depends on our proprietary information, know-how and other intellectual property. We rely on trade secrets, trademarks and contractual restrictions to protect our intellectual property rights. The measures we take to protect our trade secrets, “know how” and other intellectual property rights may be insufficient. Failure to protect, monitor and control the use of our existing intellectual property rights could cause us to lose our competitive advantage and incur significant expenses. Policing unauthorized use of intellectual property rights can be difficult and expensive, and adequate remedies may not be available.

In addition, third parties may claim that our products infringe or otherwise violate their patents or other proprietary rights and seek corresponding damages or injunctive relief. Defending ourselves against such claims, with or without merit, could be time-consuming and result in costly litigation. An adverse outcome in any such litigation could subject us to significant liability to third parties (potentially including treble damages) or temporary or permanent injunctions prohibiting the manufacture or sale of our products, the use of our technologies or the conduct of our business. Any adverse outcome could also require us to seek licenses from third parties (which may not be available on acceptable terms, or at all) or to make substantial one-time or ongoing royalty payments. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such litigation. In addition, we may not have insurance coverage in connection with such litigation and may have to bear all costs arising from any such litigation to the extent we are unable to recover them from other parties. Any of these outcomes could have a material adverse effect on our business, financial condition, results of operations and cash flows.

A terrorist attack or armed conflict could harm our business.

Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other countries in which we operate could adversely affect the U.S. and global economies and could prevent us from

meeting financial and other obligations. We could experience loss of business, delays or defaults in payments from payors or disruptions of fuel supplies and markets if pipelines, production facilities, processing plants or refineries are direct targets or indirect casualties of an act of terror or war. Such activities could reduce the overall demand for oil and gas, which, in turn, could also reduce the demand for our products and services. Terrorist activities and the threat of potential terrorist activities and any resulting economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies.

We engage in transactions with related parties and such transactions present possible conflicts of interest that could have an adverse effect on us.

We have entered into a number of transactions with related parties. Related party transactions create the possibility of conflicts of interest with regard to our management or directors. Such a conflict could cause an individual in our management or on our board of directors to seek to advance his or her economic interests above ours. Further, the appearance of conflicts of interest created by related party transactions could impair the confidence of our investors. Our board of directors regularly reviews these transactions. Notwithstanding this, it is possible that a conflict of interest could have a material adverse effect on our liquidity, results of operations and financial condition. See “Certain Relationships and Related Person Transactions” for additional information.

Recent U.S. tax legislation may materially adversely affect our financial condition, results of operations and cash flows.

On December 22, 2017, President Trump signed into law a comprehensive tax reform bill (the “Tax Cuts and Jobs Act,” or the “TCJA”), that significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, contains significant changes to corporate taxation, including a reduction of the corporate income tax rate, a partial limitation on the deductibility of business interest expense, limitation of the deduction for certain net operating losses to 80% of current year taxable income, an indefinite net operating loss carryforward, immediate deductions for certain new investments instead of deductions for depreciation expense over time and the modification or repeal of many business deductions and credits. We continue to examine the impact of this tax reform legislation, and as its overall impact is uncertain, we note that the TCJA could adversely affect our business and financial condition. The impact of this tax reform legislation on holders of our Class A common stock is also uncertain and could be adverse.

Risks Related to Our Environmental, Mining and Other Regulation

Although we do not directly engage in hydraulic fracturing activities, we supply sand-based proppants to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing is a widely used industry production technique that is used to recover oil and/or natural gas from dense subsurface rock formations. The process involves the injection of water, proppants (which include, but are not limited to, sand) and chemicals, under pressure, into the formation to fracture the surrounding rock and stimulate production. The hydraulic fracturing process is typically regulated by state or local governmental authorities. However, the practice of hydraulic fracturing has become controversial in some areas and is undergoing increased scrutiny. Several federal agencies, regulatory authorities, and legislative entities are investigating the potential environmental impacts of hydraulic fracturing and whether additional regulation may be necessary. The U.S. Environmental Protection Agency (“EPA”) has asserted limited federal regulatory authority over hydraulic fracturing and has issued a number of regulations in recent years that may affect hydraulic fracturing, including its rule setting new source performance standards for the oil and natural gas source category issued in 2012, its June 2016 rules

establishing new emissions standards for methane and additional standards for volatile organic compounds from certain new, modified and reconstructed equipment and processes in the oil and natural gas source category, and its June 2016 rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants. Also, the federal Bureau of Land Management (“BLM”) published a final rule in March 2015, establishing stringent standards relating to hydraulic fracturing on federal and American Indian lands (which was challenged in a U.S. federal trial court, resulting in a decision in June 2016 against the rule, an appeal of that decision, and a U.S. federal appeals court ruling in September 2017 dismissing the appeals and vacating the trial court decision); the BLM formally rescinded the rule in December 2017, which is being challenged in U.S. federal trial courts by various environmental groups and the attorney general of the state of California, among others. While the EPA administrator appointed by President Trump and the Trump administration more generally have indicated their interest in scaling back or rescinding regulations (including the EPA methane rule and BLM rule referred to above) that inhibit the development of the U.S. oil and gas industry, it is difficult to predict the extent to which such policies will be implemented or the outcome of litigation challenging such implementation. The U.S. Congress has from time to time considered, but has not yet adopted, legislation to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the process.

In addition, various state and local governments have implemented, or are considering, increased regulatory oversight of hydraulic fracturing through additional permitting requirements, operational restrictions, disclosure requirements and temporary or permanent bans on hydraulic fracturing in certain areas such as environmentally sensitive watersheds. For example, many states—including Texas and Oklahoma—have imposed disclosure requirements on hydraulic fracturing well owners and operators regarding the chemicals used in hydraulic fracturing. Some local governments have adopted and others may seek to adopt ordinances prohibiting or regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities within their jurisdictions. Concerns have been raised that hydraulic fracturing may also contribute to seismic activity. In March 2016, the United States Geological Survey identified six states with the most significant hazards from induced seismicity, including Oklahoma, Kansas, Texas, Colorado, New Mexico and Arkansas. In light of these concerns, some state regulatory agencies have modified their regulations or issued orders to address induced seismicity. For example, in December 2016, the Oklahoma Corporation Commission’s Oil and Gas Conservation Division (the “OCC Division”) and the Oklahoma Geologic Survey released well completion seismicity guidance, which requires operators to take certain prescriptive actions, including mitigation, following anomalous seismic activity within 1.25 miles of hydraulic fracturing operations; and in February 2017, the OCC Division issued an order limiting future increases in the volume of oil and natural gas wastewater injected into the ground in an effort to reduce earthquakes in the state. Increased regulation and attention given to induced seismicity could lead to greater opposition to, and litigation concerning, oil and natural gas activities utilizing hydraulic fracturing or injection wells for waste disposal.

The adoption of new laws or regulations at the federal, state, or local levels imposing reporting obligations on, or otherwise limiting or delaying, the hydraulic fracturing process could make it more difficult to complete oil and gas wells, increase our customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services they perform, which could negatively impact demand for our sand-based proppants. In addition, heightened political, regulatory and public scrutiny of hydraulic fracturing practices, including lawsuits, could expose us or our customers to increased legal and regulatory proceedings, which could be time-consuming, costly or result in substantial legal liability or significant reputational harm. We could be directly affected by adverse litigation involving us, or indirectly affected if the cost of compliance or the risks of liability limit the ability or willingness of our customers to operate. Such costs and scrutiny could directly or indirectly, through reduced demand for our sand-based proppants, have a material adverse effect on our business, financial condition, and results of operations.

We are subject to a variety of federal, state and local regulatory environmental requirements affecting the mining and mineral processing industry, including, among others, those relating to employee health and safety, environmental permitting and licensing, air and water emissions, greenhouse gas emissions (“GHGs”), water pollution, waste management, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, hazardous materials and natural resources. These laws, regulations and permits have had, and will continue to have, a significant effect on our business. Some environmental laws impose substantial penalties for noncompliance, and others, such as the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA,” also known as the Superfund law), impose strict, retroactive and generally joint and several liability for the remediation of releases of hazardous substances. Liability under CERCLA, or similar state and local laws, may be imposed as a result of conduct that was lawful at the time it occurred or for the conduct of, or conditions caused by, prior operators or other third parties. Failure to properly handle, transport, store or dispose of hazardous materials or otherwise conduct our operations in compliance with environmental laws could expose us to liability for governmental penalties, cleanup costs and civil or criminal liability associated with releases of such materials into the environment, damages to property or natural resources and other damages, as well as potentially impair our ability to conduct our operations. In addition, future environmental laws and regulations could restrict our ability to expand our facilities or extract our mineral deposits or could require us to acquire costly equipment or to incur other significant expenses in connection with our business. For example, future restrictions specific to the Permian Basin, including those to protect the dunes sagebrush lizard, which is found only in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our West Texas mine is located), could be enacted. Although in August 2017, following collaboration with the Texas Comptroller, we became the first mine to receive a Certificate of Inclusion into the Texas Conservation Plan, as described in “Business—Regulations and Legislation—Environmental Matters—Endangered Species,” in February 2018, the Texas Comptroller’s Office indicated that it intends to rewrite the Texas Conservation Plan to address, among other matters, increased sand mining in the Permian Basin.

Currently, the Texas Comptroller’s Office is working with the USFWS to replace the Texas Conservation Plan with a new Candidate Conservation Agreement with Assurances (“CCAA”) that includes an updated habitat map and expressly covers frac sand mining. Based on information currently available to us, we intend to join the new CCAA once it is approved by the USFWS and takes effect. Based on information currently available to us, we believe that such participation will help safeguard our facilities against adverse effects of not participating. In May 2018, the Center for Biological Diversity and Defenders of Wildlife petitioned the U.S. Fish and Wildlife Service (“USFWS”) to protect the dunes sagebrush lizard under the Endangered Species Act. The petition also asked the USFWS to designate critical habitat for the species, stating that thousands of acres of its habitat are at risk from oil and gas drilling and sand-mining projects in Texas and New Mexico. A threshold determination is required to the maximum extent practicable within 90 days after the petition is received, and depending on that threshold determination the law may require further responses regarding the petition within twelve months after receiving it. If the lizard is listed under the Endangered Species Act as an endangered or threatened species, or if the new CCAA being developed to replace the Texas Conservation Plan differs from what we anticipate, our future operations and/or the operations of our customers in any area that is designated as the lizard’s habitat may be limited, delayed or, in some circumstances, prohibited, and we and/or our customers could be required to comply with expensive mitigation measures intended to protect the lizard and its habitat. Future events, including changes in any environmental requirements (or their interpretation or enforcement) and the costs associated with complying with such requirements, could have a material adverse effect on us.

Any failure by us to comply with applicable environmental laws and regulations may cause governmental authorities to take actions that could adversely impact our operations and financial condition, including:

•

issuance of administrative, civil and criminal penalties;

•

denial, modification or revocation of permits or other authorizations;

•

imposition of injunctive obligations or other limitations on our operations, including cessation of operations; and

•

requirements to perform site investigatory, remedial or other corrective actions.

Moreover, environmental requirements, and the interpretation and enforcement thereof, change frequently and have tended to become more stringent over time. New laws and regulations could have a material adverse effect on our operating results by requiring us to modify our operations or equipment or shut down some or all of our facilities and terminals. Additionally, new laws and regulations could have a material adverse effect on our customers by requiring them to shut down old facilities or to relocate facilities to locations with less stringent regulations farther away from our facilities and terminals. We cannot at this time reasonably estimate our costs of compliance or the timing of any costs associated with any new laws and regulations, or any material adverse effect that any new standards will have on our customers and, consequently, on our operations.

Climate change legislation and regulatory initiatives could result in increased compliance costs for us and our customers.

Climate change continues to attract considerable public and scientific attention. As a result, numerous proposals have been made and are likely to continue to be made at various levels of government to monitor and limit emissions of GHGs. Past sessions of the U.S. Congress considered, but did not enact, legislation to address climate change, including legislation that would have authorized a nationwide cap-and-trade system on GHG emissions, and following those efforts the EPA and other federal agencies under the previous administration issued regulations that aim to reduce GHG emissions. While the EPA administrator appointed by President Trump and the Trump administration more generally have indicated their interest in scaling back or rescinding regulations addressing GHG emissions, including those affecting the U.S. oil and gas industry, it is difficult to predict the extent to which such policies will be implemented or the outcome of any litigation challenging such implementation. While the U.S. Department of State informed the United Nations in August 2017 that the U.S. plans to withdraw from the Paris Agreement, an international climate change agreement among nearly 200 nations that calls for countries to set their own GHG emissions targets, and to seek negotiations either to reenter the Paris Agreement on different terms or establish a new framework agreement, it is not possible at this time to predict the timing and impact of this withdrawal, or how any legal requirements imposed in the U.S. at the state or local level pursuant to the Paris Agreement or any similar agreement would impact our customers or our business. At the same time, a number of states are pursuing GHG reduction measures, including California, which enacted in 2006 Assembly Bill 32 authorizing a cap-and-trade system to meet substantial long-term GHG reduction requirements and which continues to implement the program called for by Assembly Bill 32. Any regulation of GHG emissions, including, through a cap-and-trade system, technology mandate, emissions tax, reporting requirement or other program, could directly or indirectly, through reduced demand for our sand-based proppants, adversely affect our business, financial condition and results of operations.

We are subject to the Federal Mine Safety and Health Act of 1977 and the OSHA of 1970, both of which impose stringent health and safety standards on numerous aspects of our operations.

Our operations are subject to the Federal Mine Safety and Health Act of 1977 (“MSH Act”), as amended by the Mine Improvement and New Emergency Response Act of 2006 as well as the OSHA of 1970 (“OSH Act”), including but not limited to the OSHA Silica Rule that became effective in June 2016. The MSH Act and the OSH Act impose stringent health and safety standards on numerous aspects of our operations inclusive of mineral extraction and processing operations, transportation and transloading of silica and delivery of silica sand to well sites. These standards include, the training of personnel, operating procedures, operating and safety equipment, and other matters. Our failure to comply with such standards, or changes in such standards or the interpretation or enforcement thereof, could have a material adverse effect on our business and financial condition or otherwise impose significant restrictions on our ability to conduct operations.

Our trucking services are highly regulated, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The Department of Transportation (“DOT”) and various state agencies exercise broad powers over our trucking services, generally governing matters including authorization to engage in motor carrier service, equipment operation, safety, and financial reporting. In the future, we may become subject to new or more restrictive regulations, such as regulations relating to engine exhaust emissions, hours of service that our drivers may provide in any one time period, security and other matters, which could substantially impair equipment productivity and increase our costs. We may be audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could restrict or otherwise impact our trucking services, which would adversely affect our profitability and results of operations.

We and our customers are subject to other extensive regulations, including licensing, plant and wildlife protection and reclamation regulation, that impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect our results of operations.

In addition to the regulatory matters described above, we and our customers are subject to extensive governmental regulation on matters such as permitting and licensing requirements, plant and wildlife protection, wetlands protection, reclamation and restoration activities at mining properties after mining is completed, the discharge of materials into the environment, and the effects that mining and hydraulic fracturing have on groundwater quality and availability. Our future success depends, among other things, on the quantity and quality of our frac sand deposits, our ability to extract these deposits profitably, and our customers being able to operate their businesses as they currently do.

In order to obtain permits and renewals of permits in the future, we may be required to prepare and present data to governmental authorities pertaining to the potential adverse impact that any proposed excavation or production activities, individually or in the aggregate, may have on the environment. Certain approval procedures may require preparation of archaeological surveys, endangered species studies, and other studies to assess the environmental impact of new sites or the expansion of existing sites. Compliance with these regulatory requirements is expensive and significantly lengthens the time needed to develop a site. Finally, obtaining or renewing required permits is sometimes delayed or prevented due to community opposition and other factors beyond our control. The denial of a permit essential to our operations or the imposition of conditions with which it is not practicable or feasible to comply could impair or prevent our ability to develop or expand a site. Significant opposition to a permit by neighboring property owners, members of the public, or other third parties, or delay in the environmental review and permitting process also could delay or impair our ability to develop or expand a site. New legal requirements, including those related to the protection of the environment, could be adopted that could materially adversely affect our mining operations (including our ability to extract or the pace of extraction of mineral deposits), our cost structure, or our customers’ ability to use our frac sand. Such current or future regulations could have a material adverse effect on our business and we may not be able to obtain or renew permits in the future.

Risks Related to Our Organizational Structure

Vista Proppants and Logistics Inc. is a holding company and its only material asset after completion of this offering will be its interest in Vista OpCo, and it is accordingly dependent upon distributions from Vista OpCo to pay taxes, make payments under the tax receivable agreement or pay dividends.

Vista Proppants and Logistics Inc. will be a holding company and will have no material assets other than its ownership of LLC Units. Vista Proppants and Logistics Inc. has no independent means of generating revenue. Vista Proppants and Logistics Inc. intends to cause Vista OpCo to make distributions to its holders of LLC Units in an amount sufficient to cover all applicable taxes at assumed tax rates, payments under the tax receivable agreement and dividends, if any, declared by it. Deterioration in the financial condition, earnings or cash flow of

Vista OpCo and its subsidiaries for any reason could limit or impair their ability to pay such distributions. Additionally, to the extent that Vista Proppants and Logistics Inc. needs funds, and Vista OpCo is restricted from making such distributions under applicable law or regulation or under the terms of our financing arrangements, or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.

Vista OpCo will continue to be treated as a partnership for United States federal income tax purposes and, as such, generally will not be subject to any entity-level United States federal income tax. Instead, taxable income will be allocated to holders of LLC Units. Accordingly, we will be required to pay income taxes on our allocable share of any net taxable income of Vista OpCo. Under the terms of the LLC Agreement, Vista OpCo is obligated to make tax distributions to holders of LLC Units (including us) at certain assumed tax rates. Recently enacted legislation that is scheduled to become effective for taxable years beginning after December 31, 2017 may impute liability for adjustments to a partnership’s tax return on the partnership itself in certain circumstances, absent an election to the contrary. Vista OpCo may be subject to material liabilities pursuant to this legislation and related guidance if, for example, its calculations of taxable income are incorrect.

Payments of dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our business, operating results and financial condition, current and anticipated cash needs, plans for expansion and any legal or contractual limitations on our ability to pay dividends. Our existing Term Loan Facility and Line-of-Credit includes and any financing arrangement that we enter into in the future may include restrictive covenants that limit our ability to pay dividends. In addition, Vista OpCo is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Vista OpCo (with certain exceptions) exceed the fair value of its assets. Subsidiaries of Vista OpCo are generally subject to similar legal limitations on their ability to make distributions to Vista OpCo.

Vista Proppants and Logistics Inc. will be required to pay exchanging holders of LLC Units for most of the benefits relating to any additional tax depreciation or amortization deductions that we may claim as a result of the tax basis step-up we receive in connection with sales or exchanges of LLC Units and related transactions.

Holders of LLC Units (other than Vista Proppants and Logistics Inc.) may, subject to certain conditions and transfer restrictions applicable to such holders as set forth in the operating agreement of Vista OpCo, from and after the date of the completion of this offering (subject to the terms of the exchange agreement), exchange their LLC Units for Class A common stock on a one-for-one basis. The exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Vista OpCo. These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of tax that Vista Proppants and Logistics Inc. would otherwise be required to pay in the future, although the Internal Revenue Service (“IRS”) may challenge all or part of that tax basis increase, and a court could sustain such a challenge.

Prior to the completion of this offering, we will enter into a tax receivable agreement with our pre-IPO owners that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of these increases in tax basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. This payment obligation is an obligation of Vista Proppants and Logistics Inc. and not of Vista OpCo. While the actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of our income, we expect that as a result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Vista OpCo, the payments that Vista Proppants and Logistics Inc. may make under the tax receivable agreement will be substantial. The payments under the tax receivable agreement are not conditioned upon continued ownership of us by the exchanging holders of LLC Units. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

In certain cases, payments under the tax receivable agreement may be accelerated and/or significantly exceed the actual benefits Vista Proppants and Logistics Inc. realizes in respect of the tax attributes subject to the tax receivable agreement.

The tax receivable agreement provides that upon certain changes of control, or if, at any time, Vista Proppants and Logistics Inc. elects an early termination of the tax receivable agreement, Vista Proppants and Logistics Inc.’s obligations under the tax receivable agreement (with respect to all LLC Units whether or not previously exchanged) would be calculated by reference to the value of all future payments that holders of LLC Units would have been entitled to receive under the tax receivable agreement using certain valuation assumptions, including that Vista Proppants and Logistics Inc. will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement and, in the case of an early termination election, that any LLC Units that have not been exchanged are deemed exchanged for the market value of the shares of Class A common stock at the time of termination. In addition, holders of LLC Units will not reimburse us for any payments previously made under the tax receivable agreement if our tax reporting position with respect to such payments is successfully challenged by the IRS. Vista Proppants and Logistics Inc.’s ability to achieve benefits from any tax basis increase, and the payments to be made under the tax receivable agreement, will depend upon a number of factors, including the timing and amount of our future income. In periods prior to the occurrence of a change of control and absent circumstances requiring an early termination payment, Vista Proppants and Logistics Inc. is only obligated to make payments under the tax receivable agreement as and when it realizes cash tax savings from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement and related transactions. Accordingly, Vista Proppants and Logistics Inc. will generally not be required (absent a change of control or circumstances requiring an early termination payment) to make payments under the tax receivable agreement for a taxable year in which it does not have taxable income because no cash tax savings will have been realized. However, unutilized deductions that do not result in realized benefits in a given tax year as a result of insufficient taxable income may be applied to taxable income in future years and accordingly would impact the amount of cash tax savings in such future years and the amount of corresponding payments under the tax receivable agreement in such future years.

Accordingly, it is possible that the actual cash tax savings realized by Vista Proppants and Logistics Inc. may be significantly less than the corresponding tax receivable agreement payments. There may be a material negative effect on our liquidity if the payments under the tax receivable agreement exceed the actual cash tax savings that Vista Proppants and Logistics Inc. realizes in respect of the tax attributes subject to the tax receivable agreement and/or distributions to Vista Proppants and Logistics Inc. by Vista OpCo are not sufficient to permit Vista Proppants and Logistics Inc. to make payments under the tax receivable agreement after it has paid taxes and other expenses. Based upon certain assumptions described in greater detail below under “Certain Relationships and Related Person Transactions—Tax Receivable Agreement,” we estimate that if Vista Proppants and Logistics Inc. were to exercise its termination right immediately following this offering, the aggregate amount of these termination payments would be approximately $ . The foregoing number is merely an estimate and the actual payments could differ materially. We may need to incur additional indebtedness to finance payments under the tax receivable agreement to the extent our cash resources are insufficient to meet our obligations under the tax receivable agreement as a result of timing discrepancies or otherwise.

Vista Proppants and Logistics Inc. is controlled by our pre-IPO owners, whose interests may differ from those of our public stockholders.

Immediately following this offering and the application of net proceeds from this offering, our pre-IPO owners will hold approximately % of the combined voting power of our Class A and Class B common stock (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Accordingly, our pre-IPO owners will have the ability to elect all of the members of our board of directors, and thereby to control our management and affairs. In addition, they will be able to determine the outcome of all

matters requiring stockholder approval, including mergers and other material transactions, and will be able to cause or prevent a change in the composition of our board of directors or a change in control of our company that could deprive our stockholders of an opportunity to receive a premium for their Class A common stock as part of a sale of our company and might ultimately affect the market price of our Class A common stock.

In addition, immediately following this offering and the application of the net proceeds therefrom, our pre-IPO owners will own % of the LLC Units (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Because they hold their ownership interest in our business directly in Vista OpCo, rather than through Vista Proppants and Logistics Inc., our pre-IPO owners may have conflicting interests with holders of shares of our Class A common stock. For example, if Vista OpCo makes distributions to Vista Proppants and Logistics Inc., the non-managing members of Vista OpCo will also be entitled to receive such distributions pro rata in accordance with the percentages of their respective limited liability company interests in Vista OpCo and their preferences as to the timing and amount of any such distributions may differ from those of our public stockholders. Our pre-IPO owners may also have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, especially in light of the existence of the tax receivable agreement that we will enter in connection with this offering, whether and when to incur new or refinance existing indebtedness, and whether and when Vista Proppants and Logistics Inc. should terminate the tax receivable agreement and accelerate its obligations thereunder. In addition, the structuring of future transactions may take into consideration our pre-IPO owners’ tax or other considerations even where no similar benefit would accrue to us. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

Moreover, under our amended and restated bylaws and the stockholders’ agreement with our Principal Stockholders and their respective affiliates that will be in effect by the completion of this offering, for so long as our Principal Stockholders and their respective affiliates retain significant ownership of us, we will agree to nominate to our board individuals designated by the Principal Stockholders. Even when our Principal Stockholders and their respective affiliates cease to own shares of our stock representing a majority of the total voting power, for so long as our Principal Stockholders and their respective affiliates continue to own a significant percentage of our stock, they will still be able to significantly influence the composition of our board of directors and the approval of actions requiring stockholder approval through their voting power. Accordingly, for such period of time, our Principal Stockholders and their respective affiliates will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as our Principal Stockholders and their respective affiliates continue to own a significant percentage of our stock, they will be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of Class A common stock as part of a sale of our company and ultimately might affect the market price of our Class A common stock.

Our amended and restated certificate of incorporation will not limit the ability of our Sponsor to compete with us.

Our Sponsor and its affiliates engage in a broad spectrum of activities, including investments in the energy sector generally and in the oilfield services industry in particular. In the ordinary course of their business activities, our Sponsor and its affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. Our amended and restated certificate of incorporation will provide that none of our Sponsor, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our Sponsor also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, our Sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

Risks Related to this Offering and Ownership of our Class A Common Stock

After completion of this offering, our Principal Stockholders will continue to control a majority of the combined voting power of all classes of our stock entitled to vote generally in the election of directors. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of NASDAQ. Under these rules, a company of which more than 50% of the voting power in the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirements that, within one year of the date of the listing of its common stock:

•

the company have a board that is composed of a majority of “independent directors,” as defined under the NASDAQ rules;

•

the company have a compensation committee that is composed entirely of independent directors and that has a written charter addressing the committee’s purpose and responsibilities; and

•

the company’s director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of independent directors, and that the company adopt a written charter or a board resolution addressing the nominations process.

Following this offering, we may utilize these exemptions. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.

We are an “emerging growth company” under the JOBS Act, and any decision on our part to comply with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we currently intend to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our registration statements, periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of this offering; (ii) the last day of the first fiscal year during which our annual gross revenue is $1.07 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on exemptions from certain disclosure requirements. If some investors find our Class A common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class A common stock and the price of our Class A common stock may be more volatile.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also

will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC and NASDAQ. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and Class A common stock price.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that eventually we will be required to meet. Because currently we do not have comprehensive documentation of our internal controls and have not yet tested our internal controls in accordance with Section 404, we cannot conclude in accordance with Section 404 that we do not have a material weakness in our internal controls or a combination of significant deficiencies that could result in the conclusion that we have a material weakness in our internal controls. Once we are no longer an emerging growth company, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal controls over financial reporting.

Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, which may result in a breach of the covenants under our financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the price of our Class A common stock.

If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our Class A common stock, our stock price and trading volume could decline.

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrade our Class A common stock or publish inaccurate or unfavorable research about our business, our Class A common stock price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our Class A common stock price or trading volume to decline and our Class A common stock to be less liquid.

There may not be an active trading market for shares of our Class A common stock, which may cause shares of our Class A common stock to trade at a discount from their initial offering price and make it difficult to sell the shares of Class A common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our Class A common stock. It is possible that after this offering an active trading market will not develop or continue or, if developed, that any market will be sustained which would make it difficult for you to sell your shares of Class A common stock at an attractive price or at all. The initial public offering price per share of Class A common stock will be determined by agreement among us and the representatives of the underwriters, and may not be indicative of the price at which shares of our Class A common stock will trade in the public market after this offering.

The initial public offering price for the shares of our Class A common stock offered hereby was determined by negotiations between us and the representatives of the underwriters and may not be indicative of the market price of the Class A common stock that will prevail in the trading market. The market price of our common stock may decline below the initial public offering price.

The market price of shares of our Class A common stock may be volatile, which could cause the value of your investment to decline.

Even if a trading market develops, the market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our Class A common stock regardless of our operating performance. In addition, our operating results could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly operating results or dividends, if any, to stockholders, additions or departures of key management personnel, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, adverse publicity about the industries we participate in or individual scandals, and in response the market price of shares of our Class A common stock could decrease significantly. You may be unable to resell your shares of Class A common stock at or above the initial public offering price.

In the past few years, stock markets have experienced extreme price and volume fluctuations. In the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

Investors in this offering will suffer immediate and substantial dilution.

The initial public offering price per share of Class A common stock will be substantially higher than our pro forma net tangible book value per share immediately after this offering. As a result, you will pay a price per share of Class A common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. In addition, you will pay more for your shares of Class A common stock than the amounts paid for the LLC Units by our pre-IPO owners. Assuming an offering price of $ per share of Class A common stock, which is the midpoint of the range on the front cover of this prospectus, you will incur immediate and substantial dilution in an amount of $ per share of Class A common stock. See “Dilution.”

You may be diluted by the future issuance of additional Class A common stock or LLC Units in connection with our incentive plans, acquisitions or otherwise.

After this offering we will have approximately shares of Class A common stock authorized but unissued, including approximately shares of Class A common stock issuable upon exchange of LLC Units that will be held by our pre-IPO owners. Our certificate of incorporation authorizes us to issue these shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. Similarly, the limited liability company agreement of Vista OpCo permits Vista OpCo to issue an unlimited number of additional limited liability company interests of Vista OpCo with designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the LLC Units, and which may be exchangeable for shares of our Class A common stock. Additionally, we have reserved an aggregate of shares of Class A common stock and LLC Units for issuance under our 2018 Omnibus Incentive Plan, including up to shares (assuming an offering price of $ per share of Class A common stock, which is the midpoint of the range on the front cover on this prospectus) issuable pursuant to restricted stock units that may be granted to our non-employee directors at the time of this offering. See “Management—Executive and Director Compensation—Actions Taken in Connection with the Offering—Vista Proppants and Logistics Inc. 2018 Omnibus Incentive Plan” and “—Director Compensation.” Any Class A common stock that we issue, including under our 2018 Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase Class A common stock in this offering.

We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock.

Our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our Class A common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our Class A common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the Class A common stock.

Our share price may decline due to the large number of our shares eligible for future sale.

The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock in the market after this offering or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares of our Class A common stock in the future at a time and at a price that we deem appropriate. Upon completion of this offering, we will have a total of shares of our Class A common stock outstanding, or shares if the underwriters exercise in full their option to purchase additional shares of our Class A common stock. All of the shares of our Class A common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act, by persons other than our “affiliates.” See “Shares Eligible for Future Sale.”

In addition, we and our pre-IPO owners will enter into an exchange agreement under which they (or certain permitted transferees thereof) will have the right, from and after the completion of this offering (subject to the terms of the exchange agreement), to exchange their LLC Units for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments. Upon completion of this offering (subject to the terms of the exchange agreement), an aggregate of LLC Units may be exchanged for shares of our

Class A common stock. Any shares we issue upon exchange of LLC Units will be “restricted securities” as defined in Rule 144 and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. Under applicable SEC guidance, we believe that for purposes of Rule 144 the holding period in such shares will generally include the holding period in the corresponding LLC Units exchanged. We and our directors and executive officers and each of our Principal Stockholders have agreed, subject to certain exceptions, not to dispose of or hedge any shares of our Class A common stock (including shares issued upon exchange of LLC Units) or securities convertible into or exchangeable for shares of our Class A common stock for 180 days from the date of this prospectus, except with the underwriters’ prior written consent. As a result of the registration rights agreement, however, all of these shares of our common stock (including shares issued upon exchange of LLC Units) may be eligible for future sale without restriction, subject to applicable lock-up arrangements. See “Shares Eligible for Future Sale—Registration Rights” and “Certain Relationships and Related Person Transactions—Registration Rights Agreement.”

Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in the public market, subject, in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. We expect that our Principal Stockholders will be considered affiliates for 180 days after this offering based on their expected share ownership, as well as their board nomination rights. Certain other of our stockholders may also be considered affiliates at that time. However, commencing 180 days following this offering, the holders of these shares of common stock will have the right, subject to certain exceptions and conditions, to require us to register their shares of common stock under the Securities Act, and they will have the right to participate in future registrations of securities by us. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our Class A common stock or securities convertible into or exchangeable for shares of our Class A common stock issued pursuant to our 2018 Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of our Class A common stock. However, shares issued to our directors and officers and each of our Principal Stockholders are subject to lock-up arrangements, described above, and generally may not be sold for 180 days from the date of this prospectus, except with the underwriters’ prior written consent.

As restrictions on resale end, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our class A common stock or other securities.

Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

Our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may make the merger or acquisition of our company more difficult without the approval of our board of directors. Among other things, these provisions:

•

provide that our board of directors will be divided into three classes, with terms of the directors of only one class expiring in any given year;

•

would allow us to authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of Class A common stock;

•

provide for certain limitations on convening special stockholder meetings;

•

provide for the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if our Principal Stockholders and their affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors;

•

prohibit stockholder action by written consent (other than by holders of Class B common stock) from and after the date on which our Principal Stockholders and their affiliates cease to beneficially own at least 40% in voting power of our stock entitled to vote generally in the election of directors;

•

provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws and if our Principal Stockholders and their affiliates beneficially own less than 40% in voting power of our stock entitled to vote generally in the election of directors, our stockholders may only amend our bylaws with the approval of 80% or more in voting power of all outstanding shares of our capital stock;

•

provide that certain provisions may be amended only by the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class, if our Principal Stockholders and their affiliates beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors; and

•

establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

Further, our amended and restated certificate of incorporation and bylaws provide that in the event our Principal Stockholders and their respective affiliates beneficially own, in the aggregate, less than 5% in voting power of our stock entitled to vote generally in the election of directors, we will automatically become subject to provisions of Delaware law, which may impair a takeover attempt that our stockholders may find beneficial. These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, including actions that our stockholders may deem advantageous, or negatively affect the trading price of our Class A common stock. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or the Company’s directors, officers or other employees.

Our amended and restated certificate of incorporation will provide that, unless we consent to the selection of an alternative forum, any (1) derivative action or proceeding brought on behalf of our Company, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our Company to our Company or our Company’s stockholders, (3) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws, (4) action asserting a claim against us or any director or officer of our Company governed by the internal affairs doctrine, or (5) action, proceeding or claim arising pursuant to the federal securities laws of the United States or the securities or antifraud laws of any international, national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each case, the applicable rules and regulations promulgated thereunder shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject

matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our amended and restated certificate of incorporation. These choice-of-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’s directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under “Risk Factors.” These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

MARKET AND INDUSTRY DATA

This prospectus includes market and industry data and forecasts that we have derived from independent consultant reports, publicly available information, various industry publications, other published industry sources, including Coras Research, Rystad Energy and Spears & Associates, and our internal data and estimates. Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable.

Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management’s understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

Texas Premium White proppant and other trademarks, trade names, and service marks of Vista appearing in this prospectus are the property of Vista and its affiliates.

Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus are without the ^® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks, service marks, and trade names. All trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners.

ORGANIZATIONAL STRUCTURE

Existing Organizational Structure

On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista OpCo. More specifically, LS Holdings, which was the 100% owner of Vista OpCo. and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, First Reserve purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo.

The diagram below depicts our current organizational structure.

LOGO

Organizational Structure Following this Offering

Immediately following this offering, Vista Proppants and Logistics Inc. will be a holding company, and its sole material asset will be a controlling equity interest in Vista OpCo. As the sole managing member of Vista OpCo, Vista Proppants and Logistics Inc. will operate and control all of the business and affairs of Vista OpCo and, through Vista OpCo and its subsidiaries, conduct our business. Under GAAP, Vista OpCo will satisfy the definition of a variable interest entity. Vista Proppants and Logistics Inc. will be the primary beneficiary of Vista OpCo as a result of its 100% voting power and control over Vista OpCo and as a result of its obligation to bear losses and its right to receive benefits of Vista OpCo that could potentially be significant to Vista OpCo. Vista Proppants and Logistics Inc. will consolidate Vista OpCo on its consolidated financial statements and record a

noncontrolling interest related to the LLC Units held by our pre-IPO owners on its consolidated balance sheet and statement of income. Vista OpCo’s assets and liabilities are for the use or obligation of Vista OpCo and/or its subsidiaries.

Our pre-IPO owners will hold all of the issued and outstanding shares of our Class B common stock. The shares of Class B common stock will have no economic rights but will entitle each holder, without regard to the number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units of Vista OpCo held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. The voting power afforded to holders of LLC Units by their shares of Class B common stock is automatically and correspondingly reduced as they exchange LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. pursuant to the exchange agreement. If at any time the ratio at which LLC Units are exchangeable for shares of our Class A common stock changes from one-for-one as described under “Certain Relationships and Related Person Transactions—Exchange Agreement,” the number of votes to which Class B common stockholders are entitled will be adjusted accordingly. Holders of shares of our Class B common stock will vote together with holders of our Class A common stock as a single class on all matters on which stockholders are entitled to vote generally, except as otherwise required by law.

The diagram below depicts our organizational structure immediately following this offering.

LOGO

(1)

Includes shares of Class A common stock that will be acquired by the Merged Owner immediately prior to this offering pursuant to certain reorganization transactions described below under “—Blocker Merger.” Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock). See “—Blocker Merger.”

(2)

(3)	Immediately following this offering, the Founders, our Sponsor, and the other pre-IPO owners will hold %, %, and % of the outstanding LLC Units of Vista OpCo, respectively.

Incorporation of Vista Proppants and Logistics Inc.

Vista Proppants and Logistics Inc. was incorporated as a Delaware corporation on July 19, 2017. Vista Proppants and Logistics Inc. has not engaged in any business or other activities except in connection with its formation. The certificate of incorporation of Vista Proppants and Logistics Inc. authorizes two classes of common stock, Class A common stock and Class B common stock, each having the terms described in “Description of Capital Stock.”

Reclassification and Amendment and Restatement of Limited Liability Company Agreement of Vista OpCo

The existing limited liability company agreement of Vista OpCo provides for two classes of interest: common units and Class A units. The common units, which are held by our pre-IPO owners, represent a common equity interest in Vista OpCo that entitle its holders, subject to the rights of the holder of the Class A unit described below, to participate in any distributions of Vista OpCo, including distributions upon liquidation, ratably in accordance with their respective percentage ownership of the common units and to vote on any matters with respect to which common unitholders are entitled to vote, consent or approve, ratably in accordance with their respective percentage ownership of the common units, in each case, on the terms and conditions provided in the limited liability company agreement. The Class A unit, which is held by an entity in which each of our Founders has a 50% interest, is generally non-voting and entitles its holder to receive, on the terms and subject to the conditions of the limited liability company agreement, a portion of the distributions or sales proceeds otherwise payable to our Sponsor in respect of its common units in the event that specified investment returns have been achieved by our Sponsor.

Prior to the completion of this offering, the limited liability company agreement of Vista OpCo will be amended and restated to, among other things, modify its capital structure by creating a single new class of units that we refer to as “LLC Units.” Immediately following the reclassification but prior to the other Offering Transactions described below, there will be LLC Units issued and outstanding.

Pursuant to the limited liability company agreement of Vista OpCo, Vista Proppants and Logistics Inc. will be the sole managing member of Vista OpCo. Accordingly, Vista Proppants and Logistics Inc. will have the right to determine when distributions will be made to the members of Vista OpCo and the amount of any such distributions. If Vista Proppants and Logistics Inc., as managing member, authorizes a distribution, such distribution will be made to the members of Vista OpCo pro rata in accordance with the percentages of their respective limited liability company interests.

The holders of limited liability company interests in Vista OpCo, including Vista Proppants and Logistics Inc., will incur United States federal, state and local income taxes on their proportionate share of any taxable income of Vista OpCo. Net profits and net losses of Vista OpCo will generally be allocated to its members (including Vista Proppants and Logistics Inc.) pro rata in accordance with the percentages of their respective limited liability company interests, except as otherwise required by law. The limited liability company agreement provides for cash distributions to the holders of limited liability company interests in Vista OpCo if Vista Proppants and Logistics Inc. determines that the taxable income of Vista OpCo will give rise to taxable income for its members. In accordance with the limited liability company agreement, we intend to cause Vista OpCo to make pro rata cash distributions to the holders of limited liability company interests in Vista OpCo for purposes of funding their tax obligations in respect of the income of Vista OpCo that is allocated to them. Generally, these tax distributions will be computed based on our estimate of the taxable income of Vista OpCo multiplied by an assumed tax rate equal to the highest effective marginal combined United States federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the non-deductibility of certain expenses and the character of our income). See “Certain Relationships and Related Person Transactions—Vista OpCo Limited Liability Company Agreement.”

Blocker Merger

and Logistics Inc. and the surviving entity will then be dissolved. In the merger, the Merged Owner, as the 100% owner of the Blocker Company, will acquire shares of newly issued Class A common stock and Vista Proppants and Logistics Inc. will acquire an equal number of outstanding LLC Units. Immediately following this offering, the Merged Owner will own less than 2% of the issued and outstanding shares of Class A common stock of Vista Proppants and Logistics Inc. (assuming the exchange of all LLC Units held by our pre-IPO owners for shares of Class A common stock).

Exchange Agreement

We and the holders of outstanding LLC Units will enter into an exchange agreement at the time of this offering under which they (or certain permitted transferees thereof) will have the right, from and after the completion of this offering (subject to the terms of the exchange agreement), to exchange their LLC Units for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. The exchange agreement will also provide that a holder of LLC Units will not have the right to exchange LLC Units if Vista Proppants and Logistics Inc. determines that such exchange would be prohibited by law or regulation or would violate other agreements with Vista Proppants and Logistics Inc. to which the holder of LLC Units may be subject. Vista Proppants and Logistics Inc. may impose additional restrictions on exchange that it determines to be necessary or advisable so that Vista OpCo is not treated as a “publicly traded partnership” for United States federal income tax purposes. As a holder exchanges LLC Units for shares of Class A common stock, the number of LLC Units held by Vista Proppants and Logistics Inc. is correspondingly increased as it acquires the exchanged LLC Units. See “Certain Relationships and Related Person Transactions—Exchange Agreement.”

Offering Transactions

At the time of the consummation of this offering, Vista Proppants and Logistics Inc. intends to consummate the purchase, for cash, of newly issued LLC Units from Vista OpCo at a purchase price per unit equal to the initial public offering price per share of Class A common stock in this offering net of underwriting discounts. Assuming that the shares of Class A common stock to be sold in this offering are sold at $ per share, which is the midpoint of the range on the front cover of this prospectus, at the time of this offering, Vista Proppants and Logistics Inc. will purchase from Vista OpCo newly issued LLC Units for an aggregate of $ (or newly issued LLC Units for an aggregate of $ if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The issuance and sale of such newly issued LLC Units by Vista OpCo to Vista Proppants and Logistics Inc. will correspondingly dilute the ownership interests of our pre-IPO owners in Vista OpCo. See “Principal Stockholders” for more information regarding the proceeds from this offering that will be paid to our Principal Stockholders, directors and named executive officers. Accordingly, following this offering Vista Proppants and Logistics Inc. will hold a number of LLC Units that is equal to the number of shares of Class A common stock that it has issued, a relationship that we believe fosters transparency because it results in a single share of Class A common stock representing (albeit indirectly) the same percentage equity interest in Vista OpCo as a single LLC Unit.

Holders of LLC Units (other than Vista Proppants and Logistics Inc.) may, subject to certain conditions and transfer restrictions applicable to such holders as set forth in the operating agreement of Vista OpCo, from and after the completion of this offering (subject to the terms of the exchange agreement), exchange their LLC Units for Class A common stock on a one-for-one basis. The exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Vista OpCo. These increases in tax basis may increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of tax that Vista Proppants and Logistics Inc. would otherwise be required to pay in the future, although the IRS may challenge all or part of that tax basis increase, and a court could sustain such a challenge. Prior to the completion of this offering, we will enter into a tax receivable agreement with our pre-IPO owners that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of these increases in tax

basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. This payment obligation is an obligation of Vista Proppants and Logistics Inc. and not of Vista OpCo. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

We refer to the foregoing transactions, including those described under “—Reclassification and Amendment and Restatement of Limited Liability Company Agreement of Vista OpCo” and “—Blocker Merger,” as the “Offering Transactions.”

As a result of the transactions described above:

•

the investors in this offering will collectively own shares of our Class A common stock (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and Vista Proppants and Logistics Inc. will hold LLC Units (or LLC Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

•

our pre-IPO owners will hold LLC Units and the Merged Owner will hold shares of our Class A common stock;

•

the investors in this offering will collectively have % of the voting power in Vista Proppants and Logistics Inc. (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and

•

our pre-IPO owners, as holders of all of the outstanding shares of Class B common stock, will have % of the voting power in Vista Proppants and Logistics Inc. (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

USE OF PROCEEDS

We estimate that the net proceeds to Vista Proppants and Logistics Inc. from this offering at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions, will be approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares of Class A common stock). A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease, as applicable, the net proceeds to Vista Proppants and Logistics Inc. from this offering by approximately $ million, assuming the number of shares offered by us remains the same as set forth on the cover page of this prospectus and after deducting the estimated underwriting discounts and commissions. Vista OpCo will bear or reimburse Vista Proppants and Logistics Inc. for all of the expenses payable by it in this offering, which we estimate will be approximately $ million.

Vista Proppants and Logistics Inc. intends to use all of the net proceeds from this offering (including from any exercise by the underwriters of their option to purchase additional shares of Class A common stock) to purchase a number of newly issued LLC Units from Vista OpCo that is equivalent to the number of shares of Class A common stock that we offer and sell in this offering, as described under “Organizational Structure—Offering Transactions.” We intend to cause Vista OpCo to use these proceeds, as described in “Unaudited Pro Forma Condensed Consolidated Financial Information,” to repay indebtedness, including borrowings under our Term Loan Facility, and for general corporate purposes. Our Term Loan Facility, which matures in August 2021, bears interest at LIBOR (with a floor of 1.5%) plus 9.5% and was originally entered into on March 1, 2017, was amended and restated to provide for additional incremental borrowings on November 9, 2017 and was further amended to provide for additional incremental borrowings on May 4, 2018. Borrowings under the Term Loan Facility were used to refinance existing indebtedness, fund capital expenditures, including the development of the Tolar and West Texas mines, and for general corporate purposes. Vista OpCo used the proceeds of the incremental borrowings under the Term Loan Facility to pay a distribution of $85.0 million to our pre-IPO owners on November 9, 2017 (as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—The Distribution Financing Transaction”). Additionally, on November 29, 2017 and May 4, 2018, we borrowed an additional $60.0 million and $75.0 million under our Term Loan Facility, respectively. Vista OpCo used the proceeds of the additional borrowings to fund capital expenditures, including the development of the West Texas mine, and for general corporate purposes.

DIVIDEND POLICY

The declaration, amount and payment of any future dividends on shares of Class A common stock will be at the sole discretion of our board of directors and we may reduce or discontinue entirely the payment of such dividends at any time. Our board of directors may take into account general and economic conditions, our financial condition and operating results, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, and such other factors as our board of directors may deem relevant.

Vista Proppants and Logistics Inc. is a holding company and has no material assets other than its ownership of LLC Units in Vista OpCo. We intend to cause Vista OpCo to make distributions to us in an amount sufficient to cover our taxes and obligations under the tax receivable agreement as well as any cash dividends declared by us. If Vista OpCo makes such distributions to us, the other holders of LLC Units will also be entitled to receive distributions pro rata in accordance with the percentages of their respective limited liability company interests.

Our existing Term Loan Facility and Line-of-Credit include, and any financing arrangements that we enter into in the future may also include, restrictive covenants that limit our ability to pay dividends. In addition, Vista OpCo is generally prohibited under Delaware law from making a distribution to a member to the extent that, at the time of the distribution, after giving effect to the distribution, liabilities of Vista OpCo (with certain exceptions) exceed the fair value of its assets. Subsidiaries of Vista OpCo are generally subject to similar legal limitations on their ability to make distributions to Vista OpCo.

Since its formation in July 2017, Vista Proppants and Logistics Inc. has not paid any dividends to holders of its outstanding common stock. In the period from its formation in March 2017 through June 30, 2018, Vista OpCo has paid an aggregate of $88.3 million of distributions to our pre-IPO owners (which includes $85.0 million that Vista OpCo paid to our pre-IPO owners using proceeds from incremental borrowings under the New Credit Agreement on November 9, 2017, as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Distribution Financing Transaction”).

CAPITALIZATION

The following table sets forth our consolidated cash and cash equivalents and capitalization as of June 30, 2018:

•

on a historical basis; and

•

on an as adjusted basis giving effect to the Offering Transactions described under “Unaudited Pro Forma Condensed Consolidated Financial Information,” including the application of the proceeds from this offering, as described in “Use of Proceeds.”

The information below is illustrative only and our capitalization following this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. Cash and cash equivalents are not components of our total capitalization. You should read this table together with the other information contained in this prospectus, including “Organizational Structure,” “Use of Proceeds,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes thereto included elsewhere in this prospectus.


	June 30, 2018
	Actual		As Adjusted(1)
	(Dollars in thousands, except per share amounts)
Cash and cash equivalents	$	46,741	$

Long-term debt (including current portion and net of unamortized debt issuance costs)	$	354,547	$
Capital lease obligations, including current portion		9,132
Members’ interest		93,688
Class A common stock, par value $0.01 per share, 1,000 shares authorized and no shares issued and outstanding, actual; and shares authorized and shares issued and outstanding on an as adjusted basis		—
Class B common stock, par value $0.01 per share, 1,000 shares authorized and 100 shares issued and outstanding, actual; and shares authorized and shares issued and outstanding on an as adjusted basis		—
Additional paid-in capital		—
Retained earnings		—

Non-controlling interest in Vista OpCo		—

Total stockholders’ equity and members’ interest		93,688

Total capitalization	$	504,108	$

(1)

To the extent we change the number of shares of Class A common stock sold by us in this offering from the shares we expect to sell or we change the initial public offering price from the $ per share assumed initial public offering price, representing the midpoint of the price range set forth on the cover page of this prospectus, or any combination of these events occurs, the net proceeds to us from this offering and each of total equity and total capitalization may increase or decrease. A $1.00 increase (decrease) in the assumed initial public offering price per share, assuming no change in the number of shares to be sold, would increase (decrease) the net proceeds that we receive in this offering and each of total equity and total capitalization by approximately $ . An increase (decrease) of 1,000,000 shares in the expected number of shares to be sold in the offering, assuming no change in the assumed initial offering price per share, would increase (decrease) our net proceeds from this offering and our total equity and total capitalization by approximately $ . If the underwriters exercise in full their option to purchase additional shares of Class A common stock, the pro forma amount of each of cash, additional paid-in capital, total equity and total capitalization would increase by approximately $ , after deducting underwriting discounts, and we would have shares of our Class A common stock issued and outstanding, as adjusted.

DILUTION

If you invest in shares of our Class A common stock, your investment will be immediately diluted to the extent of the difference between the initial public offering price per share of Class A common stock and the pro forma net tangible book value per share of Class A common stock after this offering. Dilution results from the fact that the per share offering price of the shares of Class A common stock is substantially in excess of the pro forma net tangible book value per share attributable to our pre-IPO owners.

Our pro forma net tangible book value as of June 30, 2018 was approximately $ , or $ per share of Class A common stock. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities, and pro forma net tangible book value per share of Class A common stock represents pro forma net tangible book value divided by the number of shares of Class A common stock outstanding, after giving effect to the reclassification and assuming that all of the holders of LLC Units in Vista OpCo (other than Vista Proppants and Logistics Inc.) exchanged their LLC Units for newly issued shares of Class A common stock on a one-for-one basis.

After giving effect to the transactions described under “Unaudited Pro Forma Financial Information,” including the application of the proceeds from this offering as described in “Use of Proceeds,” our pro forma net tangible book value as of June 30, 2018 would have been $ , or $ per share of Class A common stock. This represents an immediate dilution in net tangible book value of $ per share of Class A common stock to our pre-IPO owners and an immediate dilution in net tangible book value of $ per share of Class A common stock to investors in this offering.

The following table illustrates this dilution on a per share of Class A common stock basis assuming the underwriters do not exercise their option to purchase additional shares of Class A common stock:


Assumed initial public offering price per share of Class A common stock		$
Pro forma net tangible book value per share of Class A common stock as of June 30, 2018	$
Increase in pro forma net tangible book value per share of Class A common stock attributable to investors in this offering	$

Pro forma net tangible book value per share of Class A common stock after the offering		$

Dilution in pro forma net tangible book value per share of Class A common stock to investors in this offering		$

Because our pre-IPO owners do not own any Class A common stock or other economic interests in Vista Proppants and Logistics Inc., we have presented dilution in pro forma net tangible book value per share of Class A common stock to investors in this offering assuming that all of the holders of LLC Units in Vista OpCo (other than Vista Proppants and Logistics Inc.) exchanged their LLC Units for newly issued shares of Class A common stock on a one-for-one basis in order to more meaningfully present the dilutive impact on the investors in this offering.

A $1.00 increase in the assumed initial public offering price of $ per share of our Class A common stock would increase our pro forma net tangible book value after giving effect to this offering by $ million, or by $ per share of our Class A common stock, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The following table summarizes, on the same pro forma basis as of June 30, 2018, the total number of shares of Class A common stock purchased from us, the total cash consideration paid to us, and the average price per share of Class A common stock paid by our pre-IPO owners and by new investors purchasing shares of Class

A common stock in this offering, assuming that all of the holders of LLC Units in Vista OpCo (other than Vista Proppants and Logistics Inc.) exchanged their LLC Units for shares of our Class A common stock on a one-for-one basis.

Shares of Class A
common stock
Purchased

Total
Consideration

Average
Price Per
Share of Class
A common
stock

Number

Percent

Amount

Percent

(In thousands)

Pre-IPO owners

Investors in this offering

Total

Each $1.00 increase in the assumed offering price of $ per share would increase total consideration paid by investors in this offering by $ million, assuming the number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions. A $1.00 decrease in the assumed initial public offering price per share would result in equal changes in the opposite direction.

The dilution information above is for illustrative purposes only. Our net tangible book value following the consummation of this offering is subject to adjustment based on the actual initial public offering price of our shares and other terms of this offering determined at pricing.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2017 and for the six months ended June 30, 2018 present our consolidated results of operations giving pro forma effect to the March 2017 Transaction described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—The March 2017 Transaction” and to the Offering Transactions described under “Organizational Structure” and the use of the estimated net proceeds from this offering as described under “Use of Proceeds,” as if such transactions occurred on January 1, 2017. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2018 presents our consolidated financial position giving pro forma effect to the Offering Transactions described under “Organizational Structure” and the use of the estimated net proceeds from this offering as described under “Use of Proceeds,” as if such transactions occurred on June 30, 2018. The pro forma adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions on the historical financial information of Vista OpCo (and its accounting predecessor for the period prior to March 20, 2017 in the case of the unaudited pro forma condensed consolidated statements of operations).

Prior to giving effect to the Offering Transactions, our pre-IPO owners own 100% of the common units in Vista OpCo. Upon completion of the Offering Transactions, the pre-IPO owners will own ( %) of the outstanding LLC Units of Vista OpCo and Vista Proppants and Logistics Inc. will own ( %) of the outstanding LLC Units of Vista OpCo.

The unaudited pro forma condensed consolidated financial information should be read together with “Organizational Structure,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes included elsewhere in this prospectus.

The unaudited pro forma condensed consolidated financial information is included for informational purposes only and does not purport to reflect the results of operations or financial position of Vista Proppants and Logistics Inc. that would have occurred had we operated as a public company during the periods presented. The unaudited pro forma condensed consolidated financial information should not be relied upon as being indicative of our results of operations or financial position had the Offering Transactions described under “Organizational Structure” and the use of the estimated net proceeds from this offering as described under “Use of Proceeds” occurred on the dates assumed. The unaudited pro forma condensed consolidated financial information also does not project our results of operations or financial position for any future period or date.

The pro forma adjustments principally give effect to:

•

the March 2017 Transaction described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—The March 2017 Transaction”;

•

the acquisition, immediately prior to this offering, of newly issued shares of Class A common stock by the Merged Owner pursuant to the transactions described under “Organizational Structure—Blocker Merger”;

•

the issuance of shares of Class A common stock in this offering at the assumed initial public offering price of $ per share (the midpoint of the estimated offering price range indicated on the front cover of this prospectus) less estimated underwriting discounts of $ per share and the payment of offering expenses of approximately $ million;

•

the application of proceeds from this offering to repay outstanding indebtedness, as described in “Use of Proceeds”; and

•

in the case of the unaudited pro forma condensed consolidated statements of operations, a provision for corporate income taxes on the income of Vista Proppants and Logistics Inc. at an effective rate of %, which includes a provision for United States federal income taxes and assumes the highest statutory rates apportioned to each state and/or local jurisdiction.

The unaudited pro forma condensed consolidated financial information presented assumes no exercise by the underwriters of the option to purchase up to an additional shares of Class A common stock from us.

As a public company, we will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur additional annual general and administrative costs related to these steps and, among other things, additional directors and officers’ liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. We have not included any pro forma adjustments relating to these costs. We currently estimate that such additional annual general and administrative costs will be approximately $3.0 million.

As described in greater detail under “Certain Relationships and Related Person Transactions—Tax Receivable Agreement,” prior to the completion of this offering, we will enter into a tax receivable agreement with the holders of LLC Units (other than Vista Proppants and Logistics Inc.) that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of increases in tax basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. We anticipate that we will account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from future exchanges as follows:

•

we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;

•

to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and

•

we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital.

The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of our income. All of the effects of changes in any of our estimates after the date of the exchange will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income.

While such exchanges may occur in future periods following the offering, no such exchanges will occur as part of the Offering Transactions. In addition, the Blocker Merger is intended to be treated as a “reorganization” within the meaning of Section 368(a) of the Code. Accordingly, it is not a taxable acquisition of LLC Units by Vista Proppants and Logistics Inc. and is not an exchange resulting in an increase in tax basis resulting in payments under the tax receivable agreement. For these reasons, accordingly, no pro forma adjustment has been made to reflect the entering into of the tax receivable agreement, as any such adjustment would not be directly attributable to the Offering Transactions and would not be factually supportable. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

Vista Proppants and Logistics, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of June 30, 2018

(in thousands)


	Vista Proppants and Logistics, LLC Historical		Pro Forma Adjustments— Offering Transactions			Vista Proppants and Logistics Inc. Pro Forma
ASSETS
Current Assets:
Cash	$	46,741	$		(2)(a)	$
Certificate of deposit		187
Accounts receivable, net		59,082
Other receivables, related parties		230
Inventories		8,506
Prepaid expenses and other current assets		4,500

Total current assets		119,246		—			—
Restricted cash		3,000
Certificate of deposit		3,565
Property, plant and equipment, net		363,490
Goodwill		35,775
Intangible assets, net of amortization		16,969
Lease reserves, net		7,914
Other assets		6,395		(2	)(d)

Total assets	$	556,354	$			$

LIABILITIES AND STOCKHOLDERS’ EQUITY/MEMBERS’ INTEREST
Current Liabilities:
Accounts payable	$	16,955	$			$
Accrued royalty		1,300
Accrued expenses and other current liabilities		35,048			2(f)
Other payables, related parties		539
Line-of-credit		33,812
Current portion of capital lease obligations		4,651
Current portion of long-term debt		17,526
Current portion of deferred revenue		2,949

Total current liabilities		112,780
Capital lease obligations, net of current portion		4,481
Long-term debt, net of current portion		337,021			(2)(b)
Deferred revenue		6,929
Asset retirement obligation		1,455

Total liabilities		462,666

Members’ interest		93,688
Class A authorized to issue shares, par value $0.01 per share; shares issued and outstanding on a pro forma basis		—			(2)(c)
Class B authorized to issue shares, par value $0.01 per share; shares issued and outstanding on a pro forma basis		—			(2)(c)
Additional paid-in capital		—			(2)(d)
Retained earnings		—
Non-controlling interest		—			(2)(e)

Total stockholders’ equity and members’ interest		93,688

Total liabilities and stockholders’ equity and members’ interest	$	556,354	$			$

Vista Proppants and Logistics, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2018

(in thousands, except per share amounts)

Vista Proppants
and Logistics,
LLC
Six Months Ended
June 30,
2018

Pro Forma
Adjustments—
Offering
Transactions

Vista
Proppants
and
Logistics
Inc.
Pro Forma

Revenues

Net sales

201,163

Cost of sales

132,169

Gross profit

68,994

Selling, general and administrative expenses

22,618

(Gain) loss on abandonments and disposals of property, plant and equipment

(415

)

Income from operations

46,791

Other income (expense)

Interest expense

(12,303

)

3(c)

Early extinguishment of debt

(6,566

)

Other income, net

218

Net income before taxes

28,140

Income taxes

754

3(d)

Net income

27,386

Less: Net income attributable to noncontrolling interest

3(e)

Net income attributable to Vista Proppants and Logistics, Inc.

Earnings per share

Basic

Diluted

Weighted average shares of Class A common stock outstanding(3(f))

Basic

Diluted

Vista Proppants and Logistics, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2017

(in thousands, except per share amounts)


	Vista Proppants and Logistics, LLC Year Ended December 31, 2017			MAALT, LP for the period from January 1, 2017 to March 19, 2017			Maalt Specialized Bulk, LLC for the period from January 1, 2017 to March 19, 2017			Eliminations				Pro Forma Adjustments— Business Combinations			Pro Forma— as adjusted before Offering Transactions		Pro Forma Adjustments— Offering Transactions		Vista Proppants and Logistics Inc. Pro Forma
Revenues
Net sales	$	265,693		$	5,508		$	4,889		$	(3,248	)	3(a)				$	272,842
Cost of sales		171,807			3,804			3,766			(3,140	)	3(a)		1,066	3(b)		177,303

Gross profit		93,886			1,704			1,123										95,539

Selling, general and administrative expenses		32,818			1,279			863			(108	)	3(a)					34,852
(Gain) loss on abandonments and disposals of property, plant and equipment		1,835			(5	)		(165	)									1,665

Income from operations		59,233			430			425										59,022

Other income (expense)
Interest expense		(13,736	)		(159	)		(135	)									(14,030)		3(c)
Early extinguishment of debt		(1,673	)		—			—										(1,673)
Other income, net		86			—			—										86

Net income before taxes		43,910			271			290										43,405

Income taxes		(375	)		(41	)		(29	)									(445)		3(d)

Net income	$	43,535		$	230		$	261									$	42,960

Less: Net income attributable to noncontrolling interest																				3(e)
Net income attributable to Vista Proppants and Logistics, Inc.

Earnings per share
Basic
Diluted

Weighted average shares of Class A common stock outstanding(3(f))
Basic
Diluted

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	The March 2017 Transaction

Overview

On March 20, 2017, Vista OpCo completed a transaction in which Lonestar, MAALT and Bulk were acquired by Vista OpCo. More specifically, LS Holdings, which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, reorganized its ownership interests in Lonestar in a transaction whereby it contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, First Reserve purchased certain outstanding common units in Vista from existing owners and made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to these transactions as the “March 2017 Transaction.”

Vista OpCo accounted for the March 2017 Transaction as a business combination whereby Vista OpCo was determined to be the accounting acquirer of MAALT and Bulk as of March 20, 2017. The exchange between LS Holdings, Lonestar, and Vista OpCo was accounted for as a common control transaction. Accordingly, the results of MAALT and Bulk are included in Vista OpCo’s historical financial statements after the closing on March 20, 2017. For accounting purposes, Lonestar is the predecessor to Vista OpCo for periods prior to March 20, 2017.

Vista OpCo issued the owners of MAALT and Bulk 6.9 million newly issued common units in exchange for 100% of the ownership interests in MAALT and Bulk. The consideration exchanged between Vista OpCo and the owners of MAALT and Bulk totaled $69.0 million.

Estimated Purchase Price Allocation of MAALT and Bulk

The unaudited pro forma condensed consolidated financial statements do not give effect to the potential impact of any anticipated benefits from cost savings or synergies that may result from the acquisitions of MAALT or Bulk or to any future integration costs. The unaudited pro forma condensed consolidated financial statements do not purport to project the future operating results or financial position of the combined company following the acquisitions of MAALT or Bulk.

The fair values of the assets acquired and liabilities assumed as of March 20, 2017, were as follows (in thousands):


Purchase price assigned to MAALT and Bulk			$	69,035
Current assets	$	10,408
Property, plant, and equipment		37,338
Intangible and other non-current assets		22,054

Total assets acquired		69,800

Current liabilities		17,349

Long-term debt and capital leases		19,191
Total liabilities assumed		36,540

Net identifiable assets acquired				33,260

Goodwill			$	35,775

Property, plant and equipment

Property, plant and equipment has been adjusted to its estimated fair value as discussed further in Note 3 below. The related depreciation costs are reflected as a pro forma adjustment in the unaudited pro forma condensed consolidated statements of operations, as further described in Note 3(b).

Identifiable intangible assets

Identifiable intangible assets in the pro forma financial information consist of the assets shown in the table below. The amortization related to these intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2017, as further described in Note 3. The table below indicates the estimated fair value of the intangible assets and their estimated useful lives:


	Fair Value			Estimated Useful Life
	(in thousands)			(in years)
Definite lived intangible assets - Trade Names		$	2,429		10
Definite lived intangible asset - Customer relationships			17,041		15

Total fair value of identifiable intangible assets		$	19,470

Goodwill represents the excess of the purchase price over the fair value of the underlying net assets acquired. Goodwill in this transaction is attributable to planned growth in regional sand markets and synergies expected to be achieved from the combined operations of Lonestar, MAALT and Bulk offering a vertically integrated solution to the market.

Goodwill is expected to be deductible for tax purposes.

Consolidation

Immediately following this offering, Vista OpCo will satisfy the definition of a variable interest entity. Vista Proppants and Logistics Inc. will be the primary beneficiary of Vista OpCo as a result of its 100% voting power and control over Vista OpCo and as a result of its obligation to bear losses and its right to receive benefits of Vista OpCo that could potentially be significant to Vista OpCo. Accordingly, Vista Proppants and Logistics Inc. will consolidate Vista OpCo on its consolidated financial statements as a variable interest entity and has been presented as such herein for all periods presented. Vista OpCo’s assets and liabilities are for the use or obligation of Vista OpCo and/or its subsidiaries. See “Organizational Structure.”

2.	Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

Pro Forma Adjustments

(a)

Reflects the net effect on cash and cash equivalents of the receipt of net offering proceeds and the application thereof to (i) repay outstanding indebtedness under our Term Loan Facility and (ii) pay offering expenses remaining to be paid of $ million as described in “Use of Proceeds” (amounts in thousands).


Gross proceeds from this offering of $ million, net of underwriting discounts and commissions of $ million		$

		$
Less:
Repayment of $ million of outstanding indebtedness (see Note (b))
Professional fees and expenses related to this offering

		$

(b)

Represents the adjustment to long-term debt to give effect to the application of proceeds from this offering to repay outstanding indebtedness under our Term Loan Facility (amounts in thousands).


Repayment of Term Loan Facility (Principal)		$
Write-off of debt issuance costs

		$

(c)

Represents an adjustment to stockholders’ equity reflecting par value for the Class A common stock and Class B common stock to be outstanding following this offering, and is calculated as follows:


Par value of shares of Class A common stock issued in the Blocker Merger	$
Par value of shares of Class A common stock issued in this offering
Par value of Class A common stock issued

		$
Par value of shares of Class B common stock issued to pre-IPO owners	$

Our pre-IPO owners will hold all of the issued and outstanding shares of our Class B common stock. The shares of Class B common stock will have no economic rights but will entitle each holder, without regard to the number of shares of Class B common stock held by such holder, to a number of votes that is equal to the aggregate number of LLC Units of Vista OpCo held by such holder on all matters on which stockholders of Vista Proppants and Logistics Inc. are entitled to vote generally. The voting power afforded to holders of LLC Units by their shares of Class B common stock will be automatically and correspondingly reduced as they subsequently exchange LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. pursuant to the exchange agreement. If at any time the ratio at which LLC Units are exchangeable for shares of our Class A common stock changes from one-for-one as described under “Certain Relationships and Related Person Transactions—Exchange Agreement,” the number of votes to which Class B common stockholders are entitled will be adjusted accordingly. Accordingly, immediately following this offering, our pre-IPO owners, through their holdings of our Class B common stock, will collectively have % of the voting power in Vista Proppants and Logistics Inc. (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

(d)

Represents an increase of $ million to additional paid-in capital as a result of the amounts allocable to Vista Proppants and Logistics Inc. of net proceeds from this offering (offering proceeds, net of underwriting discounts, of $ million, less $ million of offering expenses and less par value reflected in Note (c) above and the elimination of members’ equity of $ million upon consolidation (amounts in thousands).


Net proceeds received by Vista Proppants and Logistics Inc.	$
Offering expenses		(	)
Transaction costs incurred prior to this offering included in Other Assets (see Note (f))		(	)
Par value of shares of Class A common stock issued in the Blocker Merger		(	)
Par value of shares of Class A common stock issued in this offering		(	)

Par value of Class A Common Stock issued		(	)

Par value of Class B Common Stock issued		(	)
Acquisition of noncontrolling interest of Vista OpCo (see Note (e))		(	)
Write-off of deferred borrowing costs related to the Term Loan Facility (see Note (b))	$

Total

(e)

As described in “Organizational Structure,” Vista Proppants and Logistics Inc. will become the sole managing member of Vista OpCo. Vista Proppants and Logistics Inc. will initially own less than 100% of the economic interest in Vista OpCo, but will have 100% of the voting power and control the management of Vista OpCo. As a result, we will consolidate the financial results of Vista OpCo and will record non-controlling interest on our consolidated balance sheets. Immediately following this offering, the non-controlling interest, based on the assumptions to the pro forma financial information, will be $ million. Pro forma non-controlling interest represents % of the pro forma equity of Vista OpCo of $ million (which is net of the % interest of the Merged Owner, which became an interest in Vista Proppants and Logistics Inc. rather than a non-controlling interest in Vista Opco as a result of the Blocker Merger described in Note 2(g)) (amounts in thousands).


Vista OpCo combined members equity held by the noncontrolling interest holders prior to the Offering transaction	$
Less: Pro forma equity attributable to % noncontrolling interest in Vista Proppants and Logistics Inc.		(	)

Adjustment to additional paid-in capital	$

(f)

Expenses related to this offering are estimated to be approximately $ million. Of the $ million, approximately $ million is expected to be paid from the proceeds received by Vista Proppants and Logistics Inc. in this Offering (see Note (a) above). Of the $ million in Offering expenses, $ million is recorded in accrued liabilities and will be paid after June 30, 2018. Also included in accrued liabilities is $ million related to deferred offering expenses of $ million that are included in other assets (see Note (d)). The $ million in estimated offering expenses will be offset against equity (see Note (d)).

Vista OpCo members’ interest will increase by the gross proceeds from this offering, less commissions and offering costs incurred by Vista Proppants and Logistics Inc. (which offering costs shall be borne or reimbursed by Vista OpCo).

(g)

Immediately prior to the completion of this offering, one of our pre-IPO owners that is taxable as a corporation (the “Blocker Company”) will merge with and into a newly formed subsidiary of Vista Proppants and Logistics Inc. and the surviving entity will then be dissolved (the “Blocker Merger”). In the Blocker Merger, the parent of the Blocker Company (the “Merged Owner”), as the 100% owner of the Blocker Company, will acquire one share of Class A Common Stock for each LLC Unit owned by the Blocker Company, and Vista Proppants and Logistics Inc. will acquire such LLC Units. As a result, approximately shares of Class A Common Stock of Vista Proppants and Logistics Inc. are expected to be issued to the Merged Owner as consideration in the Blocker Merger, and Vista Proppants and Logistics Inc. will become the owner of an equal number of LLC Units owned by the Blocker Company.

3.	Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations

Pro Forma Adjustments

(a)

Represents adjustments to eliminate affiliate sales and cost of sales between Lonestar, MAALT and Bulk as if such entities were consolidated together beginning on January 1, 2017.

(b)

Represents adjustments to record incremental depreciation related to the fair value adjustment of property, plant and equipment, and amortization expense related to identifiable intangible assets calculated on a straight-line basis:


	Pro Forma Year Ended December 31, 2017
	(in thousands)
Amortization of Intangible Assets—Fair Value	$	302
Depreciation, depletion and amortization of property, plant and equipment—Elimination of historical		(1,668	)
Depreciation, depletion and amortization of property, plant and equipment—Fair value		2,432

Net adjustment	$	1,066

(c)

Reflects a reduction in interest expense of $ million as a result of the repayment of $ million of our outstanding indebtedness, as described in “Use of Proceeds”.

(d)

Following this offering we will be subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to our allocable share of any net taxable income of Vista OpCo, which will result in higher income taxes. As a result, the pro forma statements of operations reflect an adjustment to our provision for corporate income taxes to reflect an effective rate of %, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state and/or local jurisdiction.


Federal statutory rate		%
State and local rate		%
Rate benefit from flow-through entity	(	)%
Pro forma effective tax rate		%

Our effective tax rate includes a rate benefit attributable to the fact that, after this transaction, approximately % of Vista Proppants and Logistics Inc.’s earnings will not be subject to corporate level taxes as the applicable income tax expense will be incurred by, and be the obligation of, the members of Vista OpCo holding the noncontrolling interest.

(e)

As described in “Organizational Structure,” Vista Proppants and Logistics Inc. will become the sole managing member of Vista OpCo. Vista Proppants and Logistics Inc. will initially own less than 100% of the economic interest in Vista OpCo, but will have 100% of the voting power and control the management of Vista OpCo. Immediately following this offering, the non-controlling interest will be % (which is net of the % interest of the Merged Owner, which became an interest in Vista Proppants and Logistics Inc. rather than a non-controlling interest in Vista Opco as a result of the Blocker Merger described in Note 2(g)). This amount has been determined based on an assumption that the underwriters’ option to purchase additional shares is not exercised. If the underwriters’ option to purchase additional shares is exercised in full, the ownership percentage held by the non-controlling interest would decrease to %. The percentage of the net income attributable to the non-controlling interest will vary from these percentages due to the differing level of income taxes applicable to the controlling interest.

(f)

The shares of Class B common stock do not share in our earnings and are therefore not included in the weighted average shares outstanding or net income (loss) per share.

The weighted average number of shares of Class A common stock utilized in the calculation of pro forma earnings per share includes the effects of the shares issued in the offering of Class A common stock, the Blocker Merger and the theoretical number of shares that would have been required to be issued to fund the $85.0 million Distribution Financing Transaction as if each of these transactions occurred on January 1, 2017, and is calculated as follows, but excludes the estimated number of shares of Class A common stock, the proceeds from the sale of which in this offering will be used for general corporate purposes:


	For the Six Months Ended June 30, 2018	For the Year Ended December 31, 2017
Shares issued in the offering at the midpoint of the price range
Shares issued in the Blocker Merger
Theoretical shares issued to fund the Distribution Financing Transaction
Subtotal

Less: Estimated shares whose proceeds will be used for general corporate purposes

Total weighted average shares of Class A common stock outstanding for the period

The theoretical shares issued to fund the Distribution Financing Transaction represent the number of shares of Class A common stock that Vista Proppants and Logistics Inc. would have been required to issue to fund the $85.0 million distribution to its owners. The number of shares of Class A common stock that Vista Proppants and Logistics Inc. would have been required to issue to fund the $85.0 million distribution was calculated by dividing the $ million distribution in excess of earnings for the year ended December 31, 2017 by an estimated issue price per share of $ , which is the midpoint of the price range indicated on the front cover of this prospectus less estimated underwriting discounts, structuring fees and offering expenses of $ per share. There were no potentially dilutive shares of Class A common stock outstanding to be considered in the pro forma diluted earnings per share calculation.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

We derived the selected historical consolidated statements of income data and the selected statements of cash flows data for the years ended December 31, 2017 and 2016 and the selected balance sheet data as of December 31, 2017 and 2016 from our consolidated financial statements included elsewhere in this prospectus, including our accounting predecessor, Lonestar, for periods prior to March 20, 2017. We derived the selected historical consolidated statements of income data and the selected statements of cash flows data for the year ended December 31, 2015 and the selected balance sheet data as of December 31, 2015 from the audited consolidated financial statements of Lonestar, which is our accounting predecessor, that are not included in this prospectus. We derived the selected historical consolidated statements of income data and the selected statements of cash flows data for the six months ended June 30, 2018 and 2017 and the selected balance sheet data as of June 30, 2018 from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in our opinion, have included all adjustments, which include only normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any interim period are not necessarily indicative of the results that may be expected for the full year. Historical results are not necessarily indicative of the results expected for any future period and the historical results of Lonestar for periods prior to March 20, 2017 also do not reflect the impact of the March 2017 Transaction and are not comparable to historical periods beginning on or after March 20, 2017.

You should read the selected historical consolidated financial data below, together with the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus, as well as “Organizational Structure,” “Summary—Summary Historical and Pro Forma Financial and Other Data,” “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Certain Indebtedness,” and the other financial information included elsewhere in this prospectus.


(Dollars in thousands, except per share data)	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017			Year Ended December 31, 2017			Year Ended December 31, 2016			Year Ended December 31, 2015
Selected Statements of Income Data:
Net sales	$	201,163		$	109,653		$	265,693		$	124,884		$	119,137
Cost of sales		132,169			73,722			171,807			102,118			73,250

Gross profit		68,994			35,931			93,886			22,766			45,887
Selling, general and administrative expenses		22,618			13,329			32,818			9,565			9,342
(Gain) loss on disposals of property, plant and equipment		(415	)		383			1,835			1,645			2,695

Income from operations		46,791			22,219			59,233			11,556			33,850

Other income (expense):

Interest expense		(12,303	)		(4,896	)		(13,736	)		(7,094	)		(7,049	)
Early extinguishment of debt		(6,566	)		(1,673	)		(1,673	)		—			—
Other income (expense), net		218			63			86			80			986

Total other expense, net		(18,651	)		(6,506	)		(15,323	)		(7,014	)		(6,063	)

Net income before taxes		28,140			15,713			43,910			4,542			27,787
State franchise taxes		754			229			375			136			242

Net income	$	27,386		$	15,484		$	43,535		$	4,406		$	27,545

Selected Statements of Cash Flows:
Net cash provided by (used in) operating activities	$	55,924		$	18,687		$	62,578		$	18,947		$	35,347
Net cash provided by (used in) investing activities		(137,887	)		(36,995	)		(153,689	)		(4,420	)		(19,855	)
Net cash provided by (used in) financing activities		96,179			73,010			117,634			(10,162	)		(31,993	)


(Dollars in thousands)	As of June 30, 2018		As of December 31, 2017		As of December 31, 2016		As of December 31, 2015
Selected Balance Sheet Data:
Cash and cash equivalents	$	46,741	$	32,525	$	4,504	$	139
Property, plant and equipment, net		363,490		252,202		67,425		76,980
Total assets		556,354		415,055		113,582		122,731
Long-term debt (including current portion and net of unamortized debt issuance costs)		354,547		277,634		71,946		73,783
Total partners’ capital/Members’ interest		93,688		66,302		17,369		15,109

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Condensed Consolidated Financial Information” and the financial statements and related notes thereto included elsewhere in this prospectus. The sums or percentages, as applicable, of certain tables and charts included in this discussion and analysis may not foot due to rounding. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Forward-Looking Statements” and “Risk Factors.”

Overview

We are a leading in-basin provider of frac sand solutions for oil and gas well completions in prolific producing regions in Texas and Oklahoma. We offer leading E&P and oilfield service companies the high-quality, fine grade white sand that is most in demand in these basins with the cost advantages of a regional provider. Through our vertically integrated logistics network of 12 transload terminals throughout Texas and Oklahoma, and fleet of approximately 100 “last mile” transport vehicles, our customers benefit from our mine-to-wellhead frac sand supply chain solutions and assured security of supply in the most active oil and gas regions of the United States, including the Permian Basin, Eagle Ford Shale and SCOOP/STACK. We mine all of our sand in Texas and believe we are the largest supplier of frac sand mined in the state, as measured by produced tonnage per year.

We produce high-quality, fine grade 40/70-mesh, 100-mesh and 200-mesh sand. Marketed as “Texas Premium White,” our sand is comparable to sand mined in Wisconsin and Illinois, commonly referred to as “Northern White,” and meets applicable industry specifications and customer requirements for a large addressable market of wells. We believe the low overburden, homogeneous geology, and strategic location of our mines near multiple railroads and sustainable water and power sources provide us with cost advantages over other Texas-based sand mines. The proximity of our mines and transload terminals to active demand centers enables significantly lower logistics costs as compared to Northern White sand providers because our costs of transportation (based on published tariff rates of Class I and shortline railroads) are lower than Northern White sand providers for proppant delivered into the basins we serve. Our mines are located near multiple rail lines, providing us with flexible logistics infrastructure and multiple rail delivery options into the major Texas and Oklahoma basins. We believe these advantages not only assure lower delivered cost, but also increase security of supply from mine-to-wellhead.

Recent Trends and Outlook

Recent trends driving demand for our sand include:

•

Increasing well count. As commodity prices rebound from the recent industry downturn from late 2014 to mid-2016, E&P operators are increasing the number of oil and gas wells drilled annually and revisiting the development of acreage that was uneconomic during the lower-price commodity environment. Spears & Associates estimates that total horizontal well count is expected to increase from 8,520 in 2016 to 16,299 in 2017 and to 18,333 in 2018.

•

Growing proppant intensity. E&P operators are achieving higher oil and gas recovery rates through increased proppant intensity. According to Spears & Associates, proppant pounds per linear lateral foot in the United States is expected to increase 37% between 2016 and 2018.

•

Increasing demand for proppant. Beginning in late 2016 and continuing during the first half of 2017, commodity prices began to recover, along with onshore well drilling and completion activity levels.

Spears & Associates estimates that proppant demand is expected to increase 224% from 44 million tons in 2016 to 142 million tons in 2018. Customers are currently purchasing increased frac sand volumes and are increasing contractual commitments with their sand suppliers. We expect this trend to continue as drilling and completion activity continues to increase.

•

Increasing demand for frac sand in our core regions, the Permian Basin, Eagle Ford, and SCOOP/STACK. We expect to see continued growth for proppant in our core regions, the Permian Basin, Eagle Ford and SCOOP/STACK. According to Spears & Associates, the Permian Basin is expected to generate the largest absolute growth in proppant demand from 2016 to 2018, increasing by 37.9 million tons from 14.3 million tons in 2016 to 52.2 million tons in 2018. Demand for proppant is expected to increase in the Eagle Ford by 13.0 million tons from 5.6 million tons in 2016 to 18.6 million tons in 2018. Likewise, demand for proppant in the SCOOP/STACK is expected to increase by 16.3 million tons from 7.1 million tons in 2016 to 23.5 million tons in 2018.

•

Demand for finer grade sand. According to Coras Research, in 2016, 64% of total U.S. proppant demand was for fine grade sand, compared to 50% in 2014. This shift toward fine grades of proppant is expected to continue, as Coras Research estimates that demand for fine grade proppant will total 82% of U.S. proppant demand in 2018. Given that substantially all of our reserves meet API specifications and consist of finer grade 40/70-mesh, 100-mesh, and 200-mesh sand, we believe that we are well positioned to leverage our operations to benefit from this increase in demand for fine grade sand.

•

Increasing need for integrated services. As proppant demand in the Permian Basin continues to increase, we believe that supply and delivery logistics to the Permian Basin will be the biggest obstacle in transporting frac sand from mine to wellhead. While nameplate transload capacity currently exceeds proppant demand in the basin, Coras Research estimates that 75% of transload capacity is controlled by ten to 20 large companies. As a result, proppant providers that do not have dedicated transload assets are vulnerable to logistic challenges. We believe that our integrated business model, including our owned and operated transload terminals, insulate us from these challenges and positions us to provide our clients with security of sand supply.

•

Operating cost structure matters. While several companies have recently announced the development of regional mines in our areas of operations, including the Permian Basin, we believe several of these mines will face regulatory and environmental hurdles, lack access to sufficient water, electricity or natural gas supply, and/or contain high levels of overburden, which may increase the cost of proppant production or delay operations of those mines. As a result of the minimal overburden at our mines and our established access to electricity, natural gas and water, we believe our mines to be among the lowest-cost mines in the region.

If the recovery in oil and gas drilling and completion activity does not continue or if additional sources of regional or in-basin sand supply come online, demand for frac sand may decline, which could result in us selling fewer tons, selling tons at lower prices, or both. If we sell less frac sand or sell frac sand at lower prices, our revenue, net income, cash generated from operating activities, and liquidity could be adversely affected.

The March 2017 Transaction

Our business has historically been conducted through three affiliated entities and their respective subsidiaries: (i) Lonestar was formed on November 3, 2010 and is in the business of mining, processing, transporting and selling frac sand; (ii) MAALT was formed on August 18, 2004 and specializes in the transloading of sand from rail to truck and the implementation of frac sand logistics solutions focused on the transportation of sand from in-basin terminals to the wellhead; and (iii) Bulk was formed on June 30, 2011 and provides commercial trucking services through its fleet of commercial trucks, trailers and related assets, used in the transportation of frac sand and related commodities.

On March 20, 2017, our pre-IPO owners completed a transaction in which Lonestar, MAALT and Bulk were acquired by a newly formed holding company, Vista Proppants and Logistics, LLC, a Delaware limited

liability company (“Vista OpCo”). More specifically, Lonestar Prospects Holdings Company, L.L.C. (“LS Holdings”), which was the 100% owner of Vista OpCo and Lonestar prior to the transaction, contributed its ownership interests in Lonestar to Vista OpCo in exchange for newly issued common units in Vista OpCo. Additionally, the owners of MAALT and Bulk, who also held a significant ownership interest in LS Holdings, contributed their ownership interests in each entity to Vista OpCo in exchange for newly issued common units in Vista OpCo. While LS Holdings, MAALT and Bulk had similar ownership prior to the transaction, they were not under common control. Finally, an affiliate of First Reserve Management, L.P. (“First Reserve”) purchased certain outstanding common units in Vista OpCo from existing owners and also made a cash capital contribution to Vista OpCo in exchange for newly issued common units in Vista OpCo. We refer to this transaction as the “March 2017 Transaction.”

The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of Lonestar (the accounting predecessor for SEC reporting purposes) prior to March 20, 2017 and Vista OpCo and its consolidated subsidiaries, including Lonestar, MAALT and Bulk, commencing on March 20, 2017. The acquisition of MAALT and Bulk was accounted for by Vista OpCo as a business combination whereby Vista OpCo was determined to be the accounting acquirer of MAALT and Bulk as of March 20, 2017. The exchange between LS Holdings, Lonestar, and Vista OpCo was accounted for as a common control transaction. In this Management’s Discussion and Analysis of Financial Condition and Results of Operations, unless the context suggests otherwise, Vista OpCo and its subsidiaries, including Lonestar, MAALT and Bulk, are collectively referred to as “the Company,” “we,” “our” or “us.”

The Distribution Financing Transaction

On November 9, 2017, we entered into an Amended and Restated Senior Secured Credit Agreement (the “New Credit Agreement”), by and among VPROP Operating, LLC, a newly formed wholly owned subsidiary of Vista OpCo, as borrower (the “Borrower”), Vista OpCo, as a parent guarantor, Ares Capital Corporation (“Ares”) and the other lenders party thereto, which replaced in its entirety the Senior Secured Credit Agreement (as amended to date, the “Prior Credit Agreement”), dated as of March 1, 2017, among Lonestar, as borrower, and Ares. The New Credit Agreement provides for a senior secured credit facility (the “Term Loan Facility”) in the principal amount of $210.0 million (of which $125.0 million was the original principal amount (before capitalized interest) under the Prior Credit Agreement and $85.0 million represented incremental borrowings made on November 9, 2017), with the option to request additional incremental loans not to exceed $60.0 million. On November 29, 2017, we borrowed the additional $60.0 million under the Term Loan Facility. On May 4, 2018, we amended the New Credit Agreement to provide for an incremental borrowing of $75.0 million under the Term Loan Facility. Vista OpCo, along with each of its subsidiaries other than the Borrower, including Lonestar, MAALT and Bulk, guarantees the Borrower’s obligations under the Term Loan Facility.

The Term Loan Facility bears interest at LIBOR (with a floor of 1.5%) plus 9.5%, subject to adjustment in certain circumstances as provided in the New Credit Agreement, of which 1% is paid in kind on a quarterly basis. The Term Loan Facility matures in August 2021 and principal payments will commence in March 2019. The Term Loan Facility contains affirmative and negative covenants and customary events of default. See “Description of Certain Indebtedness—Term Loan Facility.”

Vista OpCo used the proceeds from the incremental borrowings under the New Credit Agreement to pay a distribution of $85.0 million to our pre-IPO owners on November 9, 2017. We refer to the entry into the New Credit Agreement and the payment of such distribution in this prospectus as the “Distribution Financing Transaction.”

Items Impacting Comparability of Our Financial Results

Our historical results of operations for the periods presented may not be comparable, either from period to period or going forward, for the reasons described below:

•

The March 2017 Transaction, which resulted in MAALT and Bulk being included in our consolidated results beginning on March 20, 2017.

•

Refinancing of the Term Loan Facility on March 1, 2017 and the Distribution Financing Transaction.

•

Our shift in focus since completion of the March 2017 Transaction to a vertically integrated service model.

•

Our development of two new mines located in Tolar, Texas and West Texas, respectively. The Tolar facility commenced operations in November 2017 and increased our capacity by 1.0 million tons per year. The West Texas facility commenced operations in March 2018 and is expected to increase our capacity by 5.0 million tons per year by the fourth quarter of 2018, assuming receipt of applicable permits. Capital expenditures for the West Texas mine are expected to total $245 million, of which $218.2 million was incurred as of June 30, 2018. The remainder of the capital expenditures are expected to be incurred during the remainder of 2018. We expect our volumes mined and sold to significantly increase in 2018 with both of these mines having commenced operations.

•

We anticipate incurring approximately $3.0 million of additional general and administrative costs, including costs relating to operating as a publicly held entity, such as costs associated with annual and quarterly reporting, Sarbanes-Oxley compliance costs, independent auditor fees, investor relation expenses, registrar and transfer agent fees and NASDAQ listing fees.

•

Vista Proppants and Logistics Inc. is a corporation for federal income tax purposes. We have been taxed as a partnership for all periods prior to this offering, but following this offering, Vista Proppants and Logistics Inc. will pay federal income taxes on its share of our taxable income.

How We Generate Our Sales

Sand Sales

We derive our sales by mining and processing sand that our customers purchase for various uses. Our sales are primarily a function of the price per ton realized and the volumes sold. The price invoiced reflects product, transportation and additional services as applicable, such as storage and transloading the product from railcars to trucks for delivery to the customer wellsite. Our transportation revenue fluctuates based on several factors, including the volume of product we transport under contract, service agreements with our customers, the mode of transportation utilized and the distance between our plants and customers. We invoice most of our customers on a per shipment basis, although for some larger customers, we consolidate invoices weekly.

We sell a portion of our products under short-term fixed price agreements or at prevailing market rates. We sell the remainder of our products under long-term, competitively-bid supply agreements. We have take-or-pay supply agreements with eight of our customers in the oil and gas proppants end market with initial terms expiring between 2019 and 2023. These agreements define, among other commitments, the volume of product our customers must purchase, the volume of product we must provide, and the price we will charge our customers for each product. Prices under these agreements are generally fixed and subject to upward adjustment in response to certain cost increases or increases (or decreases) in rig count or oil prices. As a result, our realized prices may not increase or decrease at rates consistent with broader industry price increases or decreases.

The Costs of Conducting Our Business

Costs of Sales

Costs of sales include the principal expenses involved in conducting our business, such as royalty costs, labor costs, shipping costs, electricity and drying fuel costs, rental, depreciation, depletion, and accretion, and

repair and maintenance costs for our mining and processing equipment and facilities. Transportation and related costs include freight charges, fuel surcharges, transloading fees, switching fees, railcar lease costs, demurrage costs, storage fees and labor costs. We believe the majority of our operating costs are relatively stable in price, but can vary significantly based on the volume of product produced. In periods following March 20, 2017, we have experienced and expect to continue to experience increases in our consolidated depreciation, depletion and amortization expense as a result of the March 2017 Transaction, in which the assets of MAALT and Bulk were acquired and recorded at fair value as of the date of the acquisition.

Selling, General and Administrative

Selling, general and administrative costs include expenses related to our corporate operations, including costs for sales and marketing; finance; legal; and environmental, health and safety functions of our organization. These costs are principally driven by personnel expenses.

Taxes

Our business has historically been conducted through entities organized as partnerships for tax purposes and we have not been subject to United States federal, state and local income taxes. As a result of the Offering Transactions, Vista Proppants and Logistics Inc. will become subject to United States federal, state and local income tax on its allocable portion of the income of Vista OpCo at prevailing corporate tax rates. Our effective income tax rate will be dependent on many factors, including varying state tax rates, the nondeductible portion of meals and entertainment expenditures, allowable percentage depletion in excess of basis, and various other expenses not deductible under current tax law.

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law, making comprehensive changes to the U.S. tax code affecting years 2017 and thereafter. Among other things, the Tax Act reduces the U.S. federal corporate income tax rate from 35% to 21%, imposes mandatory one-time deemed repatriation of foreign earnings, enhances the acceleration of depreciation deductions on qualified property, and eliminates certain business deductions. We have no international operations. As such, the one-time deemed repatriation of foreign earnings and tax reform matters affecting 2018 and beyond, including Global Intangible Low-Taxed Income and the Base Erosion and Anti-Abuse tax, are not anticipated to have any impact on us. We anticipate benefiting from the new accelerated depreciation provisions within the Tax Act, as well as the lower corporate tax rate. We do not anticipate that the Tax Act will have a material impact on tax distributions to the holders of limited liability company interests in Vista OpCo.

How We Evaluate Our Business

Our management team evaluates our business using a variety of financial and operational metrics, including total tons sold, average selling price, gross profit and production costs, and Adjusted EBITDA. We view these metrics as important factors in evaluating our profitability and review these measurements frequently to analyze trends in our business and make strategic decisions.

Total Tons Sold

We view the total volume of sand sold as an important measure of our ability to effectively utilize our assets. Higher volumes improve profitability by spreading fixed costs over greater volumes. Our sales volumes are subject to seasonality with higher volumes in the summer months due to seasonal fluctuations in weather that impact our production levels.

Average Selling Price

We evaluate the price we receive for our sand on an average sales price per ton basis. Our average selling price per ton represents our sand sales revenue divided by total tons of sand sold. Our average selling price per ton varies depending on whether sales are FOB mine or in-basin.

Gross Profit and Production Costs

We market our frac sand production primarily under long-term take-or-pay contracts that either have fixed prices for our production or market-based prices for our production that fluctuate with the increases (or decreases) in rig count or oil prices. Additionally, we sell sand on the spot market at current prevailing prices. When market conditions are favorable, we look to enter into long-term take-or-pay contracts with our customers that are intended to mitigate our exposure to the potential price volatility of the spot market for frac sand and to enhance the stability of our cash flows. Gross profit will primarily be affected by the price we are able to receive for the sale of our frac sand and our ability to control other direct and indirect costs associated with the production and processing of frac sand. Gross profit equals revenues less costs of sales.

We also use production costs, which we define as costs of sales, excluding royalty expense and depreciation, depletion and amortization expense, to measure our financial performance. We believe production costs is a meaningful measure because it provides a measure of operating performance that is unaffected by historical cost basis and provides insight into the efficiency of our operations.

The following table presents a reconciliation of cost of sales, our most directly comparable GAAP measure, to production costs for the six months ended June 30, 2018 and 2017 and the years ended December 31, 2017 and 2016:


	Historical
(Dollars in thousands)	Six Months Ended June 30, 2018		Six Months Ended June 30, 2017		Year Ended December 31, 2017		Year Ended December 31, 2016
Cost of sales	$	132,169	$	73,722	$	171,807	$	102,118
Depreciation, depletion and amortization expense		20,177		12,554		25,701		13,114
Royalty expense		10,411		5,600		14,866		6,574

Production Costs	$	101,581	$	55,568	$	131,240	$	82,430

Cost of sales per ton (frac sand) (i)	$	47.44	$	44.49	$	45.82	$	43.09
Production costs per ton (frac sand) (i)	$	36.46	$	33.54	$	35.00	$	34.78

(i)

Adjusted EBITDA

We define EBITDA as net income (loss), plus interest expense (income), tax expense (benefit) and depreciation, depletion and amortization expense. We defined Adjusted EBITDA as EBITDA further adjusted to exclude share-based compensation, other non-cash charges and extraordinary or other items not core to our operations. Adjusted EBITDA is used as a supplemental financial measure by our management and external users of our financial statements, such as investors and commercial banks, to assess:

•

the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;

•

our compliance with our financial covenants under certain of our debt agreements, including the Term Loan Facility; and

•

our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.

We believe that Adjusted EBITDA provides useful information to investors because, when viewed with our GAAP results and the accompanying reconciliations, it provides a more complete understanding of our performance than GAAP results alone. We also believe that external users of our financial statements benefit from having access to the same financial measures that management uses in evaluating the results of our business. In addition, we expect that a metric similar to Adjusted EBITDA will be used by the lenders under our Term Loan Facility and in any future financing agreement to measure our compliance with certain financial covenants.

The following table presents a reconciliation of net income (loss), our most directly comparable GAAP measure, to Adjusted EBITDA for the six months ended June 30, 2018 and 2017 and the years ended December 31, 2017 and 2016:


	Historical
(Dollars in thousands)	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017			Year Ended December 31, 2017		Year Ended December 31, 2016
Net income (loss)	$	27,386		$	15,484		$	43,535	$	4,406
Add (subtract):
Interest expense		12,303			4,896			13,736		7,094
Depreciation, depletion and amortization		20,177			12,554			25,701		13,114
State franchise taxes		754			229			375		136

EBITDA	$	60,620		$	33,163		$	83,347	$	24,750

Adjustments:
Share-based compensation(1)		—			—			—		110
Unrealized (gain) loss on investments(2)		—			(6	)		—		—
Litigation expense(3)		24			30			511		—
(Gain) loss on abandonments and disposals of property, plant and equipment(4)		(415	)		383			1,835		1,645
Loss on extinguishment of debt(5)		6,566			1,673			1,673		—
Other(6)		—			—			3,100		—

Adjusted EBITDA	$	66,795		$	35,243		$	90,466	$	26,505

(1)	Reflects an adjustment for equity based compensation granted to an employee of Lonestar.

(2)	Reflects a loss on short-term investment held on balance sheet at year-end 2015.

(3)	Reflects legal fees relating to a litigation matter involving Bulk. See Note O to our consolidated financial statements and Note N to our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

(4)	Reflects the trade-in and early termination of capital leases as well as disposal of mine assets.

(5)	Reflects a write-off of deferred borrowing costs associated with the extinguishment of the related debt.

(6)	Reflects an adjustment to exclude a non-recurring accrual relating to an estimated future earnout payment under a contract entered into in connection with the development of the West Texas mine that was recorded in 2017.

Production costs and Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial condition and results of operations. Costs of sales is the GAAP measure most directly comparable to production costs and net income is the GAAP measure most directly comparable to Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as analytical tools because they exclude some but not all items that affect the most directly comparable GAAP financial measures. You should not consider production costs or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because production costs and

Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Results of Operations

As discussed above under “—The March 2017 Transaction,” on March 20, 2017, our pre-IPO owners completed a transaction in which each of Lonestar, MAALT and Bulk were acquired by Vista OpCo. The consolidated financial statements for periods preceding the March 2017 Transaction are presented for Lonestar and its wholly owned subsidiary (which was determined to be the predecessor to Vista OpCo for accounting purposes). The consolidated financial statements for periods succeeding the March 2017 Transaction present the financial position and results of operations of Vista OpCo and its wholly-owned subsidiaries, including Lonestar, MAALT and Bulk, and reflecting MAALT and Bulk as acquired businesses of Vista OpCo on March 20, 2017.

Six Months Ended June 30, 2018 Compared with Six Months Ended June 30, 2017

The following table presents consolidated revenues and expenses for the periods indicated. This information is derived from our consolidated statements of operations (unaudited) for the six months ended June 30, 2018 and 2017.


(Dollars in thousands)	Six Months Ended June 30,						Change			Percentage Change
(Dollars in thousands)	2018			2017			Change			Percentage Change
Net sales	$	201,163		$	109,653		$	91,510			83	%
Cost of sales		132,169			73,722			58,447			79	%

Gross profit		68,994			35,931			33,063			92	%
Selling, general and administrative expenses		22,618			13,329			9,289			70	%
(Gain) loss on abandonments and disposals of property, plant and equipment		(415	)		383			(797	)		(209	)%

Income from operations		46,791			22,219			24,572			111	%
Other expense:
Interest expense		(12,303	)		(4,896	)		(7,407	)		151	%
Early extinguishment of debt		(6,566	)		(1,673	)		(4,893	)			(1)
Other income (expense), net		218			63			155			246	%

Total other expense, net		(18,651	)		(6,506	)		(12,145	)		187	%

Net income before taxes		28,140			15,713			12,427			79	%
State franchise taxes		754			229			525			229	%

Net income	$	27,386		$	15,484		$	11,902			77	%

(1)	Not meaningful.

Net Sales


(Amounts in thousands, other than per ton figures)	Six Months Ended June 30,						Change			Percentage Change
(Amounts in thousands, other than per ton figures)	2018			2017			Change			Percentage Change
Sales
Frac sand	$	179,464		$	97,444		$	82,020			84%
Industrial sand		2,163			2,180			(16	)		(1)%
Other sales(1)		19,536			10,029			9,507			95%

Total sales	$	201,163		$	109,653		$	91,510			83%

Tons
Frac sand		2,786			1,657			1,129			68%
Industrial sand		242			253			(11	)		(4)%

Total tons		3,028			1,910			1,118			59%

Average selling price per ton
Frac sand	$	64.43		$	58.81		$	5.62			10%
Industrial sand	$	8.95		$	8.62		$	0.33			4%
Overall average selling price per ton(2)	$	59.98		$	52.16		$	7.82			15%
Percentage of volumes sold in-basin		71	%		54	%		17	%		32%

(1)	Includes transload, storage and trucking revenue relating to third-party sand, as well as miscellaneous revenues.

(2)	Overall average selling price per ton represents our frac sand and industrial sand sales divided by total tons of frac sand and industrial sand sold. It excludes Other sales, which primarily include storage revenue.

Sales increased $91.5 million, or 83%, to $201.2 million for the six months ended June 30, 2018 compared to $109.7 million for the six months ended June 30, 2017. The increase in revenue was primarily attributable to increased tonnage and average selling price improvements during the six months ended June 30, 2018. Tons sold increased by approximately 1.1 million, primarily due to a stronger market and the addition of the Tolar mine, which provided an additional 0.5 million tons sold. Frac sand average selling price per ton improved by 10% from the comparable prior period due to an increase in market rates for our sand. Average selling price per ton also increased due to the increased volumes sold in-basin, which generally are priced to include additional freight and logistics versus sand sold directly from our mines.

Approximately $19.5 million in transloading, storage and trucking revenue relating to third-party sand was included in net sales for the six months ended June 30, 2018. This revenue includes $6.5 million of transload fees on 0.85 million tons of third-party sand processed through our facilities. Included in frac sand sales is revenue related to the transloading of 1.8 million tons of our own sand processed through our transload terminal network.

Cost of Sales

Cost of sales increased $58.4 million, or 79%, to $132.1 million for the six months ended June 30, 2018 compared to $73.7 million for the six months ended June 30, 2017. This increase is primarily attributable to our increase in revenue and tonnage sold. Logistics and freight costs continue to be a large part of our cost of sales as more of our frac sand is sold in-basin.

We incurred $78.4 million and $39.7 million of transportation and related costs for the six months ended June 30, 2018 and 2017, respectively. This increase in transportation costs is directly attributable to our 68% increase in frac sand tons sold and a 17% increase in our percentage of tons sold in-basin that required rail freight when compared to the prior period.

We incurred $18.8 million and $12.4 million of operating labor costs for the six months ended June 30, 2018 and 2017, respectively. The increase in operating labor costs is partially due to the addition of labor incurred by MAALT and Bulk that was not included prior to March 20, 2017 and totaled $9.5 million for the six months ended June 30, 2018. The remaining increase in operating labor costs was due to additional head count at the Cresson mine to handle additional demand compared to the prior period, the addition of a fully staffed Tolar mine and preliminary staffing of the West Texas mine.

We incurred $4.5 million and $3.3 million of electricity and drying fuel costs for the six months ended June 30, 2018 and 2017, respectively. The increase in electricity and drying fuel costs incurred was driven primarily by higher volumes of sand produced, offset slightly by lower per unit gas costs.

We incurred $7.4 million and $4.3 million of maintenance and repair costs for the six months ended June 30, 2018 and 2017, respectively. The increase was primarily due to increased volumes of sand produced and the addition of the Tolar mine.

As a percentage of sales, royalty costs increased to 6% of sales for the six months ended June 30, 2018 from 5% of sales for the six months ended June 30, 2017. Royalty expense increased 186% compared to the prior period due to the increased volumes of sand sold as well as the addition of $1.0 million in minimum royalty payments on properties not currently being mined.

Depreciation, depletion and amortization included in cost of sales for the six months ended June 30, 2018 was $20.2 million compared to $12.6 million for the six months ended June 30, 2017. This increase was partially the result of property acquired in the March 2017 Transaction as well as the step-up in fair value resulting from the business combination, which resulted in a combined $4.4 million for the six months ended June 30, 2018. The remaining increase in depreciation, depletion and amortization is due to the additional depreciation expense associated with expansion projects at the Cresson mine completed during 2017 and depreciation expense associated with the Tolar mine, which was placed in service during the fourth quarter of 2017.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $9.3 million, or 70%, to $22.6 million for the six months ended June 30, 2018 compared to $13.3 million for the six months ended June 30, 2017. The increase is partially due to selling, general and administrative expenses incurred by MAALT and Bulk that were not included prior to March 20, 2017 and totaled $6.6 million for the six months ended June 30, 2018. Selling, general and administrative expenses for the six months ended June 30, 2018 included $1.5 million of amortization expense related to definite lived intangible assets resulting from the March 2017 Transaction. The remaining increase is primarily related to higher compensation expense as a result of additional headcount, higher bonus accruals and our updated bonus program.

We expect to incur additional expenses as we grow our operations and transition to operating as a public company, including higher legal, corporate insurance, accounting and auditing expenses, and the additional costs associated with enhancing and maintaining our internal control environment through the adoption of new corporate policies, compliance under the Exchange Act, annual and quarterly reports to stockholders, registrar and transfer agent fees and NASDAQ listing fees.

(Gain)/Loss on abandonments and disposals of property, plant and equipment

Gain on abandonments and disposals of property, plant and equipment of $0.4 million for the six months ended June 30, 2018, is primarily driven by the sale of various trailers and other equipment by us.

Early extinguishment of debt

In connection with the refinancing of our Term Loan Facility on May 4, 2018, we recorded an early extinguishment of debt charge totaling $6.6 million.

Interest Expense

Interest expense increased 151% period over period to $12.3 million for the six months ended June 30, 2018 compared to $4.9 million for the six months ended June 30, 2017. The increase in interest expense primarily relates to our Prior Credit Agreement, which was entered into on March 1, 2017 and subsequently amended August 1, 2017 and November 9, 2017, under which we borrowed additional indebtedness as compared to the prior year period. Please read “—Liquidity and Capital Resources—Term Loan Facility.”

Taxes

Our businesses have historically been conducted through entities organized as partnerships for tax purposes and we have not historically been subject to United States federal, state and local income taxes.

Year Ended December 31, 2017 Compared with Year Ended December 31, 2016

The following table presents consolidated revenues and expenses for the periods indicated. This information is derived from our consolidated statements of operations for the years ended December 31, 2017 and 2016.


(Dollars in thousands)	Year Ended December 31,					Change		Percentage Change
(Dollars in thousands)	2017		2016			Change		Percentage Change
Net sales	$	265,693	$	124,884		$	140,809		113	%
Cost of sales		171,807		102,118			69,689		68	%

Gross profit		93,886		22,766			71,120		312	%
Selling, general and administrative expenses		32,818		9,565			23,254		243	%
Loss on abandonments and disposals of property, plant and equipment		1,835		1,645			190		12	%

Income from operations		59,233		11,556			47,677		413	%
Other expense:
Interest expense		(13,736)		(7,094	)		(6,642)		94	%
Early extinguishment of debt		(1,673)		—			(1,673)		N/M	⁽¹⁾
Other income (expense), net		86		80			6		8	%

Total other expense, net		(15,323)		(7,014	)		(8,310)		118	%

Net income before taxes		43,910		4,542			39,367		867	%
State franchise taxes		375		136			239		175	%

Net income	$	43,535	$	4,406		$	39,128		888	%

(1)	Not meaningful.

Net Sales


(Amounts in thousands, other than per ton figures)	Year Ended December 31,						Change			Percentage Change
(Amounts in thousands, other than per ton figures)	2017			2016			Change			Percentage Change
Sales
Frac sand	$	237,236		$	120,851		$	116,385			96	%
Industrial sand		4,376			4,020			356			9	%
Other sales(1)		24,081			13			24,068			N/M	⁽²⁾

Total sales	$	265,693		$	124,884		$	140,809			113	%

Tons
Frac sand		3,750			2,370			1,380			58	%
Industrial sand		503			364			139			58	%

Total tons		4,253			2,734			1,519			56	%

Average selling price per ton
Frac sand	$	63.26		$	50.99		$	12.27			24	%
Industrial sand	$	8.70		$	11.04		$	(2.34	)		(21	)%
Overall average selling price per ton(3)	$	62.48		$	45.68		$	16.80			37	%
Percentage of volumes sold in-basin		64	%		53	%		11	%		21	%

(1)	Includes transload, storage and trucking revenue relating to third-party sand, as well as miscellaneous revenues.

(2)	Not meaningful.

(3)	Overall average selling price per ton represents our frac sand and industrial sand sales divided by total tons of frac sand and industrial sand sold. It excludes Other sales, which primarily include storage revenue.

Sales increased $140.8 million, or 113%, to $265.7 million for the year ended December 31, 2017 compared to $124.9 million for the year ended December 31, 2016. Tons sold increased approximately 1.5 million tons to 4.3 million tons for the year ended December 31, 2017 compared to 2.7 million tons sold for the year ended December 31, 2016, and overall average selling price per ton increased 37% from the comparable prior period. Furthermore, during 2017, we sold 64% of our volumes in-basin compared to 53% in-basin during 2016, which increased both our cost and our price per ton. The increase in tons sold is largely due to the stabilization of crude oil and natural gas pricing during the year ended December 31, 2017.

We earned $24.1 million in transloading, storage, and trucking revenue relating to third-party sand for the period from March 20, 2017 to December 31, 2017 as a result of the acquisition of MAALT and Bulk in the March 2017 Transaction. This revenue included $9.9 million of transload fees on 1.1 million tons of third-party sand through our facilities. Included in Frac sand sales is revenue related to the transloading of 2.3 million tons of our sand through our transload terminal network.

Cost of Sales

Cost of sales for the year ended December 31, 2017 includes $35.2 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, cost of sales increased $69.7 million, or 68%, to $171.8 million for the year ended December 31, 2017 compared to $102.1 million for the year ended December 31, 2016. During 2016, MAALT invested in, and developed, the infrastructure to allow for the growth of its transload business. The additional transload infrastructure has allowed us to have access to a wider geographic sales area and increased availability for customers. As overall demand for sand decreased in the first half of 2016 (largely due to the decrease in crude oil and natural gas prices beginning in 2014), we partnered with oil and gas service companies drilling in Texas and Oklahoma to offer sand in-basin at a lower cost than the sand being shipped from the northern United States. As a result, considerably more of our sales required transportation services, driving the increase in cost of sales. As our costs of shipping sand in-basin increased at a higher rate than our price per ton, we experienced lower gross profit margins in the year ended

2016 as compared to the year ended 2017 as the demand for sand increased (largely due to the stabilization of crude oil and natural gas pricing).

Transportation and related costs for the year ended December 31, 2017 includes $13.2 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, we incurred $101.9 million and $57.6 million of transportation and related costs for the years ended December 31, 2017 and 2016, respectively. During the year ended December 31, 2017, frac sand sales increased by over 91% compared to the year ended December 31, 2016. We also experienced a 21% increase in our percentage of tons sold in-basin (requiring transportation costs) compared to the prior year. This increase in total tonnage sold and increase in the percentage of tonnage sold in-basin resulted in the increase in transportation and related costs during the year ended December 31, 2017.

Operating labor for the year ended December 31, 2017 includes $15.1 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, we incurred $26.4 million and $7.4 million of operating labor costs for the years ended December 31, 2017 and 2016, respectively. The increase in labor costs incurred was primarily as a result of the March 2017 Transaction as well as increased headcount at the Cresson mine as the demand for sand increased, along with production, and as we hired additional employees for our Tolar mine, which commenced operations in November 2017.

Electricity and drying fuel costs for the year ended December 31, 2017 includes $0.3 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, we incurred $6.7 million and $4.6 million of electricity and drying fuel (principally natural gas) costs for the years ended December 31, 2017 and 2016, respectively. The increase in electricity and drying fuel costs incurred was driven primarily by higher volumes of sand produced.

Maintenance and repair costs for the year ended December 31, 2017 includes $3.1 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, we incurred $10.6 million and $5.3 million of maintenance and repair costs for the years ended December 31, 2017 and 2016, respectively. The $5.3 million increase was primarily a result of the addition of MAALT and Bulk as well as increased volumes of sand produced, additional work on heavy equipment used for mining, and various expansion projects commenced at the Cresson facility during 2017.

As a percentage of sales, royalty costs increased to 6% of sales for the year ended December 31, 2017 from 5% of sales for the year ended December 31, 2016. Royalty expense more than doubled during the year ended December 31, 2017 compared to the prior year, and includes $2.8 million of minimum royalties related to properties not currently being mined.

Depreciation, depletion and amortization included in cost of sales for the year ended December 31, 2017 was $25.7 million as compared to $13.1 million for the year ended December 31, 2016. This increase was a result of the property acquired in the March 2017 Transaction as well as the step-up in fair value resulting from the business combination.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the year ended December 31, 2017 includes $13.4 million of expenses incurred by MAALT and Bulk for the period from March 20, 2017 to December 31, 2017. Overall, selling, general and administrative expenses increased $23.3 million, or 243%, to $32.8 million for the year ended December 31, 2017 compared to $9.6 million for the year ended December 31, 2016. The increase resulted from higher compensation expense as a result of additional headcount, higher bonus accruals directly correlated with our higher forecasted sales and updated bonus programs, and higher professional fees as we transition to operating as a public company. In addition, selling, general and administrative expenses for the year ended December 31, 2017 includes a $3.1 million charge resulting from a non-recurring accrual relating to an estimated future earnout payment under a contract entered into in connection with the development of the West Texas mine

that was recorded in 2017. Changes in the estimated amount of this accrued liability would be recorded in selling, general and administrative expenses in future periods. We also expect that general and administrative expenses will continue to increase in absolute dollars as we expand our operations.

Loss on abandonments and disposals of property, plant and equipment

Loss on abandonments and disposals of property, plant and equipment of $1.8 million for the year ended December 31, 2017 relates to the early termination of heavy equipment and trucks leased under capital leases. This amount includes a $1.4 million charge resulting from an increase in the accrual for litigation relating to the early termination of heavy equipment and trucks leased under capital leases. See Note O to our consolidated financial statements included elsewhere in this prospectus.

Early extinguishment of debt

In connection with the refinancing of our Term Loan Facility on March 1, 2017, we recorded an early extinguishment of debt charge totaling $1.7 million.

Interest Expense

Interest expense increased 94% period over period to $13.7 million for the year ended December 31, 2017 compared to $7.1 million for the year ended December 31, 2016. $1.0 million of interest expense included in the year ended December 31, 2017 relates to MAALT and Bulk. The additional increase in interest expense period over period primarily relates to our Prior Credit Agreement, which was entered into on March 1, 2017 and subsequently amended August 1, 2017 and November 9, 2017 under which we increased additional indebtedness as compared to the prior year period. Please read “—Liquidity and Capital Resources—Term Loan Facility.”

Taxes

Liquidity and Capital Resources

Our principal liquidity requirements have historically been to service our debt, to meet our working capital, capital expenditure and mine development expenditure needs, and to finance acquisitions. We have historically satisfied our liquidity and capital investment needs with funds generated through operations and through borrowings under our credit facilities. More recently, we have partnered with our Sponsor to further fund the construction of our greenfield sites through its capital investment of approximately $25.0 million into Vista OpCo. See “Certain Relationships and Related Party Transactions—The March 2017 Transaction.”

We have utilized a portion, and expect to utilize the remainder, of the approximately $25.0 million received in connection with our Sponsor’s investment, along with the additional borrowings under the credit facilities discussed below and operating cash flows, to fund the completion of the West Texas location in the total amount of $245 million.

Following completion of this offering, we believe that cash generated through operations and our financing arrangements will be sufficient to meet working capital requirements, anticipated capital expenditures and scheduled debt payments for at least the next 12 months.

We expect that our future principal uses of cash will be for working capital, capital expenditures, funding our debt service obligations, paying income taxes and obligations under our tax receivable agreement and making distributions to our stockholders in accordance with our dividend policy, if and to the extent declared by our board of directors. We expect our principal sources of liquidity will be cash generated by our operations, borrowings under our line-of-credit and issuances of debt and equity securities, and we believe that cash from these sources will be sufficient to meet our short-term working capital requirements and long-term capital expenditure requirements.

In the event our board of directors determine that we should declare or pay any dividend on our shares of Class A common stock, our ability to make such dividend distributions to our stockholders will be dependent on a number of factors, including among others: general economic and business conditions; our strategic plans and prospects; our business and investment opportunities; our financial condition and operating results; working capital requirements and other anticipated cash needs; contractual restrictions and obligations; legal, tax and regulatory restrictions; restrictions on the payment of distributions by our subsidiaries to us; and other relevant factors.

There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. Future cash flows are subject to a number of variables, and are highly dependent on the activity of our customers, which in turn is highly dependent on crude oil and natural gas prices. Depending upon market conditions and other factors, we may issue equity and debt securities or take other actions necessary to fund our business or meet our future obligations.

Term Loan Facility

On March 1, 2017, Lonestar completed a debt refinancing that redeemed its $75.0 million senior secured credit agreement, and entered into the Prior Credit Agreement, which provided for the Term Loan Facility in the original amount of $125.0 million, with the option to request incremental loans not to exceed $60.0 million. On November 9, 2017, we replaced the Prior Credit Agreement with the New Credit Agreement, which provides for the Term Loan Facility in the principal amount of $210.0 million (of which $125.0 million was the original principal amount under (before capitalized interest) the Prior Credit Agreement and $85.0 million represented incremental borrowings made on November 9, 2017), with the option to request additional incremental loans not to exceed $60.0 million. On November 29, 2017, we borrowed an additional $60.0 million under the Term Loan Facility. On May 4, 2018, we amended the New Credit Agreement to provide for an incremental borrowing of $75.0 million under the Term Loan Facility. VPROP Operating, LLC, a wholly owned subsidiary of Vista OpCo, is the borrower under the Term Loan Facility. Vista OpCo, along with each of its subsidiaries other than the Borrower, including Lonestar, MAALT and Bulk, guarantees the Borrower’s obligations under the Term Loan Facility. The Term Loan Facility bears interest at LIBOR (with a floor of 1.5% (prior to May 4, 2018, the floor was 1%)) plus 9.5%, of which 1% is paid in kind on a quarterly basis. Prior to August 1, 2017, the Term Loan Facility bore interest at LIBOR (with a floor of 1%) plus 8.00%, of which 1% was paid in kind on a quarterly basis. The Term Loan Facility matures on August 1, 2021 and principal payments will commence in March 2019. The Term Loan Facility contains affirmative and negative covenants and customary events of default. See “Description of Certain Indebtedness—Term Loan Facility.”

Line-of-Credit

We have a line-of-credit arrangement for short-term financing with a bank under which we can borrow up to $60.0 million (the “Line-of-Credit”). The borrowing limit was increased from $10.0 million to $40.0 million in a November 2017 amendment and was further increased to $60.0 million in a June 2018 amendment to the Line-of-Credit. At June 30, 2018, December 31, 2017 and December 31, 2016, the unused portion of the credit line was $29.2 million, $40.0 million and $10.0 million, respectively, all of which was available for borrowing. At June 30, 2018, December 31, 2017 and 2016, the Line-of-Credit incurred interest at 5.50%, 5.00% and 4.25%, respectively. In January and March 2018, we borrowed $33.9 million in the aggregate under the Line-of-Credit to fund capital expenditures, including the development of the West Texas mine. Pursuant to a June 2018 amendment, the maturity date of the Line-of-Credit was extended from April 14, 2019 to June 14, 2020 and the floor rate was increased from 5.00% to 5.25%. See “Description of Certain Indebtedness—Line-of-Credit.”

Working Capital

Working capital is the amount by which current assets exceed current liabilities and is a measure of our ability to pay our liabilities as they become due.

The following table presents the components of our working capital as of June 30, 2018, December 31, 2017 and December 31, 2016.


(Dollars in thousands)	June 30,		December 31,
(Dollars in thousands)	2018		2017		2016
Current assets:
Cash	$	46,741	$	32,525	$	4,504
Certificate of deposit		187		187		862
Accounts receivable, net		59,082		48,526		24,646
Other receivables, related parties		230		267		85
Inventories		8,506		7,164		5,838
Prepaid expenses and other current assets		4,500		2,851		1,323

Total current assets	$	119,246	$	91,520	$	37,258

Current liabilities:
Accounts payable	$	16,955	$	13,458	$	11,599
Accrued royalty		1,300		847		936
Sales tax payable		—		—		13
Accrued expenses and other current liabilities		35,048		38,789		4,710
Accounts payable, related parties		539		399		1,707
Line-of-credit		33,812		—		—
Current portion of capital lease obligations		4,651		4,789		1,298
Current portion of long-term debt		17,526		20,312		361
Current portion of deferred revenue		2,949		822		—

Total current liabilities	$	112,780	$	79,416	$	20,624


Working capital	$	6,466	$	12,104	$	16,634

June 30, 2018 Compared to December 31, 2017

Our working capital was $6.5 million at June 30, 2018 compared to working capital of $12.1 million at December 31, 2017.

Accounts receivable, net increased by $10.6 million from December 31, 2017 to June 30, 2018, primarily due to the increase in net sales over the first six months of 2018.

The balance of the Line-of-Credit increased by $33.8 million due to draws made to finance the construction of our West Texas mine.

Current portion of long-term debt decreased by $2.8 million from December 31, 2017 to June 30, 2018, primarily due to the May 4, 2018 amendment to our Term Loan Facility discussed elsewhere in this prospectus which, among other things, provided incremental borrowings and delayed the start of required quarterly principal payments from March 2018 to March 2019. See “Description of Certain Indebtedness—Term Loan Facility.”

December 31, 2017 Compared to December 31, 2016

Our working capital was $12.1 million at December 31, 2017 compared to working capital of $16.6 million at December 31, 2016.

Cash increased by $28.0 million from December 31, 2016 to December 31, 2017. The $28.0 million increase was predominantly the result of $62.6 million in cash generated from operations, $29.1 million in cash received from the March 2017 Transaction, and $199.9 million in proceeds related to the refinancing of the Term Loan Facility, partially offset by $153.0 million invested in capital expenditures and $88.3 million in distributions to certain pre-IPO owners.

Accounts receivable, net increased by $23.9 million from December 31, 2016 to December 31, 2017, primarily due to an increase in frac sand sales of 1.5 million tons and an improvement in average selling price.

Accounts payable and accrued liabilities increased $34.1 million from December 31, 2016 to December 31, 2017. This increase was principally the result of the additional capital expenditures relating to the West Texas mine, IPO related costs and the purchase of the right to lease the new Barnhart transload facility. In addition, accounts payable and accrued liabilities of $6.5 million at December 31, 2017 were related to the entities acquired in the March 2017 Transaction.

Current portion of capital lease obligations and current portion of long-term debt increased $23.4 million from December 31, 2016 to December 31, 2017, primarily as a result of a portion of the Term Loan Facility becoming current during the period and leases and debt acquired in the March 2017 Transaction, which totaled $6.6 million at December 31, 2017.

Cash Flows

The significant captions and amounts from our historical financial statements are summarized below. Negative amounts represent a net outflow, or use of cash.


(Dollars in thousands)	Six Months Ended June 30, 2018		Six Months Ended June 30, 2017			Year Ended December 31, 2017			Year Ended December 31, 2016
Net cash provided by (used in) operating activities	$	55,924	$	18,687		$	62,578		$	18,947
Net cash provided by (used in) investing activities		137,887		(36,995	)		(153,689	)		(4,420	)
Net cash provided by (used in) financing activities		96,179		73,010			117,634			(10,161	)

Operating Activities

Operating activities consist primarily of net income adjusted for non-cash items, including depreciation, depletion and amortization and the effect of working capital changed.

Net cash provided by operating activities was $55.9 million for the six months ended June 30, 2018 compared to $18.7 million for the six months ended June 30, 2017. The $37.2 million increase was primarily driven by the $11.9 million increase in net income due to 1.1 million additional tons of frac sand sold with average selling prices 10% higher than the comparable period. Also contributing to the increase was an additional $3.6 million of collections on deferred revenue.

Net cash provided by operating activities was $62.6 million for the year ended December 31, 2017 compared to $18.9 million for the year ended December 31, 2016. This $43.6 million increase is primarily the result of a $39.1 million increase in net income attributable to a 1.5 million increase in tons sold for the year ended December 31, 2017 as compared to the year ended December 31, 2016 and a higher average sales price per ton of frac sand of $63.26 for the year ended December 31, 2017 compared to $50.99 for the year ended December 31, 2016. Cash provided by operating activities was further increased by the add back of depreciation, depletion and amortization which increased approximately $12.6 million due to the acquisitions of MAALT and Bulk as well as expansions at the Cresson mine and the Tolar mine commencing operations. The increase in cash provided by operating activities at December 31, 2017 was partially offset by an increase in accounts receivable of $23.9 million from December 31, 2016 to December 31, 2017 as a direct result of an increase in tons sold and average sales price.

Investing Activities

Net cash used in investing activities was $137.9 million for the six months ended June 30, 2018 compared to $36.9 million for the six months ended June 30, 2017. The use of cash for the six months ended June 30, 2018 was due to the purchase of property, plant and equipment, substantially all of which was used to construct the West Texas mine.

Net cash used in investing activities was $153.7 million for the year ended December 31, 2017 compared to $4.4 million for the year ended December 31, 2016. The use of cash for the year ended December 31, 2017 was due to the $153.0 million in capital expenditures relating to ongoing expansion efforts at our Cresson mine, $53.9 million invested in the construction and development of our Tolar mine and $77.2 million invested in the construction and development of our West Texas mine.

Financing Activities

Net cash provided by financing activities was $96.2 million for the six months ended June 30, 2018, which included net proceeds on the line-of-credit of $36.9 million to finance construction of the West Texas mine, offset by $7.3 million of payments on long-term debt and capital lease obligations.

Net cash provided by financing activities was $73.0 million for the six months ended June 30, 2017, which included refinancing of the Term Loan Facility and cash received as a result of the March 2017 Transaction.

Net cash provided by financing activities was $117.6 million for the year ended December 31, 2017, which included refinancing of the Term Loan Facility, generating cash proceeds of $199.9 million and $24.7 million of net cash received as a result of the March 2017 Transaction. These proceeds were offset by $9.9 million of payments on debt and capital leases, payment of deferred borrowing and debt extinguishment costs of $8.0 million, and distributions of $88.3 million.

Net cash used in financing activities was $10.2 million for the year ended December 31, 2016. The financing activities included payment on debt and capital leases totaling $7.8 million and distributions of $2.3 million.

Contractual Obligations and Commercial Commitments

The following table presents our contractual obligations and other commitments as of December 31, 2017:


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Long-term debt(1)(2)	$	284,784	$	20,312	$	47,160	$	217,312	$	—
Equipment lease obligations(3)		11,547		4,935		6,337		275		—
Facility construction obligations(4)		80,752		80,752		—		—		—
Asset retirement obligations(5)		1,415		—		—		—		1,415
Equipment and office operating leases(6)		61,400		18,951		28,902		12,025		1,522
Royalty minimums(7)		142,496		8,388		16,275		15,850		101,983
Interest Obligations		85,666		27,988		49,670		8,008		—

	$	668,060	$	161,326	$	148,344	$	253,470	$	104,920

(1)

Long-term debt includes the current portion and unamortized debt issuance costs. See Note I to the consolidated financial statements included elsewhere in this prospectus. On March 1, 2017, we repaid in full the old senior secured credit facility and entered into the Prior Credit Agreement. On November 9, 2017, we replaced the Prior Credit Agreement with the New Credit Agreement, which governs the terms of the Term

Loan Facility and on May 4, 2018 we amended the New Credit Agreement and borrowed an additional $75.0 million under the Term Loan Facility. The table above does not give effect to the $75.0 million in incremental borrowings under the Term Loan Facility on May 4, 2018. The Term Loan Facility has a maturity date of August 1, 2021 and principal payments will commence in March 2019. See “Description of Certain Indebtedness—Term Loan Facility.” We have financed certain equipment and automobile purchases and construction projects by entering into various debt agreements. Interest rates on these notes ranged from 0% to 7.44% and maturities range from 2018 through 2022. In August 2016, we entered into a note payable with the lessor of additional reserves located in Hood County, Texas. The note bore interest at 7% and required monthly interest payments and quarterly principal payments until maturity in August 2018. On May 4, 2018, this note was repaid in full. See Note I to the consolidated financial statements included elsewhere in this prospectus.

(2)

MAALT financed the acquisition of land and the related construction of a sand storage and transload facility by entering into a construction note payable, along with a related entity as a co-borrower, for which MAALT is jointly and severally liable. As of December 31, 2017, total borrowings outstanding under this arrangement were $8.2 million, of which $6.0 million was outstanding by MAALT and included in the table above and $2.2 million was outstanding by the related entity co-borrower and not included in the table above. See Note I to the consolidated financial statements included elsewhere in this prospectus.

(3)	Through December 31, 2017, we entered into various lease arrangements to lease operational equipment. Interest rates on these lease arrangements ranged from 0% to 9.51% and maturities range from 2018 through 2021.

(4)	We executed a contract to construct a greenfield site in West Texas in July 2017. The amount disclosed includes the total construction budget less amounts paid prior to December 31, 2017.

(5)	The asset retirement obligation represents the fair value of post closure reclamation and site restoration commitments for the Cresson property and processing facility.

(6)	We have entered into non-cancelable long-term operating leases for certain portable buildings, office equipment, operational equipment, storage and transload facilities and rail equipment, which expire in various years through 2025.

(7)

Minimum royalty payments under our leases range from $675,000 to $4,000,000 annually with various conditions set forth in the different lease agreements. Amounts include minimum royalties associated with the Cresson, Tolar and West Texas leases. See Note G to the consolidated financial statements included elsewhere in this prospectus.

Tax Receivable Agreement

Holders of LLC Units (other than Vista Proppants and Logistics Inc.) may, subject to certain conditions, from and after the completion of this offering (subject to the terms of the exchange agreement), exchange their LLC Units for shares of Class A common stock of Vista Proppants and Logistics Inc. on a one-for-one basis. Vista OpCo intends to have an election under Section 754 of the Code in effect for each taxable year in which an exchange of LLC Units for shares of Class A common stock occurs, which is expected to result in increases to the tax basis of the assets of Vista OpCo at the time of an exchange of LLC Units. The exchanges are expected to result in increases in the tax basis of the tangible and intangible assets of Vista OpCo. These increases in tax basis may reduce the amount of tax that Vista Proppants and Logistics Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. The IRS may challenge all or part of the tax basis increase and increased deductions, and a court could sustain such a challenge.

We will enter into a tax receivable agreement with our pre-IPO owners that provides for the payment by Vista Proppants and Logistics Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Vista Proppants and Logistics Inc. realizes, or in certain cases is deemed to realize, as a result of these increases in tax basis and of certain other tax benefits related to such exchanges, including tax benefits attributable to payments under the tax receivable agreement. This payment obligation is an obligation of Vista Proppants and Logistics Inc. and not of Vista OpCo. In general, Vista Proppants and Logistics Inc. expects to benefit from the remaining

15% of cash tax savings, if any, it realizes. For purposes of the tax receivable agreement, the cash tax savings in income tax will be computed by comparing the actual income tax liability of Vista Proppants and Logistics Inc. (calculated with certain assumptions) to the amount of such taxes that Vista Proppants and Logistics Inc. would have been required to pay had there been no increase to the tax basis of the assets of Vista OpCo as a result of the exchanges and had Vista Proppants and Logistics Inc. not entered into the tax receivable agreement. The term of the tax receivable agreement will continue until all such tax benefits have been utilized or expired, unless Vista Proppants and Logistics Inc. exercises its right to terminate the tax receivable agreement for an amount based on the agreed payments remaining to be made under the agreement or Vista Proppants and Logistics Inc. breaches any of its material obligations under the tax receivable agreement in which case all obligations generally will be accelerated and due as if Vista Proppants and Logistics Inc. had exercised its right to terminate the tax receivable agreement. Estimating the amount of payments that may be made under the tax receivable agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of our income. We expect that as a result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Vista OpCo, the payments that Vista Proppants and Logistics Inc. may make under the tax receivable agreement will be substantial. The payments under the tax receivable agreement are not conditioned upon continued ownership of us by the holders of LLC Units. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

We anticipate that we will account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from future exchanges as follows:

•

we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;

•

All of the effects of changes in any of our estimates after the date of the exchange will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income.

Indemnification

We enter into contracts that contain a variety of indemnification obligations. Our maximum exposure under these arrangements is not known. However, we have not had prior claims or losses pursuant to these contracts and expect the risk of loss to be remote.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are likely to have a current or future material effect on our financial condition, changes in financial condition, sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements included elsewhere in this prospectus, which have been prepared in accordance with accounting principles generally acceptable in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates.

Listed below are the accounting policies we believe are critical to our consolidated financial statements due to the degree of uncertainty regarding the estimates or assumptions involved, and that we believe are critical to the understanding of our operations.

Revenue Recognition

On January 1, 2018 we adopted ASC Topic 606, Revenue from Contracts with Customers, using the modified retrospective approach for all contracts not completed at the adoption date. Results for periods beginning after January 1, 2018 are presented under ASC 606, while comparative information is not restated and will continue to be reported under the accounting standards in effect during those periods.

We recognize revenue at a point in time, when the performance obligation under the terms of a contract with a customer is satisfied at the amount to which we expect to be entitled in exchange for such goods. This occurs when control of our products or services is transferred to our customers.

For sand sales, revenue is recognized when sand is shipped for direct sales to customers or when customers pickup product at our plant or transload sites. The sand is generally transported via railcars or trucking companies hired by the customer or through our fleet of railcars or trucks. The majority of our revenues are realized through long-term take-or-pay contracts. The expiration dates of these contracts range from 2019 through 2023; however, certain contracts include extension periods, as defined in the respective contracts. These agreements define, among other commitments, the volume of product that our customers must purchase, the volume of product that we must provide and the price that we will charge and that our customers will pay for each ton of contracted product. Prices under these agreements are generally either fixed or indexed to the average historical prices of West Texas Intermediate Crude and are subject to adjustment, as a result of market conditions. With respect to take or pay arrangements, once the likelihood of the customer purchasing the contracted minimum volumes is remote, we recognize shortfall payments as revenue once such payments are received or reasonably assured to be collectable. For the six months ended June 30, 2018 and 2017, we did not recognize any revenue, nor have any accounts receivable, relating to minimum commitments under take-or-pay contracts.

We also sell sand on the spot market, at agreed-upon prices and other terms determined by the specific requirements by customers and present market conditions. All sales are billed subsequent to the satisfaction of the performance obligation, once legal control of the product has transferred, and amounts are generally due thirty to forty-five days after invoicing.

Certain of our sales arrangements contain provisions allowing us to recover portions of our invested capital to accommodate customer growth through a capital improvement contribution. Such amounts are invoiced as a surcharge on a per ton basis, until the contractually determined amount is fully recovered through the surcharge at which point no further capital improvement contributions are received. Such capital improvement contributions are

recognized as revenue on a straight-line basis over 5-12 years, corresponding with the duration of the contract. The difference between the cash received accounted for as upfront payments and invoiced for these capital improvement contributions and the amount recorded using the straight-line method is recognized as deferred revenue.

Transportation of sand and other revenues is recognized when the obligation under the terms of a contract with a customer are satisfied. This is generally when the sand is transferred from our locations or truck and title and risk of ownership pass from us to the customer or third-party trucking company or based on the number of days goods are in storage and is generally billed monthly. For transload services, we elected to utilize a practical expedient to utilize an output (i.e. measure of progress) method to recognize revenue that is based on the amount to which we have a right to bill the customer for services performed to date, if that amount corresponds directly with the value provided to the customer from the performance of our obligation to date. Accordingly, we recognize revenue in the amount in which we have the right to invoice.

Asset Retirement Obligations

We estimate the future cost of dismantling, restoring and reclaiming operating excavation sites and related facilities in accordance with our lease agreements as well as federal, state and local regulatory requirements and recognize reclamation obligations when extraction occurs and record them as liabilities at estimated fair value.

In addition, a corresponding increase in the carrying amount of the related asset is recorded and depreciated over such asset’s useful life or the estimated number of years of extraction. The asset retirement liability is accreted to expense over the estimated productive life of the related asset and is subject to adjustments to reflect changes in value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation costs. If the reclamation obligation is settled for more or less than the carrying amount of the liability, a loss or gain will be recognized, respectively.

Inventory Valuation

Sand inventory is stated at the lower of cost or market using the average cost method. Costs applied to inventory include direct excavation costs, processing costs, overhead allocation, depreciation and depletion. Stockpile tonnages are calculated by measuring the number of tons added and removed from the stockpile. Costs are calculated on a per ton basis and are applied to the stockpiles based on the number of tons in the stockpile.

Depreciation and Depletion

All of our property, plant, and equipment is depreciated using the straight-line method, which results in depreciation expense being incurred evenly over the life of an assets. The estimate of depreciation expense incorporates management assumptions regarding the useful economic lives of our assets.

We amortize the cost to acquire land and mineral rights using a units of production method, based on the total estimated reserves and tonnage extracted each period.

Impairment of Long-Lived Assets

We periodically evaluate whether current events or circumstances indicate that the carrying value of our long-lived assets, including goodwill and other intangible assets, to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. A detailed determination of the fair value may be carried forward from one year to the next if certain criteria have been met. We report an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Factors we generally consider important in our evaluation and that could trigger an impairment review of the carrying value of long-lived assets include significant underperformance relative to expected operating trends, significant changes in the way assets are used, underutilization of our tangible assets, discontinuance of certain products by us or by our customers, a decrease in estimated mineral reserves, and significant negative industry or economic trends.

The recoverability of the carrying value of our mineral properties is dependent upon the successful development, start-up and commercial production of our mineral deposit and the related processing facilities. Our changes in our mineral reserves, or the underlying estimates and assumptions, including estimated production costs. Assessing the economic feasibility requires certain estimates, including the prices of products to be produced and processing recovery rates, as well as operating and capital costs.

Although we believe the carrying values of our long-lived assets were realizable as of the relevant balance sheet date, future events could cause us to conclude otherwise.

Accounting for Contingencies

Our financial results may be affected by judgments and estimates related to loss contingencies. Litigation contingencies may require significant judgment in estimating amounts to accrue. We accrue liabilities for litigation or other loss contingencies when such liabilities are considered probable of occurring and the amount is reasonably estimable.

Income Taxes

Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. This approach requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based upon the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the expenses are expected to reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We recognize a tax benefit associated with an uncertain tax position when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that it judges to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management.

GAAP prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. Management must determine whether it is more likely than not that a tax position will be sustained upon examination based on technical merits of the position and management’s opinion is that there are no such uncertain positions as of December 31, 2017.

We evaluate quarterly the realizability of our deferred tax assets by assessing the need for a valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are our forecast of future taxable income and available tax planning strategies that could be

implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income might affect the ultimate realization of the net deferred tax assets. Factors that may affect our ability to achieve sufficient forecasted taxable income include, but are not limited to, the following: a decline in sales or margins, increased competition or loss of market share. In addition, we operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. These audits can involve complex issues, which may require an extended time to resolve. We believe that adequate provisions for income taxes have been made for all years.

The largest permanent item in computing both our effective tax rate and taxable income is the deduction allowed for statutory depletion. The deduction for statutory depletion does not necessarily change proportionately in income before income taxes.

In addition, we will be responsible to fund payments under the tax receivable agreement. We expect that as a result of the size of the transfers and increases in the tax basis of the tangible and intangible assets of Vista OpCo, the payments that we may make under the tax receivable agreement will be substantial. We anticipate that we will account for the effects of these increases in tax basis and associated payments under the tax receivable agreement arising from future exchanges as follows:

•

we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;

•

The amounts to be recorded for both the deferred tax assets and the liability for our obligations under the tax receivable agreement will be estimated at the time of an exchange of LLC Units. All of the effects of changes in any of our estimates after the date of the exchange will be included in net income. Similarly, the effect of subsequent changes in the enacted tax rates will be included in net income. See “Certain Relationships and Related Person Transactions—Tax Receivable Agreement.”

Recent Accounting Pronouncements

For a complete description of new accounting pronouncements, see Note B to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included elsewhere in this prospectus.

Quantitative and Qualitative Disclosure About Market Risk

Market risk refers to the risk of loss from adverse changes in interest rates, market prices, commodity prices, and inflation. The primary market risks to which we are exposed are commodity price risk, interest rate risk and credit risk. We may in the future use derivative financial instruments to manage, or hedge, interest rate risks related to any borrowings we may have. Going forward our market risk exposure generally will be limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments or derivative instruments for trading purposes.

Commodity Price Risk

The market for frac sand is indirectly exposed to fluctuations in the prices of crude oil and natural gas to the extent such fluctuations impact drilling and completion activity levels and consequently impact the activity levels of our customers in the oilfield services and E&P industries. However, because we generate a significant portion of our revenues under long-term take-or-pay contracts, we believe we have only limited direct exposure to short-term fluctuations in the prices of crude oil and natural gas. Sales under long-term take-or-pay contracts accounted for approximately 72%, 58% and 47% of our volume sold for the six months ended June 30, 2018 and the years ended December 31, 2017 and 2016, respectively. We do not currently intend to hedge our indirect exposure to commodity price risk.

Interest Rate Risk

As of June 30, 2018, December 31, 2017 and December 31, 2016, the total outstanding balance of our variable-rate debt was primarily composed of borrowings on our Term Loan Facility of $347.4 million, $271.0 million and $70.1 million, respectively. All borrowings bear interest at LIBOR (with a floor of 1.5%) plus an applicable spread, of which 1% is paid in kind on a quarterly basis.

Assuming no change in the outstanding balance of our existing variable rate debt, the following table illustrates the projected effect of a 100 basis point increase or decrease in the LIBOR rate on our annual interest expense as of June 30, 2018, December 31, 2017 and December 31, 2016:

Change in Interest Expense

As of
June 30,
2018

As of
December 31,
2017

As of
December 31,
2016

Rate increase of 1%

3.5 million

2.7 million

0.5 million

Rate decrease of 1%⁽¹⁾

(1.7) million

(1.5 million

)

—

(1)	Calculation of projected decrease in annual interest expense as a result of a 100 basis point decrease is reflective of any LIBOR floors or minimum interest rates stated in the agreements of the respective borrowings.

This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we may consider taking actions to further mitigate our exposure to the change. However, because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

Credit Risk

A significant portion of our revenue for the year ended December 31, 2017 was generated through long-term take-or-pay contracts with our customers. Our customers are concentrated in the oilfield services and E&P industries, all of which have been negatively impacted by the recent downturn in activity in the oil and natural gas industry. This concentration of counterparties operating in the oilfield services and E&P industries may increase our overall exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. If a customer defaults or if any of our contracts expires in accordance with its terms, and we are unable to renew or replace these contracts, our gross profit and cash flows may be adversely affected.

100

INDUSTRY

Unless otherwise indicated, all statistical data and related forecasts set forth in this “Industry” section is derived from Spears & Associates’ Hydraulic Fracturing Market report published in December 2017, Coras Research’s Proppant Data Report published in June 2018, Rystad Energy’s North American Shale Report published in February 2018, Rystad Energy’s Shale Intel Frac Chemicals Report published in June 2018 and Rystad Energy’s Shale Commentary Report published in June 2018. We believe that the third-party sources are reliable and that the third-party information included in this prospectus is accurate and complete. While we are not aware of any misstatements regarding the industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors.”

Industry Trends Impacting Our Business

Well productivity gains, escalating frac intensity and increases in crude oil and natural gas commodity prices, have driven a 109% increase in U.S. proppant demand from the fourth quarter of 2016 to the third quarter of 2017, according to Spears & Associates.

According to Rystad Energy, the wellhead breakeven price for U.S. shale crude oil has declined from approximately $65 per Bbl in 2014, the previous peak sand demand period, to approximately $42 per Bbl in 2018. Because of these cost efficiencies, E&P operators can continue to profitably drill and complete wells at lower oil and natural gas prices than was possible in 2014. We believe these lower completions costs should lead to more stable baseline frac sand demand during low oil price environments and are a key contributing factor to Spears & Associates, Coras Research and Rystad Energy all forecasting record sand demand in 2018.

Average U.S. Wellhead Crude Oil Breakeven Prices

(USD/Bbl)

LOGO

Source: Rystad Energy, February 2018.

Total Proppant Demand

Increased demand for proppant has been driven by a combination of greater horizontal drilling activity, increasing lengths of horizontal laterals, improving rig efficiency and higher levels of proppant loading, all of which have increased over the past decade. The result of these proppant-intensive trends has been growth in total

101

proppant demand and relatively greater levels of stability in proppant demand compared to products that experience large demand swings due to particular drilling or completion trends. When demand for frac sand increases, there may not be a corresponding increase in the prices of our products. See “Risk Factors—Risks Related to Our Business and Industry—Our business and financial performance depend on the level of activity in the oil and gas industries and the price of oil and natural gas.”

Benchmarking of Drilling and Completion Metrics 2017 as a Percentage of 2014 Levels

LOGO

Source: Spears & Associates, December 2017.

•

Rig Count Has Increased: According to Spears & Associates, U.S. onshore rig count increased by 133% from the trough in the second quarter of 2016 to the third quarter of 2017. An increase in onshore rig count drives additional drilling activity, resulting in more wells drilled, the majority of which will require proppant for completions. In addition, horizontal rigs continue to represent an increasing proportion of total U.S. onshore rig count, and comprised 79% of total U.S. onshore rigs in 2016.

•

Drillers Are Extending the Reach of Lateral Sections of the Wellbore: Enhanced horizontal and directional drilling technologies have allowed E&P operators to drill increasingly long lateral lengths which are believed to enable higher hydrocarbon production per well and require more proppant to complete each well. According to Spears & Associates, the average lateral length of horizontal and directional wells is projected to increase from approximately 7,300 feet in 2015 to approximately 8,700 feet in 2018.

•

Drilling Programs Improve Rig Efficiency: The prevalence of pad drilling, tighter well spacing and efficiency gains from new, high-specification rigs have combined to result in more footage being drilled per rig, per year. Rigs are able to drill wells more quickly than before. According to Spears & Associates, average days to drill a well decreased from 20.7 days in the first quarter of 2016 to 17.7 days in the third quarter of 2017. This improving rig efficiency, combined with a trend toward longer laterals, has led to growth in overall footage drilled that is well in excess of growth in rig count. According to Spears & Associates, U.S. land footage drilled is projected to increase by 120% from 2016 to 2019.

•

Proppant Intensity Is Increasing: Proppant intensity is the combination of the number of fracturing stages used per well and the amount of proppant used to complete each fracturing stage. In the past decade, E&P operators have begun fracturing more stages per well. According to Spears & Associates, the average number of fracturing stages per new U.S. horizontal well has increased from 23 stages per well in 2014 to 34 stages per well in 2016, and is expected to further increase to an average of 48

102

stages per new U.S. horizontal well in 2018. Similarly, according to Spears & Associates, the amount of proppant used per linear foot has increased 74% from the first quarter of 2014 through the third quarter of 2017. This increase in both the number of fracturing stages per well and the amount of proppant used per linear foot is expected to result in a considerable increase in proppant demand per well, which Spears & Associates estimates to increase from an average of approximately 4,700 tons per well in 2016 to an average of approximately 7,100 tons per well in 2018.

Quarterly Historical and Projected Pounds of Proppant per Well

(Millions of pounds)

LOGO

Source: Spears & Associates, December 2017.

Fine Grade Proppant Demand

Over the past decade, U.S. land oil and gas completions have increasingly shifted to utilizing slickwater or water-based hybrid frac fluids instead of gel or crosslinked fluids. According to Rystad Energy, approximately 94% of U.S. horizontal well completions in the second quarter of 2018 utilized slickwater or hybrid fluids compared to 77% in 2014. This trend has been driven by a belief among E&P operators that the lower viscosity of slickwater fluid allows the fluid and accompanying proppant to penetrate deeper into formations than higher viscosity alternatives, thereby increasing the effectiveness of the fracture and increasing the resulting production from wells. However, due to the lower viscosity of the fluid, slickwater fluids have proven less effective in suspending and conveying the coarser grades of proppant traditionally used in hydraulic fracturing. As a result, slickwater fracturing applications utilize finer grades of sand that are able reach further into the fractures, resulting in increased stimulation and resource production. According to Coras Research, in 2016, 64% of total U.S. proppant demand was for fine grade sand, compared to 50% in 2014. This shift toward fine grades of proppant is expected to continue as Coras Research estimates demand for fine grade proppant will total 82% of total U.S. proppant demand in 2018. We expect Northern White sand mines, which have historically produced a mix of sand grades including high volumes of coarse grade sand, will continue to produce a smaller proportion of fine grade sand.

103

Historical and Projected Overall U.S. Proppant Demand Composition by Grade

LOGO

Source: Coras Research, June 2018.

Proppant Demand in Key Basins

Due to the attractive economics of producing oil and gas in the Permian Basin, the Eagle Ford Shale and the SCOOP/STACK (Mid-Continent), oil and gas activity in these regions has increased, resulting in an accompanying increase in demand for proppant in these regions. According to Spears & Associates, from 2016 to 2018, proppant demand in the Permian Basin, Eagle Ford Shale and the Mid-Continent is expected to increase by 265%, 231% and 229%, respectively, and will account for a combined 67% of total U.S. sand demand in 2018. Historically, each of these regions relied on geographically distant Northern White mines in order to meet proppant demand, but as E&P operators in these regions increasingly focused on minimizing well completion costs, E&P operators in these regions began favoring low-cost, regionally sourced sand as an alternative to more expensive Northern White sand. We believe these regions will continue to prefer regionally sourced sand as their geographic proximity to regional sand mines provides a cost advantage into these regions over Northern White mines. Additionally, we believe trends toward use of slickwater fracturing fluid, which requires use of fine mesh proppant, favors regionally sourced sands as sand reserves in close proximity to the Permian Basin, Eagle Ford Shale and Mid-Continent are generally of a finer mesh than more distant Northern White alternatives.

104

Proppant Demand by Basin

(Millions of tons)

LOGO

Source: Spears & Associates, December 2017.

Proppant Supply Challenges in Our Key Basins

The significant recent and expected increase in demand for sand will require a substantial amount of new supply to be developed to avoid the need to continue relying on Northern White sand and higher cost regional producers to meet demand needs.

Prior to 2015, Northern White mines provided coarse grade sand in sufficient supply to meet the majority of proppant demand across the U.S. proppant market. According to Coras Research, in 2014 Northern White sand accounted for 72% of total proppant volume sold in the United States. However, as industry trends have shifted toward a preference for fine grade sand, Northern White mines have proven inherently disadvantaged to meet U.S. proppant demand, which has led to a significant decline in the relative contribution of Northern White sand to total U.S. proppant supply. As a result, according to Coras Research, in 2016, Northern White sand accounted for only 63% of U.S. sand sales, and in 2018, is expected to account for only 52% of total U.S. sand sales, based on effective supply. We believe that this trend is driven by the inability of Northern White mines to produce, transport and deliver proppant to the wellhead in the Permian, Eagle Ford and SCOOP/STACK regions at a cost that is competitive with in-basin and low cost out-of-basin regional proppant providers.

Current transload infrastructure is insufficient to meet future proppant demand levels projected in the Permian Basin Eagle Ford Shale and SCOOP/STACK. Barring the construction of dedicated transload assets by Northern White proppant providers, which would require overcoming significant barriers to successful construction and implementation, we believe Northern White mines will likely be unable to provide E&P companies with the certainty of supply offered by close proximity to highly active oil and gas regions. As such, while Northern White mines have historically proven an important source of proppant supply into the Permian Basin Eagle Ford Shale and SCOOP/STACK, we believe that Northern White mines will not be able to effectively provide sufficient, low-cost fine grade proppant into these regions to the development of additional in-basin or low cost out-of-basin regional supply.

Many regional mines contain high levels of overburden, which yield high strip-to-ore ratios and increase the cost to produce proppant. Similarly, few regional providers have mines containing primarily fine grade proppant, which creates the need for many regional providers to produce less desirable coarse grade proppant alongside the desired fine grade proppant, reducing overall fine grade production capacity. Moreover, the sand in many

105

regional mines lacks the combination of API specifications for crush resistance, sphericity, solubility and turbidity required by E&P companies. Regional providers that are not vertically integrated must also contend with increasing truck rates, as many regional providers rely solely on trucking long distances to transport proppant due to a lack of rail access. While the development of last-mile logistics and wellsite solutions has increased the efficiency of trucking sand, we believe available trucking capacity will continue to decrease. As the availability of truck transportation becomes increasingly constrained, we believe regional providers that are not vertically integrated will face difficulty guaranteeing customers proppant supply to the wellhead. We believe these factors limit the number of regional providers that can effectively compete with premium regional and in-basin proppant providers on cost, quality and security of transportation to the wellhead.

Despite the approval of multiple mine permits on file with the Texas Commission on Environmental Quality (“TCEQ”), we believe that the following challenges reduce the likelihood that currently planned production capacity additions will be fully realized on their stated timeline.

•

Environmental Restrictions: A number of environmental restrictions and concerns specific to the Permian Basin, including the protection of the dunes sagebrush lizard and the potential formation of groundwater conservation districts, require careful site selection. These items can create uncertainty and delays in the construction process and, post construction, could lead to the future shut down or curtailment of production at already constructed and operating facilities.

•

Water Sourcing Challenges: Sourcing water in the volumes and quality needed to meet sand processing requirements can be difficult and require the implementation of region-specific sand processing procedures that take time to develop.

•

Personnel Hiring Challenges: The design, construction and operation of efficient sand processing facilities requires specialized knowledge and labor, which can be difficult to find and hire due to competition from existing sand mines that provide ample employment opportunities and opportunities for advancement.

•

High Customer Standards for Quality: Customer standards in the Permian Basin require the combination of a number of attributes which are difficult to find in available sand reserves. Customer requirements dictate a need for proppant that meets API specifications for crush resistance, sphericity, solubility and turbidity. While a number of Permian Basin sand reserves may contain certain of these API specifications, we believe sand reserves with all of these characteristics are limited.

•

Limited Access to Utilities: Obtaining access to the utilities needed to operate efficiently and produce low-cost proppant, including access to sufficient, uninterruptible electric power and natural gas, can take extended amounts of time, and, in certain locations, is not possible.

•

Challenges to Road Access: The use of heavy trucks in both the construction of facilities and the production of proppant requires the permitting and construction of roads to gain access to remotely located sand mines.

•

Difficulty Obtaining Surface Access Rights: Obtaining surface access rights and avoiding active oil and gas production prospects can be difficult and can cause project delays.

•

Lack of Quality Sand Reserves: Production of low cost proppant is facilitated by sand reserves that consist of large parcels of deep, homogeneous formations with low overburden and low clay content. We believe that many of the areas currently permitted for development of proppant mines may have some but not all of these characteristics.

•

Permitting Constraints: The process required to gain the necessary permits for air, road, water and other resources requires a significant amount of time and is prone to unexpected delays that must be overcome before production can begin.

•

High Capital Intensity: Sand mine construction projects require access to a significant amount of capital in order to purchase land and fund construction of the processing facility, storage and loading infrastructure.

106

Due to the challenges inherent to constructing a low cost proppant production facility with high-quality sand in the Permian Basin, there will likely be a continued need for non-Permian Basin sourced sand in the future.

Trucking and Transload Supply

The growth in proppant demand, particularly in the Permian, Eagle Ford and SCOOP/STACK basins, has outpaced the growth of the transload capacity required to support the transportation of proppant into the region. While nameplate transload capacity exceeds proppant demand, Coras Research estimates 75% of transload capacity is controlled by ten to 20 large companies, leaving proppant providers without dedicated transload assets vulnerable to transload shortages. While some build-out of unit train capable transload facilities has occurred, Coras Research indicates much of this build-out has been anchored by large E&P tenants resulting in a lack of unit train capable transload facilities available for use by proppant providers without dedicated transload assets. Currently, according to Coras Research, unit train-capable transload facilities account for 91% of Permian Basin transload capacity but only 55% of transload facilities. Similarly, in the Eagle Ford Basin, unit train-capable transload facilities account for 77% of transload capacity but only 22% of transload facilities.

While there is a clear need to build additional transload capacity, a number of challenges make the successful execution of such projects difficult. For example, effective transload operations require careful site selection, creating a finite number of locations suitable for development. Moreover, the identification of these locations, as well as facility design, project management and transload facility optimization requires a multifaceted requisite set of skills. In addition to these challenges, transload terminal construction requires a lengthy permitting and development process.

As proppant demand has grown since the end of the industry downturn in mid-2016, last-mile logistics capacity has become constrained as the inability to find and hire qualified truck drivers has limited growth in the build-out of last-mile logistics capacity. As a result, trucking and demurrage rates have increased such that the radius for which last-mile transportation by truck is cost effective has declined to 100 miles or fewer. Should proppant demand grow in-line with the forecasts published by Spears & Associates, we expect last-mile logistics capacity to further tighten due to:

•

continued difficulty hiring qualified drivers;

•

federal regulations requiring drivers to track daily hours worked via strict electronic logs structured to maximize compliance relative to the current practice of paper logs, which will promote increased enforcement of thresholds on daily hours of service restrictions; and

•

further congestion at transload terminals, which increases the likelihood for material stock-outs and extended truck load-out times.

Consequently, we believe proppant providers with dedicated transload and last-mile and logistics assets will have an advantage over other proppants providers.

Trucking and Transload Demand

The overall tonnage of proppant required to complete a well has increased to a level beyond the capacity of legacy logistics infrastructure. According to Coras Research, proppant per well in the Permian Basin is expected to average approximately 15 million pounds per well in 2018, which represents approximately 65 railcars of proppant. Large groups of railcars of proppant are customarily moved most efficiently via unit trains, which can command discounts on railroads and reduce overall logistics costs. As a result, the demand for unit train capable transload facilities, which can accommodate higher volumes of proppant, and new and more efficient technologies and infrastructure focused on transload facilities and last-mile logistics solutions, have increased. Recent increases in drilling rig activity, the lengths of laterals drilled and proppant intensity have increased the volume of proppant needed at the wellhead. Accordingly, the volume of proppant that must move through transload facilities to the wellhead via last-mile logistics assets has also increased, often requiring more proppant to be stored at the wellsite or transloads located in close proximity to the well. We believe vertically integrated

107

proppant providers have enjoyed discounted rail rates largely unavailable to non-vertically integrated proppant providers and efficiency benefits from last-mile logistics solutions tailored to delivering larger quantities of sand to the wellhead in short periods of time.

This increase in proppant required per well has placed considerable strain on last-mile logistics assets, transload infrastructure and wellsite infrastructure. As the number of trucks of proppant required to complete a well has increased, congestion at the wellsite has become a growing issue. Such congestion commonly leads to demurrage, which results in increased well costs and, in some cases, well shutdowns due to an insufficient amount of sand on hand to complete a frac stage. Last-mile proppant logistics is also exposed to shortages in pneumatic trucks and labor inflation for qualified truck drivers, as Rystad Energy forecasts that the number of trucks required for operations in the Permian Basin is expected to grow at a compound annual growth rate of 15% from 2018 to 2021.

Trucks on Road in the Permian Basin

LOGO

Source: Rystad Energy, June 2018.

108

Quarterly Proppant Pounds Per Lateral Foot

(Pounds)

LOGO

Source: Spears & Associates, December 2017.

Aside from being an important contributor to growing sand demand, the amount of proppant used per lateral foot is often one of the most important considerations in determining last-mile logistics solutions as it determines how much sand must be stored on the well-site, how quickly sand must be pumped and, in some cases, how the well pad must be designed to accommodate truck traffic. As a result, a customer with high proppant loadings per foot may prefer a high velocity portable silo or portable conveyance system at their wellsite while a customer focused on longer hauls or potential road bottlenecks from the mine to the wellhead may prefer a box system.

We believe that the sharp increases in demand for transload and last-mile logistics capacity have created significant advantages for those proppant providers that have vertically integrated and flexible transload and last-mile logistics operations. Many non-vertically integrated proppant suppliers have entered into take-or-pay contracts with third party transload and last-mile logistics providers in order to satisfy the need of customers to guarantee proppant supply to the wellhead. While these contracts are effective in meeting transload and last-mile logistics needs, the take-or-pay nature of these contracts ties the proppant provider to sourcing proppant from the origin point tied to the contract, regardless of new proppant development projects that may no longer have access to the original origin point. Moreover, while non-vertically integrated proppant providers may be able to contract transload capacity, they often use non-unit train capable transload terminals, which limits their ability to realize the reduced rail rates enjoyed by vertically integrated proppant providers with dedicated unit train capable transload terminals. Further, we believe the frequent need to contract with multiple parties and the lack of direct asset ownership through vertical integration increases the difficulty non-vertically integrated providers face in:

•

maintaining constant service levels across last-mile transload and trucking solutions;

•

quickly rolling out new solutions via third party controlled transloads or trucking locations;

•

co-locating truck infrastructure at in-basin origin points to eliminate miles driven from the point of unloading to the point of the next load; and

•

deploying new last-mile logistics assets (for example, lighter trailers with higher payload capacity).

109

BUSINESS

Our Company

The following table summarizes key characteristics of our mining facilities:


Location	Reserves	Annual Production Capacity	Logistics Access	Basins Served	Commencement of Operations
Cresson, Texas	37.7 million tons (proven reserves) 64.9 million tons (probable reserves) 8% 40/70-mesh 79% 100-mesh 13% 200-mesh(1)	4.5 million tons	BNSF Railway, Union Pacific Railroad, Texas Pacífico Transportation Railway, trucking	Permian Basin, Eagle Ford Shale, SCOOP/STACK	2011

Tolar, Texas	12.4 million tons (proven reserves) 100% 100-mesh	1.0 million tons	BNSF Railway, Union Pacific Railroad, Texas Pacífico Transportation Railway, trucking	Permian Basin, Eagle Ford Shale, SCOOP/STACK	November 2017

Winkler County, Texas	236.5 million tons (proven reserves) 38% 40/70-mesh 62% 100-mesh	5.0 million tons(2)	Trucking	Midland Basin and Delaware Basin (sub-basins of the Permian Basin)	March 2018(2)

(1)	Historically, 200-mesh sand from the Cresson mine has been sold as an industrial product.

(2)

110

Our vertically integrated proprietary network of transload terminals and last-mile logistics capabilities enable us to provide our customers with complete mine-to-wellhead frac sand supply solutions. Our 12 existing transload terminals are strategically located in the most active U.S. basins, including the Permian Basin (six terminals), Eagle Ford Shale (two terminals) and SCOOP/STACK (two terminals). We utilize our transload terminals to deliver and store sand within trucking distance to the well site. To complement our network of transload terminals and complete our mine-to-wellhead capabilities, we own and operate a fleet of approximately 100 fit-for-purpose last-mile transport vehicles that can integrate with various wellsite storage solutions, including silo, box and portable conveyance solutions. Our vertically integrated operations allow us to provide our customers with greater control over their development plans, security of supply, and efficient cost management of their hydraulic fracturing process.

Our Competitive Strengths

We believe that the following strengths position us to achieve our primary business objective of creating value for our stockholders:

•

Advanced Logistics Infrastructure. Our transload rail terminals and in-basin mines are located close to customer wellheads, minimizing our customers’ exposure to the elevated truck rates and NPT incurred during times of high trucking activity as a result of the 150- to 300-mile hauls from a typical regional mine operator.

•

111

improve cost efficiency and reliability of mine origin and rail distribution pairings, mitigate volatility in transportation costs, ensure transloading availability and capacity, provide security of supply at delivered locations close to, or at, the wellhead and offer a full portfolio of last-mile solutions, including the delivery of sand to customers using last-mile proppant delivery solutions, such as pneumatic trucks, portable sand silos, portable wellsite conveyance systems and boxes. We have increased the number of our transload facilities to 12 as of the date of this prospectus from one in 2006, three in 2011 and five in 2013. Over the last five years we have transloaded approximately 15 million tons of frac sand and delivered approximately six million tons of frac sand to the wellsite in the aggregate. These benefits represent a cost and customer service advantage over other frac sand providers and have greatly contributed to our success securing business from E&P operators, who typically do not have the personnel or relevant expertise to manage the complex frac sand supply chain and frequently require one or more last-mile proppant delivery solutions to most efficiently hydraulically fracture their wells. We believe our large network of terminals, fleet of last-mile vehicles, 24/7 real time logistics reports, onsite well coordinators and final mile experience delivering sand to a wide range of our customer’s customized proppant delivery solutions (including pneumatic trucks, portable silo, portable conveyance or boxes) would be difficult, costly and time-consuming for competitors to replicate. Our logistics assets also provide us with the ability to opportunistically generate revenue from handling of third-party sand and allow us to more quickly adapt to the growing challenges posed by an industry that is increasingly focused on high-intensity well completions.

•

Proven track record of profitably executing organic growth projects: We have a track record of successfully identifying and executing greenfield and brownfield growth projects. We have grown annual capacity at our Cresson facility from under 300,000 tons in 2011 to 1.6 million tons by the end of 2013, to 3.1 million tons by the end of 2015 and to 4.5 million tons as of December 31, 2017 by completing three brownfield expansion projects. We commenced operations at our Tolar mine and our mine in Winkler County, Texas, which we refer to as the “West Texas” mine, in November 2017 and March 2018, respectively. The addition of the Tolar and West Texas mines have increased our total production capacity to approximately 8.5 million tons annually as of the second quarter of 2018. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits, which will increase our total production capacity to approximately 10.5 million tons annually. With approximately 351.5 million tons of reserves, consisting of 286.6 million tons of proven reserves and 64.9 million tons of probable reserves, our operations have been designed to enable up to six million tons of additional capacity expansion, most of which would occur at our West Texas mine, including a two million ton capacity expansion at our West Texas mine that is anticipated to be complete by the fourth quarter of 2018, assuming receipt of applicable permits. Moreover, since inception we have constructed five transload terminals. We believe our demonstrated ability to identify and successfully develop high-quality sand reserves and transload sites in attractive basins will allow us to continue to opportunistically and profitably expand our business.

•

112

frac sand solution offerings allowed us to operate profitably in 2016 on both a net income and Adjusted EBITDA basis, a period during which many of our publicly traded competitors were operating at or below breakeven Adjusted EBITDA levels and/or curtailed their operations. Our definition of Adjusted EBITDA may not be comparable to a similarly titled measure of other companies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Evaluate Our Business—Adjusted EBITDA.” After giving effect to this offering, we expect to have approximately $ million of liquidity in the form of cash on hand and undrawn borrowing capacity under our $60.0 million line-of-credit, and we believe that we will have ample liquidity to pursue attractive initiatives.

•

Our Business Strategy

We believe that we will be able to achieve our primary business objective of creating value for our stockholders by executing on the following strategies:

•

Capitalize on the U.S. oil and gas market recovery and favorable secular trends: We believe we are well positioned to benefit from a continued recovery in U.S. land drilling and completion activity. In the Permian Basin and Eagle Ford Shale, where we have a significant presence and are a low-cost supplier of proppant, Spears & Associates projects proppant demand will grow by 265% and 231% from 2016 to 2018, respectively. Coras Research estimates that 82% of sand demand in 2018 will be demand for 40/70-mesh sand or finer, compared to 64% of total sand demand in 2016. Our sand mines consist entirely of fine grade sand (API spec 40/70-mesh or finer), which allows us to produce fine grade sand without also having to produce coarser grain sand, as is typical for many regional proppant providers in Texas that have less homogeneous reserves. As industry trends have shifted toward a preference for fine grade sand, and as proppant demand in the Permian Basin has come to represent an increasingly significant amount of total U.S. sand demand, Northern White sand sold as a percent of total proppant volume sold in the United States has decreased from 72% in 2014 to 63% in 2016, and is expected to account for only 52% in 2018 based on effective supply, according to Coras Research. We believe our ability to maintain our position as a low-cost supplier of proppant to the Permian, Eagle Ford and SCOOP/STACK basins while growing our proppant volumes to meet rising demand in our core markets will position us to capitalize on a continued recovery and enable us to increase our market share.

113

Proppant Demand by Basin

(Millions of tons)

LOGO

Source: Spears & Associates, December 2017.

•

114

•

ability to couple fully managed sand delivery from mine-to-wellhead with streamlined invoicing; and

•

integrated reporting systems that enable real-time tracking of inventory.

•

Our Assets and Operations

Our Facilities

The following is a detailed description of our three sand mining and processing facilities in operation or under development.

Cresson, Texas

Our Cresson, Texas mine has an annual frac sand processing capacity of 4.5 million finished tons and is located on just over 1,300 contiguous acres of land, with onsite processing and rail loading facilities. The facility is located approximately 25 miles southwest of Fort Worth, Texas, and is accessible from FM 3450 via TX-171 or FM 167. The facility has access to three phase power from Brazos Electric Power Cooperative, natural gas from an interstate transmission line and groundwater from onsite wells, all of which are present in sufficient quantities to sustainably support the facility’s current processing capacity. The facility’s onsite processing

115

equipment includes two hydrosizer style wet plants, one rotary kiln dryer and two vibratory fluid bed dryers. Our Cresson facility was originally opened in 2007 by Sandhill Land and Cattle, LLC, and we purchased the rights to the facility in 2011. During 2016, we completed substantial upgrades to the facility, including the installation of a new dryer, multiple silos, rail access, a water clarification and tailing thickening system and a wet plant feed system, bringing total annual production capacity from 2.5 million tons in 2015 to 4.5 million tons currently. Additionally, we acquired the rights to additional mineral ore reserves adjacent to the operation in 2015. Further brownfield expansions are possible at the Cresson facility that could increase annual production by an additional 2.0 million tons. The total net book value of the Cresson facility’s real property and fixed assets as of June 30, 2018 was $63.8 million.

The Cresson facility has proven reserves of 37.7 million tons and probable recoverable reserves of 64.9 million tons as of December 31, 2017. The sand reserves, which are part of the Paluxy Formation, are up to 100 feet thick and contain exclusively fine grade sand of 40/70-mesh, 100-mesh and 200-mesh with an anticipated production mix of approximately 8% for 40/70-mesh, approximately 79% for 100-mesh and approximately 13% for 200-mesh. The crush strength of the sand mined at the facility is 7,000 PSI for 40/70-mesh, 9,000 PSI for 100-mesh. Given the low overburden the sand is generally extracted from the mine through surface excavation using heavy earthmoving equipment. The annual processing capacity of the mine is approximately 5.2 million tons of finished product, of which up to 4.5 million tons is comprised of frac sand with the remainder consisting of sand used in building materials and other industrial applications. The Cresson facility is located near multiple rail lines, with approximately 26,500 feet of onsite rail transportation infrastructure capable of accommodating multiple unit trains simultaneously. The facility is connected to the BNSF Railway, Union Pacific Railroad and Texas Pacífico Transportation Railway rail networks. The Cresson facility has a New Source Review (“NSR”) permit and two mineral leases. See “—Mineral Leases” for more information.

We have received the material permits required to operate our Cresson facility from the TCEQ Air Permits Division and Water Quality Division, Hood County, Johnson County, MSHA and the Texas Department of Transportation (“TxDOT”). See “—Permits” for more information.

The following map indicates the layout and location of our Cresson facility:

LOGO

116

Tolar, Texas

Our Tolar, Texas mine has an initial annual frac sand processing capacity of 1.0 million tons and is located on approximately 950 contiguous acres of land, with onsite processing and unit train rail loading facilities. We commenced construction of our Tolar, Texas mine in March 2017 and commenced operations in November 2017. The facility is located 1.5 miles northeast of Tolar, Texas, and is accessible from Electric Rd. via US-377. The facility’s primary utilities include three phase power from Brazos Electric Power Cooperative, natural gas from an interstate transmission line and groundwater from onsite wells, all of which are present in sufficient quantities to sustainably support the facility’s expected processing capacity. The facility’s onsite processing equipment includes one rotary kiln dryer, one hydro-cyclone wet plant and both truck and unit train rail loadout facilities. The total net book value of the Tolar facility’s real property and fixed assets as of June 30, 2018 was $52.9 million.

The Tolar facility has proven recoverable reserves of 12.4 million tons as of December 31, 2017. The sand reserves, which are part of the same Paluxy Formation we mine at our Cresson, Texas facility, are up to 40 feet thick and consist of 100-mesh sand. The crush strength of the 100-mesh sand mined at the facility is 9,000 PSI. Given the low overburden and loose sedimentation of material, the sand is generally extracted from the mine through surface excavation using heavy earthmoving equipment. The annual processing capacity of the facility is 1.0 million finished tons, and can be expanded to 1.5 million finished tons with limited capital investment upon receipt of an NSR air permit from the TCEQ. The Tolar facility is located near multiple rail lines with approximately 18,000 feet of onsite rail transportation infrastructure capable of accommodating multiple unit trains simultaneously. The facility is connected to the BNSF Railway, Union Pacific Railroad and Texas Pacífico Transportation Railway rail networks. The Tolar facility has a Permit by Rule (“PBR”) permit and a mineral lease controlled by a related party. See “—Mineral Leases” for more information.

We have received the material permits required to operate our Tolar facility from the TCEQ Air Permits Division and Water Quality Division, Evergreen GWCD and MSHA. See “—Permits” for more information.

The following map indicates the layout and location of our Tolar facility:

LOGO

117

West Texas

Our West Texas mine has an initial annual frac sand processing capacity of 3.0 million tons and is located on approximately 13,000 contiguous acres of land in Winkler County, Texas, with onsite processing and truck loading facilities. We commenced construction of our West Texas mine in June 2017 and commenced operations in March 2018. The facility is located approximately 13 miles north of Monahans, Texas, and is accessible via CR-402 via TX-18. The facility’s primary utilities include three phase power from Oncor Electric Delivery Company LLC, natural gas from an interstate transmission line and groundwater from onsite wells, all of which are present in sufficient quantities to sustainably support a facility producing in excess of 8 million tons annually. The facility’s onsite processing equipment includes two hydrosizer style wet plants, three rotary kiln dryers and a high-speed truck loadout. The total net book value of the West Texas facility’s real property and fixed assets as of June 30, 2018 was $217.2 million.

The West Texas facility has 236.5 million tons of proven reserves as of December 31, 2017. The sand deposits are up to 90 feet thick and consist of 40/70-mesh and 100-mesh sand with an anticipated production mix of approximately 38% 40/70-mesh and approximately 62% 100-mesh. The crush strength of the sand mined at the facility is 7,000 PSI for 40/70-mesh and 9,000 PSI for 100-mesh. Given the low overburden and loose sedimentation, sand is generally extracted from the mine through surface excavation using heavy earthmoving equipment. The initial annual processing capacity of the facility is approximately 3.0 million finished tons as of the second quarter of 2018, and, upon receipt of an NSR permit, can be expanded up to 6.0 million finished tons. We expect to expand annual production capacity at our West Texas mine to 5.0 million tons by the fourth quarter of 2018, assuming receipt of applicable permits. The West Texas facility is located near the FM 404 highway and has onsite transportation infrastructure capable of loading more than 70 trucks per hour. The West Texas facility has a PBR permit and a mineral lease. See “—Mineral Leases” for more information.

We have received the material permits required to operate our West Texas facility from the TCEQ Air Permits Division, Winkler County, MSHA and TxDOT. See “—Permits” for more information.

The following map indicates the layout and location of our West Texas facility:

LOGO

118

Capital Expenditures

Set forth below is a discussion of our current and proposed significant capital expenditures.

•

Tolar, Texas – On-site construction of the Tolar facility began in March 2017 and operations commenced in November 2017. Construction was completed in November 2017 and the total capital investment related to this project was $56.7 million. The Tolar mine provides us with an additional 1.0 million tons of annual production capacity, which we use to capitalize upon growth opportunities with current customers.

•

West Texas – On-site construction of the West Texas facility began in May 2017 and operations commenced in March 2018. As of June 30, 2018, we estimate that the total capital investment related to this project will be approximately $245.0 million, of which approximately $218.2 million had already been incurred as of June 30, 2018. The West Texas facility currently provides us with an additional 3.0 million tons of annual production capacity and is expected to provide us with an additional 2.0 million tons of annual production capacity by the fourth quarter of 2018, assuming receipt of applicable permits. We expect to use such increased production capacity to capitalize upon growth opportunities with both current and potential new customers.

Our Products

We serve the oil and gas end markets, and our sand reserves contain deposits of fine grade 40/70-mesh, 100-mesh and 200-mesh sizes that API specifies for use in wellsite fracturing operations. We believe that this mix of finer grade sand reserves is in higher demand and meets current industry preferences. Our API-spec frac sand is marketed under the name “Texas Premium White” and is consistent with Northern White sand in terms of quality. We also sell for industrial use the byproduct sand from our mining operations that is not fit for oil and gas end markets, although such sales are not a material portion of our business.

Our frac sand is offered to our customers at the mine or as an integrated mine-to-wellhead solution. By owning and operating our vertically integrated logistics infrastructure, we are able to provide our customers with a solution-based approach.

Our Reserves

“Reserves” are defined by SEC Industry Guide 7 as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Industry Guide 7 divides reserves between “proven (measured) reserves” and “probable (indicated) reserves,” which are defined as follows:

•

Proven (measured) reserves. Reserves for which (1) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.

•

Probable (indicated) reserves. Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.

We categorize our reserves as proven or probable in accordance with these SEC definitions. We estimate that we had a total of approximately 351.5 million tons of proven and probable recoverable reserves as of December 31, 2017. As of December 31, 2017, we had approximately 37.7 million tons of proven reserves and 64.9 million tons of probable recoverable reserves at our Cresson, Texas facility, approximately 12.4 million tons of proven reserves at our Tolar, Texas facility and approximately 236.5 million tons of proven reserves at our West Texas facility. The quantity and nature of the reserves at each of our properties are estimated by our

119

internal Geology and Technical Services department. Our Director of Technical Services uses drone surveys and three-dimensional models to regularly update our reserve estimates, making necessary adjustments for operations and mine plans at each location during the year. Our internal reserve estimates are provided to John T. Boyd Company for review no less than annually so that third-party approved additions or reductions can be made to our reserves and resource calculations due to ore extraction, additional drilling and delineation, property acquisitions and dispositions or quality adjustments. Before acquiring new reserves, we perform surveying, drill core analysis and other tests to confirm the quantity and quality of the acquired reserves. John T. Boyd Company has reviewed our December 31, 2017 reserves, and we intend to continue retaining third-party engineers to review our reserves on an annual basis.

To opine as to the economic viability of our reserves, John T. Boyd Company reviewed our operating cost and revenue per ton data at the time of the proven reserve determination. The sand deposits at our facilities are characterized by a high silica content (typically 98% or greater) and do not require crushing or extensive processing to eliminate clays or other contaminants, enabling us to cost-effectively produce high-quality raw frac sand meeting API specifications. In addition, the sand deposits are generally characterized by shallow overburden as minimal as a few feet in depth. The shallow depth of the sand deposits allows us to conduct surface mining rather than underground mining, which lowers our production costs and decreases safety risks as compared to underground mining. All of our surface mining is currently conducted utilizing excavators and trucks or loaders and conveyance systems to deliver sand to the wet plant. We have considered utilizing other mining methods and may continue evaluating other mining methods from time to time in the future.

Summary of Reserves

The following table provides information on our production facilities that have reserves as of December 31, 2017. Included is the location and area of the facility; the amount of its reserves; and the primary end markets that it serves.


Mine/Plant Location	Approx. Acreage Leased (in acres)		Proven Reserves		Probable Reserves		Total Proven and Probable Reserves (a)		Estimated Reserve Life in Years (b)		Primary End Markets Served
	(reserve data in millions)
Cresson, Texas		1,300		37.7		64.9		102.6		22.8	Oil and gas proppants, building materials, foundry

Tolar, Texas		950		12.4		—		12.4		12.4	Oil and gas proppants

West Texas		13,000		236.5		—		236.5		78.8	Oil and gas proppants


Total		15,250		286.6		64.9		351.5

(a)

Reserves as of December 31, 2017 as reviewed by third-party independent engineering firms based on core drilling results and in accordance with the SEC’s definitions of proven and probable recoverable reserves and related rules for companies engaged in significant mining activities. Reported reserves for Cresson, Tolar, and West Texas consider the factors necessary to account for potential mining and processing losses such as inaccessible ore, thin clay zones, losses due to vegetation, spillage incurred during mining process and highwall benching.

Drilling density utilized by us to determine proven versus probable reserves is based upon the relative characteristics of the mineral resource field evaluated, including the consistency and density of the mineral resource within the drilling core sample. The target drill-hole spacing utilized by us to estimate proven and probable reserves in accordance with the SEC’s definitions are as follows by property:

•

Cresson, Texas – 500 feet x 500 feet (proven ore reserve); 2,000 feet by 2,000 feet (probable ore reserve)

120

•

Tolar, Texas – 500 feet x 500 feet (proven ore reserve); 2,000 feet by 2,000 feet (probable ore reserve)

•

West Texas – 1,000 feet x 1,000 feet (proven ore reserve)

The underlying FOB mine sales assumptions utilized by us to estimate proven and probable reserves in accordance with the SEC’s definitions are as follows by property:

•

Cresson and Tolar – $34/ton for 100-mesh and $40/ton for 40/70-mesh

•

West Texas – $47/ton for 100-mesh and $50/ton for 40/70-mesh

(b)	For Cresson, Tolar, and West Texas facilities, total proven and probable reserves as of December 31, 2017, divided by the annual production capacity (as stated herein as of the second quarter of 2018) of each facility.

Mineral Leases

The mineral rights and access to mineral reserves for our Cresson, Texas facility are secured under two separate mineral leases. The first lease was entered into in 2011 with Sand Hill Land and Cattle, LLC, and had an original expiration in April 2016 but continues thereafter so long as materials are sold and removed from the leased premises and the royalty payments continue to be paid. The lease includes a royalty payment of 8.75% of the sales price of the materials sold if the price per barrel of West Texas Intermediate crude oil is greater than or equal to $70 for 90 days; otherwise, the royalty payment is 8.00% of the sales price of the materials sold. The lease also includes an annual minimum royalty payment of $3.25 million.

The second lease for our Cresson, Texas facility was entered into in 2015 with Lonestar Prop 50, LLC, and continues so long as materials are sold and removed from the leased premises and the royalty payments continue to be paid; provided that the term does not continue past August 2040. Starting in August 2016, the agreement requires monthly payments in the amount of $35,000 until mining operations commence. Once mining operations commence, the lease includes a royalty payment of the greater of (a) $2.25/ton or (b) 7.75% of gross revenue from sales of material. The lease also includes an annual minimum royalty payment of $675,000. Until February 1, 2019, the lease includes certain adjustments to the royalty rate calculations as follows:

•

for the mining period of January 1, 2017 to January 1, 2019 the price of $2.25 per ton of material sold shall be replaced with a price of $2.50 per ton of materials sold;

•

for the mining period of January 1, 2017 to January 1, 2018 the lessor and lessee will split any royalty over $15,000 up to $600,000 of royalties; and

•

for the mining period of February 1, 2018 to February 1, 2019, the percentage of 7.75% of gross revenue shall be replaced with the percentage of 8.00% of the gross revenue.

Mining operations commenced on this lease during the year ended December 31, 2017.

The mineral rights and access to mineral reserves for our Tolar, Texas facility are secured under a mineral lease with GHMR Operations, LLC, a related party. The mineral lease, which was entered into in December 2014, expires in December 2019, but continues thereafter so long as materials are sold and removed from the leased premises and the royalty payments continue to be paid. The lease includes a royalty payment for all sand removed from the property during the term of the lease and any renewal thereof. The initial royalty payment is calculated based on $4.00 per ton of sand removed from the land. The lease also requires a processing royalty for any sand brought onto the land from other lands for processing. The lease provides that an annual minimum royalty shall not be less than an amount equal to the sum of the amount of all principal and interest paid by the lessor related to the property, the ad valorem taxes paid by the lessor, and an amount equal to 20% of such amounts, which for the years ended December 31, 2017 and 2016 was $1,649,000 and $1,194,000, respectively. For more information, please see Note G to the consolidated financial statements included elsewhere in this prospectus.

121

The mineral rights and access to mineral reserves for the mining facility in West Texas are secured under a mineral lease with Hogg Ranch, LLC. The mineral lease, which was entered into in April 2017, expires in December 2037, but is renewable thereafter on an annual basis. The lease includes a royalty payment for all sand removed from the property during the term of the lease and any renewal thereof. The initial royalty payment is calculated based on $5.00 per ton of sand removed from the land. The lease also requires a processing royalty for any sand brought onto the land from other lands for processing. The lease provides that the annual minimum royalty shall not be less than $4,000,000. For more information, please see Note G to the consolidated financial statements included elsewhere in this prospectus.

Transportation Logistics and Infrastructure

We have established an oil and gas logistics network that we believe positions us to be highly responsive to our customers’ needs. With a growing logistics bottleneck facing the industry, we believe providing a mine-to-wellhead solution is important because it is the only way to assure customers certainty of supply and efficient delivered cost. Our oil and gas logistics network includes 12 transload terminals to deliver and store sand within trucking distance from a customer’s wellsite, approximately 1,000 leased railcars and approximately 100 pneumatic trucks. Our Cresson and Tolar, Texas mines are located near multiple rail lines: BNSF Railway (“BNSF”), Union Pacific Railroad (“UP”), and the Texas Pacífico Transportation Railway (“TXPF”). The ability to access multiple rail lines gives us the flexibility to assure our products are delivered to our client delivery destinations in a timely manner and provides negotiating leverage with the railroads that is critical to securing attractive freight rates. Our rail access is complemented by the location of our transload facilities, which give our customers the ability to store large quantities of sand near their well pads and enables us to create custom transload solutions optimized to fit the level of sand per stage or sand per well required to maximize performance at the wellhead and minimize, or eliminate, costly non-productive time. Our fleet of last-mile transport vehicles further enhances our broad suite of integrated sand delivery solutions, enabling us to deliver sand directly to our customers’ wellheads using traditional pneumatic assets, portable silos, boxes or portable conveyance systems. The integrated nature of our logistics operations allows us to better serve E&P operators seeking more control over their well completion schedules and overall well performance by directly sourcing sand in addition to minimizing bottlenecks attributable to scarce access to rail assets, which limits operational delays and decreases wellhead costs. A map of our mine facilities and transload terminals can be found below.

LOGO

122

We maintain (i) six transload terminals in the Permian Basin (in Barnhart, Texas; Big Lake, Texas; Fort Stockton, Texas; Pecos, Texas (two facilities); and Sweetwater, Texas), (ii) two transload terminals in the Eagle Ford Shale (in Dilley, Texas and Gonzales, Texas); (iii) two transload terminals in the Barnett Shale (in Cleburne, Texas and Fort Worth, Texas), and (iv) two transload terminals in the SCOOP/STACK (in Enid, Oklahoma and Altus, Oklahoma). A summary of our transload facilities can be found below.


Proppant Transloading Terminal Location	Storage Capacity (Tonnage)		Unit Train Capable		Railcar Spots		Loadout Lanes		Rail Lines
Permian
Barnhart, TX		15,000		Yes		130		2	TXPF
Big Lake, TX		40,000		Yes		353		3	TXPF
Fort Stockton, TX		17,500		Yes		155		2	TXPF
Pecos (New), TX		25,000		Yes		220		3	UP
Pecos (Old), TX		6,000		No		54		1	PVS / UP
Sweetwater, TX		10,000		No		90		1	BNSF / UP

Eagle Ford
Dilley, TX		43,000		Yes		204		4	UP
Gonzales, TX		12,500		Yes		110		2	TXGN

SCOOP/STACK
Altus, OK		4,000		No		35		1	BNSF
Enid, OK		62,500		No		40		2	BNSF

Barnett
Cleburne, TX		17,000		Yes		150		3	BNSF / UP
Fort Worth, TX(1)		162,500		No		40		2	UP

Permits

We operate in a highly regulated environment overseen by many government regulatory and enforcement bodies. To conduct our mining operations, we are required to obtain permits and approvals from local, state and federal governmental agencies. These governmental authorizations address environmental, land use and safety issues, among others. We have obtained numerous federal, state, and local permits required for operations at our Cresson, Tolar and West Texas facilities and our transload facilities.

While resources invested in securing permits are significant, this cost has not had a material adverse effect on our results of operations or financial condition. We cannot assure that existing environmental laws and regulations will not be reinterpreted or revised or that new environmental laws and regulations will not be adopted or become applicable to us. Revised or additional environmental requirements that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business.

Our Customers and Contracts

Our customer base includes major oilfield services companies and E&P operators that are engaged in hydraulic fracturing. We believe the strength of our customer base is driven by our reputation for high-quality product, our tailored approach to customer service and our ability to offer a broad suite of cost efficient mine-to-wellhead logistics solutions. For the six months ended June 30, 2018, our top four customers, EOG Resources, Schlumberger, Halliburton and Apache Corporation, accounted for approximately 27%, 13%, 11% and 11%, respectively, of our total net sales revenue. For the year ended December 31, 2017, our top three customers, EOG Resources, Halliburton and Apache Corporation, accounted for approximately 29%, 14% and 14%, respectively, of our total net sales revenue. For the year ended December 31, 2016, our top four customers, Halliburton, EOG Resources, Apache Corporation and Keane Group, accounted for approximately 28%, 22%, 13% and 11%, respectively, of our total net sales revenue.

123

We primarily sell products under supply agreements that vary by contract. Certain of the agreements require the customer to purchase a specified percentage of its proppant requirements from us. Other agreements require the customer to purchase a minimum volume of proppant from us. These minimum volume contracts typically include a “take-or-pay” or “take-or-penalty” provision which triggers certain penalties if the purchased volume does not meet the required minimums.

Our current contracts include a combination of either fixed prices or market-based prices. For fixed price contracts, prices are fixed and subject to adjustment, upward or downward, based upon: (i) certain changes in published producer cost indices, including the Consumer Price Index for All Urban Consumers and the Producer Price Index published by the U.S. Bureau of Labor Statistics; or (ii) market factors, including a natural gas surcharge which is applied if the Average Quarterly Natural Gas Price for West Texas Waha, as listed by the Platt’s Inside FERC’s “Gas Market Report,” are above the benchmark set in the contract for the preceding calendar quarter. Contracts with market-based pricing mechanisms permit our raw frac sand prices to fluctuate within certain negotiated ranges depending on the price of crude oil (based upon the price of West Texas Intermediate oil as listed on the EIA’s website).

Competition

There are numerous large and small producers in all sand producing regions of the United States with whom we compete. Our main competitors in the raw frac sand market include U.S. Silica Holdings, Inc., Hi-Crush Partners LP, Covia Holdings Corporation, Badger Mining Corporation, CARBO Ceramics, Inc., Emerge Energy Services LP, Preferred Sands LLC and Smart Sand Inc. The most important factors on which we compete are reliability of supply, quality of product, delivered price of proppant (including distribution and logistics), distribution and logistics capabilities, customer service and breadth of product offering.

Demand for sand-based proppants is closely linked to proppant consumption patterns for the completion of oil and natural gas wells in North America. These consumption patterns are influenced by numerous factors, including the price for hydrocarbons, the drilling rig count and hydraulic fracturing activity, including the number of stages completed and the amount of proppant used per stage. Further, these consumption patterns are also influenced by the location, quality, price and availability of sand-based proppants and other types of proppants such as ceramic proppant.

Intellectual Property

Other than operating licenses for our mining facilities, there are no third-party patents, licenses or franchises material to our business. Our intellectual property consists primarily of trade secrets, know-how and trademarks, including products with trademarked names such as “Texas Premium White” proppant. We rely on trade secrets, rather than patents, to protect our proprietary processes, methods, documentation and other technologies, as well as certain other business information. Patent protection requires a costly and uncertain federal registration process that would place our confidential information in the public domain. As a result, we utilize trade secrets to protect the formulations and processes we use to manufacture our products and to safeguard our proprietary formulations and methods. We believe we can effectively protect our trade secrets indefinitely through the use of confidentiality agreements and other security measures.

Employees

As of June 30, 2018, we employed a workforce of 697 employees. Our employees are not currently represented by labor unions. We believe that we maintain good relations with our workers.

124

Seasonality

Our business is affected to some extent by seasonal fluctuations in weather that impact our production levels and our customers’ business needs. For example, the first and fourth quarters can experience lower sales, and sometimes lower production levels, largely from adverse winter weather that adversely affects our logistical and production capabilities as well as generally lower demand for proppant due to a slowdown in E&P operations as a result of inclement weather. For a discussion of the impact of weather on our operations, please read “Risk Factors—Seasonal and severe weather conditions could have a material adverse impact on our business.”

Insurance

We believe that our insurance coverage is customary for the industry in which we operate and adequate for our business. As is customary in the proppant industry, we review our safety equipment and procedures and carry insurance against most, but not all, risks of our business. Losses and liabilities not covered by insurance would increase our costs. To address the hazards inherent in our business, we maintain insurance coverage that includes physical damage coverage, third-party general liability insurance, employer’s liability, business interruption, environmental and pollution and other coverage, although coverage for environmental and pollution-related losses is subject to significant limitations.

Legal Proceedings

We are subject to various legal proceedings, claims, and governmental inspections, audits or investigations arising out of our business which cover matters such as general commercial, governmental regulations, product liability, environmental, intellectual property, employment and other actions that are incidental to our business. Although the outcomes of these claims cannot be predicted with certainty, in the opinion of management, the ultimate resolution of these matters will not have a material adverse effect on our financial position or results of operations.

Regulation and Legislation

Mining and Workplace Safety

Federal Regulation

The MSHA is the primary regulatory agency with jurisdiction over the industrial silica industry. Accordingly, MSHA regulates quarries, surface mines, underground mines, and the industrial mineral processing facilities associated with quarries and mines under the Federal Mine Safety and Health Act of 1977. As part of MSHA’s oversight, it promulgates safety and health standards, and its representatives must perform at least two unannounced inspections annually for each surface mining facility in its jurisdiction. To date, these inspections have not resulted in any citations for material violations of MSHA standards.

We also are subject to the requirements of the OSHA and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA Hazard Communication Standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities, and the public. OSHA regulates the customers and users of industrial silica and provides detailed regulations requiring employers to protect employees from overexposure to silica-bearing dust through the enforcement of permissible exposure limits and the OSHA Hazard Communication Standard.

In March 2016, the OSHA issued a comprehensive final rule revising the PEL for crystalline silica, reducing the PEL applicable to general industry to 0.050 mg/m3 averaged over an eight-hour shift. The final rule became effective in June 2016 with compliance required by September 2017 for the construction industry and June 2018

125

for general industry and maritime. For hydraulic operations in the oil and gas industry, compliance became required with all obligations of the standard in June 2018, except for engineering controls, which have a compliance date of June 2021. Several industry groups have filed suit in the United States Court of Appeals for the D.C. Circuit to halt implementation of the rule. If the workplace exposure limit applicable to our sites is lowered substantially, we may be required to incur certain capital expenditures for equipment to reduce such exposure.

Health and Safety Programs

We adhere to a strict occupational health program aimed at controlling employee exposure to silica dust, which includes a silicosis prevention program comprised of routine dust sampling, a respiratory protection program, medical baseline tests and ongoing surveillance, training and other components. Our safety program is designed to ensure compliance with the MSHA and OSHA regulations discussed immediately above. For both health and safety issues, extensive training is provided to employees. We have safety meetings at our facilities with salaried and hourly employees that are involved in establishing, implementing and improving safety standards. We perform annual internal health and safety audits and conduct annual crisis management drills to test our abilities to respond to various situations. Health and safety programs are administered by our corporate health and safety department with the assistance of plant environmental, health and safety coordinators.

Environmental Matters

We and the industrial silica industry are subject to extensive governmental regulation on, among other things, matters such as permitting and licensing requirements, plant and wildlife protection, hazardous materials, air and water emissions and environmental contamination and reclamation. A variety of state, local and federal agencies enforce this regulation.

Federal Regulation

Water Permitting

At the federal level, we are required to obtain permits under the Clean Water Act from the EPA or the relevant state environmental agency in states where the permit program has been delegated to the state, including the Texas Commission on Environmental Quality, for discharges of pollutants into waters of the United States, including discharges of wastewater and storm water runoff. The EPA and Army Corps of Engineers issued a final rule in 2015 attempting to clarify the federal jurisdictional reach over waters of the United States (sometimes referred to as the waters-of-the-United-States, or “WOTUS,” rule), but in response to petitions filed directly in federal courts of appeals, the rule was stayed nationwide by the United States Court of Appeals for the Sixth Circuit. In January 2018, the U.S. Supreme Court held that challenges to the WOTUS rule must be filed first in federal district court, and instructed the Court of Appeals to dismiss the petitions that had been filed with it. In June 2017, the EPA and Army Corps of Engineers formally proposed to rescind the WOTUS rule and to develop a new, revised WOTUS rule, and in January 2018, after the Supreme Court’s decision, issued a final rule delaying the applicability of the WOTUS rule by two years. The final rule delaying applicability has been challenged in federal district court by attorneys general from a number of states and by several environmental groups. At this time, it is unclear what impact these actions will have on the implementation of the WOTUS rule. If upheld and implemented in its current form, it could significantly expand federal control of certain land and water across the United States, resulting in additional permitting and regulatory requirements that could apply to us and/or our customers in ways that could adversely affect us. Failure to obtain these required permits or to comply with their terms could subject us to administrative, civil and criminal penalties as well as injunctive relief.

Air Emissions

The CAA and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and other requirements. These regulatory programs may require us to install expensive

126

emissions abatement equipment, modify operational practices, and obtain permits for existing or new operations. Before commencing construction on a new or modified source of air emissions above regulatory thresholds, such laws may require us to reduce emissions at existing facilities. As a result, we may be required to incur increased capital and operating costs to comply with these regulations. We could be subject to administrative, civil and criminal penalties as well as injunctive relief for noncompliance with air permits or other requirements of the CAA and comparable state laws and regulations.

Climate Change

In recent years, the U.S. Congress has considered legislation to reduce emissions of GHGs. It presently appears unlikely that comprehensive climate legislation will be passed by either house of Congress in the near future, although energy legislation and other regulatory initiatives may be proposed that may be relevant to GHG emissions issues. While it is not currently possible to predict how any proposed or future GHG legislation or regulation by Congress, the EPA, the states, or multi-state regions will impact our business, any legislation or regulation of GHG emissions that may be imposed in areas in which we conduct business could result in increased compliance costs or additional operating restrictions or reduced demand for our products and services.

Site Remediation

As part of our operations, we utilize or store petroleum products and other substances such as diesel fuel, lubricating oils and hydraulic fluid. We are subject to regulatory programs pertaining to the storage, use, transportation and disposal of these substances. Spills or releases may occur in the course of our operations, and we could incur substantial costs and liabilities as a result of such spills or releases, including claims for damage or injury to property and persons. CERCLA and comparable state laws may impose joint and several liability, without regard to fault or legality of conduct, on classes of persons who are considered to be responsible for the release of hazardous substances into the environment. These persons generally include the owner or operator of the site where the release occurred and anyone who disposed of or arranged for disposal, including offsite disposal, of a hazardous substance generated or released at the site. Under CERCLA, such persons may be subject to liability for the costs of cleaning up the hazardous substances, for damages to natural resources, and for the costs of certain health studies. In addition, neighboring landowners and other third parties may file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment.

Hazardous and Non-Hazardous Waste

In addition, the Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. In the course of our operations, we generate industrial solid wastes that may be regulated as hazardous wastes, we generate minor amounts of industrial solid wastes that may be regulated as hazardous wastes, including oil, grease, antifreeze, batteries and tires. All of these items are collected and disposed of by certified and/or registered waste handlers.

Hydraulic Fracturing

Although we do not directly engage in hydraulic fracturing activities, we supply sand-based proppants to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing involves the injection of water, proppants (which include, but are not limited to, sand), and chemicals, under pressure, into the formation to fracture the surrounding rock and stimulate production. The hydraulic fracturing process is typically regulated by state or local governmental authorities. However, the practice of hydraulic fracturing has become controversial in some areas and is undergoing increased scrutiny. Several federal agencies and regulatory authorities are investigating the potential environmental impacts of hydraulic fracturing and whether additional regulation may be necessary. While the EPA administrator appointed by President Trump and the Trump administration more generally have indicated their interest in scaling back or rescinding regulations that inhibit

127

the development of the U.S. oil and gas industry, it is difficult to predict the extent to which such policies will be implemented or the outcome of any litigation challenging such implementation. The U.S. Congress has from time to time considered, but not adopted, legislation to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the process.

In addition, various state, local, and foreign governments have implemented, or are considering, increased regulatory oversight of hydraulic fracturing through additional permitting requirements, operational restrictions, disclosure requirements, and temporary or permanent bans on hydraulic fracturing in certain areas such as environmentally sensitive watersheds. Numerous states, including Texas and Oklahoma, have imposed disclosure requirements on hydraulic fracturing well owners and operators. Some local governments have adopted and others may seek to adopt ordinances prohibiting or regulating the time, place, and manner of drilling activities in general or hydraulic fracturing activities within their jurisdictions. Concerns have been raised that hydraulic fracturing may also contribute to seismic activity. Increased regulation and attention given to induced seismicity could lead to greater opposition to, and litigation concerning, oil and natural gas activities utilizing hydraulic fracturing or injection wells for waste disposal.

The adoption of new laws, regulations, or enforcement policies at the federal, state or local levels imposing reporting obligations on, or otherwise limiting or delaying, the hydraulic fracturing process could make it more difficult to complete oil and natural gas wells, increase our customers’ costs of compliance and doing business, and otherwise adversely affect the hydraulic fracturing services they perform, which could negatively impact demand for our sand-based proppants.

Environmental Reviews

Our operations may also be subject to broad environmental review under the National Environmental Policy Act (“NEPA”). NEPA requires federal agencies to evaluate the environmental impact of all “major federal actions,” which could include a major development project, such as a mining operation, significantly affecting the quality of the human environment. Therefore, our projects may require review and evaluation under NEPA. As part of this evaluation, the federal agency considers a broad array of environmental impacts, including, among other things, impacts on air quality, water quality, wildlife (including threatened and endangered species), historic and archaeological resources, geology, socioeconomics and aesthetics. NEPA also requires the consideration of alternatives to the project. The NEPA review process, especially the preparation of a full environmental impact statement, can be time consuming and expensive. Though NEPA requires only that an environmental evaluation be conducted and does not mandate a particular result, a federal agency could decide to deny a permit or impose certain conditions on its approval, based on its environmental review under NEPA, or a third party could challenge the adequacy of a NEPA review and thereby delay the issuance of a federal permit or approval.

Endangered Species

Federal agencies granting permits for our operations also must consider impacts to endangered and threatened species and their habitat under the Endangered Species Act. Similar protections are offered to certain migratory birds under the Migratory Bird Treaty Act. We also must comply with and are subject to liability under the Endangered Species Act, which prohibits and imposes stringent penalties for harming endangered or threatened species and their habitat. The dunes sagebrush lizard, which is found only in the active and semi- stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas (including areas where our West Texas mine is located), was a candidate species for listing under the Endangered Species Act by the

U.S. Fish and Wildlife Service (“USFWS”) for many years. However, in June 2012, the USFWS declined to list the species as endangered under the Endangered Species Act in part due to oil and gas operators and private landowners in the Permian Basin in New Mexico participating in a CCAA, whereby participants in the CCAA voluntarily agreed to implement mitigation measures, such as habitat avoidance or time and manner operating restrictions so as not to adversely impact the dunes sagebrush lizard habitat. The Texas Comptroller’s Office also

128

created the Texas Conservation Plan in 2012 to minimize disturbances to the dune sagebrush lizard’s habitat in the State of Texas. In August 2017, following collaboration with the Texas Comptroller, we became the first mine to receive a Certificate of Inclusion into the Texas Conservation Plan and thereby agreed to efforts intended to reduce and/or eliminate threats to the dunes sagebrush lizard and contribute to the conservation of its habitat. Recently, however, partly as a result of increased frac sand mining by parties who are not currently parties to the CCAA or the Texas Conservation Plan, the Texas Comptroller’s Office, USFWS, and environmental groups have voiced concerns about the potential destruction of the dunes sagebrush lizard habitat and harm to the species. In addition, in February 2018, the Texas Comptroller’s office indicated that it intends to rewrite the Texas Conservation Plan to address, among other matters, increased sand mining in the Permian Basin. In May 2018, the Center for Biological Diversity and Defenders of Wildlife petitioned the USFWS to protect the dunes sagebrush lizard under the Endangered Species Act. The petition also asked the USFWS to designate critical habitat for the species, stating that thousands of acres of its habitat are at risk from oil and gas drilling and sand-mining projects in Texas and New Mexico. A threshold determination is required to the maximum extent practicable within 90 days after the petition is received, and depending on that threshold determination the law may require further responses regarding the petition within twelve months after receiving it. Currently, the Texas Comptroller’s Office is working with the USFWS to replace the Texas Conservation Plan with a new CCAA that includes an updated habitat map and expressly covers frac sand mining. Based on information currently available to us, we anticipate that we will participate in the new CCAA once it is approved by the USFWS and takes effect. While we believe based on current information that such participation will help safeguard our facilities against adverse effects of not participating, if the lizard is listed under the Endangered Species Act as an endangered or threatened species or if the new CCAA differs from what we anticipate, additional restrictions relating to the dunes sagebrush lizard could adversely affect us because of impacts on our operations and/or impacts on the operations of our customers in any area that is designated as the lizard’s habitat.

State and Local Regulation

We are also subject to a variety of state and local environmental review and permitting requirements, most notably air emissions standards regulated and monitored by the Texas Commission on Environmental Quality. Our operations may require state law-based permits in addition to federal permits, requiring state agencies to consider a range of issues, many the same as federal agencies, including, among other things, a project’s impact on wildlife and their habitats, historic and archaeological sites, aesthetics, water conservation and availability, agricultural operations and scenic areas. Some states also have specific permitting and review processes for commercial silica mining operations, and states may impose different or additional monitoring or mitigation requirements than federal agencies.The development of new sites and our existing operations also are subject to a variety of local environmental and regulatory requirements, including land use, zoning, building and transportation requirements.

As demand for frac sand in the oil and natural gas industry has driven a significant increase in current and expected future production of industrial silica, some local communities have expressed concern regarding silica sand mining operations. These concerns have generally included exposure to ambient silica sand dust, truck traffic, water usage and blasting. In response, certain state and local communities have developed or are in the process of developing regulations or zoning restrictions intended to minimize dust from getting airborne, control the flow of truck traffic, significantly curtail the amount of practicable area for mining activities, provide compensation to local residents for potential impacts of mining activities and, in some cases, ban issuance of new permits for mining activities. To date, we have not experienced any material impact or disruption to our existing mining operations or planned capacity expansions as a result of these types of concerns.

Planned expansion of our mining and production capacity in new communities could be more significantly impacted by increased regulatory activity. Difficulty or delays in obtaining or inability to obtain new mining permits or increased costs of compliance with future state and local regulatory requirements could have a material negative impact on our ability to grow our business.

129

Motor Carrier Regulation

Our trucking services are regulated by the DOT, the Federal Motor Carrier Safety Administration (“FMCSA”) and by various state agencies. These regulatory authorities have broad powers, generally governing matters such as authority to engage in motor carrier operations, as well as motor carrier registration, driver hours of service, safety and fitness of transportation equipment and drivers, transportation of hazardous materials and periodic financial reporting. In addition, each driver is required to have a commercial driver’s license and may be subject to mandatory drug and alcohol testing. We may be audited periodically by these regulatory authorities to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations.

The transportation industry is subject to possible other regulatory and legislative changes (such as the possibility of more stringent environmental, climate change, security and/or occupational safety and health regulations, limits on vehicle weight and size and a mandate to implement electronic logging devices) that may affect the economics of our trucking services by requiring changes in operating practices or by changing the demand for motor carrier services or the cost of providing truckload or other transportation or logistics services.

Costs of Compliance

We may incur significant costs and liabilities as a result of environmental, health and safety requirements applicable to our activities. Failure to comply with environmental laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of investigatory, cleanup and site restoration costs and liens, the denial or revocation of permits or other authorizations and the issuance of injunctions to limit or cease operations. Compliance with these laws and regulations may also increase the cost of the development, construction and operation of our projects and may prevent or delay the commencement or continuance of a given project. In addition, claims for damages to persons or property may result from environmental and other impacts of our activities.

The process for performing environmental impact studies and reviews for federal, state and local permits for our operations involves a significant investment of time and monetary resources. We cannot control the permit approval process. We cannot predict whether all permits required for a given project will be granted or whether such permits will be the subject of significant opposition. The denial of a permit essential to a project or the imposition of conditions with which it is not practicable or feasible to comply could impair or prevent our ability to develop a project. Significant opposition and delay in the environmental review and permitting process also could impair or delay our ability to develop a project. Additionally, the passage of more stringent environmental laws could impair our ability to develop new operations and have an adverse effect on our financial condition and results of operations.

130

MANAGEMENT

Directors and Executive Officers

The following table sets forth the names, ages and positions of our directors and executive officers as of the date of this prospectus. Prior to completing this offering, we expect to appoint additional independent directors to our board of directors.


Name	Age	Position
Gary B. Humphreys	57	Chief Executive Officer and Co-Chairman of the Board of Directors

Martin W. Robertson	49	President, Chief Operating Officer and Co-Chairman of the Board of Directors

Kristin W. Smith	34	Chief Financial Officer

Edward T. Bialas	38	Director

Neil A. Wizel	41	Director

Gary B. Humphreys is our Chief Executive Officer and Co-Chairman of our Board of Directors. He has served as our Chief Executive Officer and a Managing Member or Director since the predecessor’s inception in 2010. Mr. Humphreys has over 25 years of experience in the transportation and logistics sector. During that time, he has founded four companies in the energy and tire recycling industries in addition to holding various senior management positions and board roles. Mr. Humphreys received a Bachelor of Arts in Agricultural Economics from Oklahoma State University.

Martin W. Robertson is our President, Chief Operating Officer and Co-Chairman of our Board of Directors. He has served as our President and a Managing Member or Director since the predecessor’s inception in 2010 and as our Chief Operating Officer since November 2017. Mr. Robertson has over 22 years of experience in the transportation and logistics sector and over 24 years of management experience. Prior to his role as a founder of Vista, MAALT and Bulk, Mr. Robertson was employed by Penske Truck Leasing from 1996 to 2004, where he held a variety of key leadership roles in operations, sales and marketing, including Vice President of Sales.

Kristin W. Smith has served as our Chief Financial Officer since May 2017, and prior to that served as our Chief Accounting Officer. Before joining us in August 2016, Ms. Smith spent over 10 years in public accounting at Whitley Penn where she served a variety of clients within the energy and mining industries. Ms. Smith is a Certified Public Accountant in the State of Texas and earned a Bachelor of Business Administration in Accounting from The University of Texas at Austin.

Edward T. Bialas joined our board in March 2017. Mr. Bialas has served as a Managing Director of First Reserve since 2017. His responsibilities at First Reserve include investment origination, execution and exit, focusing on the equipment, manufacturing, and services sectors, and he is also responsible for First Reserve’s fundraising and investor relations activities. Mr. Bialas joined First Reserve in 2003 as an Associate and returned to First Reserve as a Vice President in 2007 after earning his M.B.A. Prior to joining First Reserve, Mr. Bialas was an Analyst at UBS Investment Bank in the Financial Sponsors Group. Mr. Bialas currently serves on the board of Diamond S Shipping Group. Mr. Bialas holds an A.B. from Dartmouth College and an M.B.A. from Harvard Business School.

Neil A. Wizel joined our board in March 2017. Mr. Wizel has served as Managing Director of First Reserve since 2013. His responsibilities at First Reserve include investment origination, execution and exit, focusing on the energy value chain, including reserves; equipment, manufacturing, and services; and downstream and hydrocarbon processing assets. Mr. Wizel joined First Reserve in 2007. Prior to joining First Reserve, Mr. Wizel was a member of the Investment Staff at Greenbriar Equity Group, a transportation-focused private equity firm. Prior to Greenbriar, he was a Financial Analyst in the Leveraged Finance/Financial Sponsor Group at Credit

131

Suisse First Boston. Mr. Wizel currently serves on the boards of Expanse Energy Solutions, Hoover Ferguson Group, Tri-Point LLC, TPC Group and Deep Gulf Energy, and formerly served as a director of PBF Energy, Inc. Mr. Wizel holds a B.A. from Emory University.

Composition of the Board of Directors After this Offering

Our business and affairs are managed under the direction of our board of directors. In connection with this offering, we will amend and restate our certificate of incorporation to provide for a classified board of directors, with one director in Class I (expected to be ), two directors in Class II (expected to be Edward T. Bialas and Neil A. Wizel) and two directors in Class III (expected to be Gary B. Humphreys and Martin W. Robertson). See “Description of Capital Stock—Classified Board of Directors.” In addition, we intend to enter into a stockholders agreement with our Principal Stockholders in connection with this offering. This agreement will grant our Principal Stockholders the right to designate nominees to our board of directors subject to the maintenance of certain ownership requirements in us. See “Certain Relationships and Related Person Transactions—Stockholders Agreement.”

Background and Experience of Directors

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, the members of our board of directors considered the following important characteristics, among others:

•

Mr. Humphreys—our board of directors considered Mr. Humphreys’ extensive familiarity with our business as one of its founders, serving in roles as a Managing Member or Director and Chief Executive Officer from inception, and his thorough knowledge of our industry, serving in various senior and executive capabilities.

•

Mr. Robertson—our board of directors considered Mr. Robertson’s extensive familiarity with our business as one of its founders, serving in roles as a Managing Member or Director and President from inception and as our current Chief Operating Officer, and his thorough knowledge of our industry, serving in various senior and executive capabilities.

•

Mr. Bialas—our board of directors considered Mr. Bialas’ affiliation with First Reserve, his knowledge of our industry, experience with energy investment origination, execution and exit as Managing Director of First Reserve, and experience working with companies backed by private equity sponsors.

•

Mr. Wizel—our board of directors considered Mr. Wizel’s affiliation with First Reserve, his financial expertise, industry knowledge and investment experience across the entire energy value chain as Managing Director of First Reserve.

Controlled Company Exception

After the completion of this offering, our Principal Stockholders will continue to control a majority of the combined voting power of all classes of our stock entitled to vote generally in the election of directors. As a result, we will be a “controlled company” as set forth in Rule 5615 of the NASDAQ listing rules. Under these corporate governance standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards, including the requirements (1) that a majority of our board of directors consist of independent directors, (2) that our board of directors have a compensation committee that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities

132

and (3) that our director nominations be made, or recommended to our full board of directors, by our independent directors or by a nominations committee that is comprised entirely of independent directors and that we adopt a written charter or board resolution addressing the nominations process. For at least some period following this offering, we may utilize these exemptions. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of these corporate governance requirements. In the event that we cease to be a “controlled company” and our shares continue to be listed on NASDAQ, we will be required to comply with these provisions within the applicable transition periods.

Board Committees

We anticipate that, prior to the completion of this offering, our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Our board of directors may also establish from time to time any other committees that it deems necessary or desirable. Members serve on these committees until their resignation or until otherwise determined by our board of directors.

Audit Committee

is currently the sole member of the audit committee and serves as chair. The purpose of the audit committee is to prepare the audit committee report required by the SEC to be included in our proxy statement and to assist our board of directors in overseeing (1) accounting, financial reporting and disclosure processes and the adequacy of systems of disclosure and internal control established by management, (2) the quality and integrity of our financial statements, (3) our independent registered public accounting firm’s qualifications and independence, (4) the performance of our independent registered public accounting firm and (5) our overall risk management profile.

Compensation Committee

Our compensation committee consists of and , with serving as chair. The purpose of the compensation committee is to assist our board of directors in discharging its responsibilities relating to (1) setting our compensation program and compensation of our executive officers and directors, (2) monitoring our incentive-compensation and equity-based compensation plans and (3) preparing the compensation committee report required to be included in our proxy statement under the rules and regulations of the SEC.

Nominating and Corporate Governance Committee

Upon completion of this offering, we expect our nominating and corporate governance committee will consist of and , with serving as chair. The nominating and corporate governance committee is responsible for, among other things:

•

assisting our board of directors in identifying prospective director nominees and recommending nominees to the board of directors;

•

reviewing developments in corporate governance practices and developing and recommending a set of corporate governance guidelines; and

•

recommending members for each committee of our board of directors.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or has served during the last completed fiscal year as a member of the board of directors or compensation committee (or other committee performing equivalent

133

functions) of any entity that has one or more executive officers serving on our board of directors or compensation committee. We are party to certain transactions with affiliates of our Principal Stockholders described in “Certain Relationships and Related Person Transactions.”

Code of Ethics

We will adopt a new Code of Business Conduct and Ethics that applies to all of our officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, which will be posted on our website. Our Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website. The information contained on, or accessible from, our website is not part of this prospectus by reference or otherwise.

Executive and Director Compensation

Summary Compensation Table

The following table sets forth all compensation paid to or accrued for our principal executive officer and the two other most highly compensated persons serving as our executive officers in the capacities indicated as of December 31, 2017 for services rendered for the years ended December 31, 2017 and December 31, 2016. We refer to these executives as our “NEOs.”


Name and Principal Position	Year		Salary ($)(1)		Bonus ($)(2)		Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)
Gary B. Humphreys		2017		1,500,004						24,748		1,524,752
Chief Executive Officer		2016		1,350,000		—		—		71,011		1,421,011

Martin W. Robertson		2017		1,500,004		—		—		40,760		1,540,764
President and Chief Operating Officer		2016		1,500,000		—		—		61,868		1,561,868

Kristin W. Smith (5)		2017		207,692		67,500		9,050		25,821		310,063
Chief Financial Officer

(1)

For Messrs. Humphreys and Robertson, (i) for fiscal 2017, represents $1,500,004 each paid pursuant to the 2017 management services agreements, and for fiscal 2016, represents $1,000,000 each, in fees paid by Lonestar, and (ii) for fiscal 2016, represents $350,000 and $500,000, respectively, in consulting fees paid by MAALT and Bulk. See “—Narrative to Summary Compensation Table—2017 Management Services Agreements”, and “—Management Fees and Consulting Fees” below for additional details on amounts shown. For Ms. Smith, represents salary earned for 2017.

(2)	Represents the portion of Ms. Smith’s 2017 bonus earned under the 2017 AIP (as defined below) that was guaranteed pursuant to her employment agreement. See “—Narrative to Summary Compensation Table—Annual Cash Bonus” below.

(3)

Represents $5,000 received as annual audit bonus pursuant to Ms. Smith’s employment agreement plus the portion of Ms. Smith’s 2017 bonus earned under the 2017 AIP that was not guaranteed pursuant to her employment agreement. See “—Narrative to Summary Compensation Table—Annual Cash Bonus” and “—Employment Agreement” below.

(4)	Represents perquisites and other personal benefits provided to our named executive officers, including car allowance, gas charges and car insurance premiums, life insurance premiums and medical, dental and vision premiums.

(5)	Ms. Smith was promoted to Chief Financial Officer in May 2017. During 2017, her salary was increased from $175,000 to $225,000.

134

Narrative to Summary Compensation Table

2017 Management Services Agreements

We have entered into a management services agreement with each of Messrs. Humphreys and Robertson, and an entity ultimately controlled by the respective executive as the “manager” (M&J Partnership, Ltd. for Mr. Robertson and GBH Properties LLC for Mr. Humphreys). Such agreements are dated as of May 1, 2017 and set forth the terms and conditions of such executive’s service as, respectively, our Chief Executive Officer and as our President. These agreements superseded the terms of each executive’s respective 2011 employment agreement and 2014 management agreement described below. The term of each executive’s service under their respective agreement commenced on May 1, 2017 and runs until terminated by us or by such executive, through the “manager” entity controlled by him, in accordance with the terms and conditions of the agreement, which provides that any termination by us requires the approval of First Reserve so long as First Reserve holds at least 50% of the units in Vista OpCo that it initially held.

Under the terms of the management services agreements, while providing services thereunder, each executive’s “manager” entity is entitled to receive an annual base fee of $1,500,000 with respect to service provided by the executive, subject to increase but not decrease, paid in equal monthly installments in advance; provided that any increase requires the approval of First Reserve so long as First Reserve holds at least 50% of the units in Vista OpCo that it initially held. In addition, while providing services under the agreement, the executive will be provided with all benefits generally provided to senior officers of the Company, provided that if such benefits can only be provided to employees or if the executive desires to procure his own benefits, the “manager” entity is entitled to payment of the minimum amount required for the executive to obtain the same or substantially similar benefits. In addition, each manager entity may be entitled to additional payments and benefits upon certain terminations of service. See “—Termination and Change in Control Provisions” below.

2016 Management Fees and Consulting Fees

In October 2011, each of Messrs. Humphreys and Robertson entered into an employment agreement, setting forth elements of the executive’s terms of employment and compensation. Compensation for fiscal 2016, however, was paid to those executives as described below. As described above, in May 2017, these employment agreements were superseded by management services agreements, also described above.

During fiscal 2016, Lonestar was a party to a management agreement with the entity serving as its general partner (and ultimately controlled by Messrs. Humphreys and Robertson), pursuant to which such general partner entity served as a consultant to Lonestar and agreed to provide certain management services to Lonestar in exchange for compensation of up to $1.0 million annually. The term of this agreement commenced on September 18, 2014, and initially ran for four years. For fiscal 2016, the Managers of LS Holdings (the “Board of Managers”) determined to pay $2.0 million for such management services, split evenly among Messrs. Humphreys and Robertson. In May 2017, the 2014 management agreement was superseded by the 2017 management services agreements described above.

In addition, Future New Deal, Ltd. and M&J Partnership, Ltd., entities ultimately controlled by Messrs. Humphreys and Robertson, respectively, received $350,000 and $500,000, respectively, in consulting fees paid by MAALT and Bulk with respect to services provided as partners of MAALT and members of Bulk. This arrangement was not set forth in a formal document.

Employment Agreement – Kristin W. Smith

We entered into an employment agreement with Ms. Smith, effective as of January 1, 2018, which sets forth the terms and conditions of her service as our Chief Financial Officer. The term of her employment agreement commenced on January 1, 2018 and, unless earlier terminated pursuant to the agreement, will continue through January 1, 2021 and will thereafter be automatically renewed for successive one year terms unless either party gives written notice to the other at least thirty (30) days prior to the end of the applicable term.

135

Under the terms of Ms. Smith’s employment agreement, she is entitled to receive an initial annual base salary of $225,000. If Ms. Smith remains employed by us and complies with, and adequately performs under, her employment agreement, as reasonably determined by us (i) through May 1, 2018, her annual base salary increases to $247,500 and (ii) through May 1, 2019, her annual base salary increases to $272,250. In addition to her annual base salary, Ms. Smith’s employment agreement also provides that, for 2017, Ms. Smith is eligible to receive an annual bonus under the 2017 AIP that is guaranteed at 30% of her annual base salary as in effect on December 31, 2017. Ms. Smith is eligible to receive (i) a bonus in the amount of $100,000 for efforts related to our initial public offering, of which $50,000 was paid on the execution of Ms. Smith’s employment agreement and $50,000 will be paid within 60 days after successful completion of the initial public offering, (ii) a bonus in the amount of $87,500 for efforts related to commissioning certain mines and transload facilities, as described in Ms. Smith’s employment agreement, and (iii) an annual audit bonus in the amount of $5,000 if our annual audit has no material weaknesses as determined by our certified public accountant. Ms. Smith is entitled to participate in any of the benefit programs, including our long-term incentive program (once established), to the same extent as all other similarly-situated officers and directors. Ms. Smith may also be entitled to additional payments and benefits upon certain terminations of employment. See “—Termination and Change in Control Provisions.”

Under the terms of her employment agreement, Ms. Smith is subject to (i) a restrictive covenant not to disclose confidential information while employed and at all times thereafter and (ii) restrictive covenants not to compete with us while employed and for one year after Ms. Smith’s termination of employment for any reason and not to solicit our employees or customers for one year after Ms. Smith’s termination of employment for any reason.

Annual Cash Bonus

Our annual cash incentive compensation plan for the fiscal year ended December 31, 2017 (the “2017 AIP”), which is not set forth in a formal plan document, was intended to compensate and

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

Vista Proppants & Logistics Inc. S-1/A