WISCONSIN FREIGHT RAIL DAY 2013 OCTOBER 9 TH MADISON, WI Capitalizing on a “Once in a Lifetime Opportunity” Richard J. Shearer President & CEO Superior.

WISCONSIN FREIGHT RAIL DAY 2013OCTOBER 9TH MADISON, WI

Capitalizing on a

“Once in a Lifetime Opportunity”

Richard J. ShearerPresident & CEOSuperior Silica Sands

THE EVOLUTION OF WELL STIMULATION

HORIZONTAL VERSUS VERTICAL DRILLING

• Hydraulic fracturing and horizontal drilling has driven “Hockey stick” propant demand• 85% of proppants are natural sand

U.S. BECOMES ENERGY SELF SUFFICIENT

• 89% of needs currently being met

• Global shift in energy “power players”

• Manufacturing returns to North America

• Lower energy costs

North America is an environmentally enhanced continent

• Conversion to natural gas is reducing our carbon emissions 45% per energy unit versus coal

LOCATION OF BEST FRAC SAND The Cambrian quartz sandstone deposits (marked in red on the attached map)

found in Wisconsin are a scarce resource

The Cambrian deposits in Wisconsin are unique in that the sand: Is of unusually high quality

Can be mined in a manner that is cost efficient and environmentally friendly

WHERE THE BEST FRAC SAND IS (RED)

Source: Where-the-best-sand-is – Brown Presentation

St. Peter’s

Jordan

Wonewoc

To date, no high quality frac sand deposits found on the globe better than Wisconsin and Eastern Minnesota

INDUSTRIAL SAND GEOLOGY

NORTH AMERICAN SHALE DEVELOPMENT

THE WISCONSIN PROPPANT MARKET HAS CHANGED

Barriers to entry continue to increase• Limited high quality frac sand reserves (Wisconsin)

• Fewer deposits near rail service

• NIMBY

• Permits – regulations – ordinances and moratoriums

Industry Consolidation• The leading frac sand suppliers get stronger

Logistics “arms race” continues• We are actually in the logistics business as much as sand

THE WISCONSIN PROPPANT MARKET HAS CHANGED

Frac sand supply growth slows as demand catches up • 31MM TPY demand in 2013; current capacity = 52MM TPY

• Projections show proppant supply demand in – balance by 2018

• Demand will escalate if natural gas prices get above $5/ MMBTU

High quality natural frac sand from USA could be in global demand

• Current geology suggests that USA (Wisconsin) has superior frac sand

• Unconventional drilling is lagging the USA but beginning to develop

• Argentina, China, Mexico, Australia, South Africa, and Eastern Europe all show strong proppant demand potential

THE SUCCESSFUL WISCONSIN FRAC SAND BUSINESS MODEL

• Must have high quality sand deposits

• Must have various efficient shipping options (rail, truck, barge, etc)

• Must have an infrastructure and organizational “culture” in place to exceed customer expectations

• Provide full service to the well-head: servicing the “last mile”

• Must be as expert in logistics as in industrial sand

• Must be flexible and nimble

• Must form strategic partnerships; customers, railroads, etc

US PROPPANT DEMAND: ANNUAL GROWTH *

* The Freedonia Group, Inc

2006 – 2011 2011 – 2016

Total Proppants Demand

28.2% 10.5%

Sand Proppants 32.8% 11.2%

Ceramic Proppants 21.9% 9.1%

Other Proppants 34.1% 11.3%

FRAC SAND ECONOMIC IMPACT IN WISCONSINSSS IS INVESTED IN WISCONSIN

Two “best in class” frac sand operations

• New Auburn, WI: Progressive Rail (WN)/ Union Pacific

• Clinton, WI: CN Railroad

SSS Wisconsin frac sand capacity = 3.8MM TPY

$100MM capital invested in both operations

Post opening capital improvements = $2MM

• Onsite storage track for 800 railcars ($6.5MM)

215 employees in the Badger state; all local hires

SSS annual operating budget of $70MM

• Local economic impact = $420MM/ year

SSS PARTNERED RAIL LINES

Canadian National

Union Pacific

SSS NEW AUBURN, WI

1.4MM TPY CAPACITYUNIT TRAIN CAPABLE

SSS CLINTON, WI

2.4MM TPY CAPACITYUNIT TRAIN CAPABLE

WHAT IT ALL MEANS TO YOU …. THE RAILROADS

Shipping more sand to numerous new destinations

More railcars in the system

Unit train shipments more common

Managing bottlenecks and turnaround times becomes more crucial

With freight prices not dropping, service is king

Storage and Transload sites are over populated in some locales

Railroad Partnerships

CONCLUSIONS

The Frac Sand Boom is a “Once in a Lifetime” event.

Wisconsin is the proppant Global Epicenter

Efficiency and cost Effectiveness in shipping this important proppant is critical

Rail is a major focal point to complete market success

Any successful frac sand producer is actually in the Logistics Business!