S-1/A

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

S-1/A 1 d292890ds1a.htm S-1/A S-1/A

As filed with the U.S. Securities and Exchange Commission on February 28, 2023

Registration No. 333-269488

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 4

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Atlas Energy Solutions Inc.

(Exact name of registrant as specified in its charter)


Delaware	1400	88-0523830
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

5918 W. Courtyard Drive, Suite 500

Austin, Texas 78730

(512) 220-1200

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

John Turner

President and Chief Financial Officer

5918 W. Courtyard Drive, Suite 500

Austin, Texas 78730

(512) 220-1200

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

Copies to:

Douglas E. McWilliams

Thomas G. Zentner

Vinson & Elkins L.L.P.

200 West 6th Street, Suite 2500

Austin, Texas 78701

(512) 542-8400

David J. Miller

Monica E. White

Latham & Watkins LLP

301 Congress Avenue, Suite 900

Austin, Texas 78701

(737) 910-7300

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

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, 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, as amended, or until this registration statement shall become effective on such date as the U.S. 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 the securities described herein until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell such securities, and it is not soliciting an offer to buy such securities in any state or jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 28, 2023

18,000,000 Shares

Atlas Energy Solutions Inc.

Class A Common Stock

This is the initial public offering of our Class A common stock. We are offering 18,000,000 shares of our Class A common stock.

Prior to this offering, there has been no public market for our Class A common stock. It is currently anticipated that the initial public offering price for our Class A common stock will be between $20.00 and $23.00 per share. We have been approved to list our Class A common stock on the New York Stock Exchange (the “NYSE”) under the symbol “AESI.”

We are an “emerging growth company” as the term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, are eligible for reduced reporting requirements. Please see the section titled “Risk Factors” and “Summary—Emerging Growth Company Status.”

Because the Principal Stockholders (as defined herein) will hold approximately 54.6% of the voting power of our Class A common stock and Class B common stock on a combined basis upon the closing of this offering, we will be a “controlled company” under the corporate governance rules of the NYSE. See “Management—Status as a Controlled Company” for additional information.

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 39 to read about factors you should consider before investing in our Class A common stock.

Neither the U.S. Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share		Total
Initial public offering price(1)	$	21.50	$	387,000,000
Underwriting discounts and commissions(2)	$	1.29	$	23,220,000
Proceeds, before expenses, to Atlas Energy Solutions Inc.	$	20.21	$	363,780,000

(1)	The public offering price for the shares sold to the public was $21.50 per share.

(2)	See “Underwriting” for information relating to underwriting compensation, including certain expenses of the underwriters to be reimbursed by us.

The underwriters will have an option to purchase, exercisable within 30 days from the date of this prospectus, a maximum of 2,700,000 additional shares of our Class A common stock from us, at the initial price to public less the underwriting discount and commissions.

The underwriters expect to deliver the shares of Class A common stock against payment in New York, New York on , 2023.


Goldman Sachs & Co. LLC	BofA Securities	Piper Sandler

RBC Capital Markets	Barclays	Citigroup

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

	Stephens Inc.

Capital One Securities		Pickering Energy Partners

	Drexel Hamilton

Prospectus dated , 2023.

TABLE OF CONTENTS


SUMMARY			1
RISK FACTORS			39
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			81
USE OF PROCEEDS			84
DIVIDEND POLICY			85
CAPITALIZATION			87
DILUTION			89
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			91
INDUSTRY			108
BUSINESS			129
MANAGEMENT			168
EXECUTIVE COMPENSATION			176
CORPORATE REORGANIZATION			182
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			185
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			187
DESCRIPTION OF CAPITAL STOCK			193
SHARES ELIGIBLE FOR FUTURE SALE			199
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS			202
CERTAIN ERISA CONSIDERATIONS			207
UNDERWRITING			210
LEGAL MATTERS			219
EXPERTS			219
WHERE YOU CAN FIND MORE INFORMATION			219
INDEX TO FINANCIAL STATEMENTS			F-1
GLOSSARY OF CERTAIN INDUSTRY TERMS			A-1

Neither we nor the underwriters have authorized anyone to provide you with information different from that contained in this prospectus and any free writing prospectus we have prepared. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell shares of Class A common stock and seeking offers to buy shares of Class A common stock only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of any sale of the Class A common stock. Our business, liquidity position, financial condition, prospects or results of operations may have changed since the date of this prospectus.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

BASIS OF PRESENTATION

Unless otherwise indicated, the historical financial information presented in this prospectus is that of Atlas Sand Company, LLC (“Atlas LLC”), our “Predecessor” for financial reporting purposes. Further, the financial information and certain other information presented in this prospectus have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables in this prospectus. In addition, certain percentages presented in this prospectus reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers or may not sum due to rounding.

INDUSTRY AND MARKET DATA

This prospectus includes industry data and forecasts that we obtained from a variety of sources, including independent publications, government publications and publicly available information, as well as our good faith estimates, which have been derived from management’s knowledge and experience in the industry in which we operate. Although we believe that these third-party sources are reliable, we have not independently verified the data obtained from these sources and we cannot assure you of the accuracy or completeness of the data. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus.

The market data regarding supply and demand is difficult to quantify, as the proppant industry continues to evolve and many market participants are privately held, making accurate estimates of supply capacity and market demand difficult to qualify. While we are not aware of any misstatements regarding the market, industry or similar data presented herein, such data involves risks and uncertainties and are subject to change based on various factors, including those discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in this prospectus. Please read the section titled “Industry” for additional information on the proppant industry.

TRADEMARKS AND TRADE NAMES

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply, a relationship with, or endorsement or sponsorship by, us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ^®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.

LOGO

“Who We Are”: A Discussion of Corporate Integrity and our Mission to Increase Access to Affordable Energy, Which Thereby Enhances Human Flourishing, Society and the Environment

Since the founding of our first enterprise in 1990, Brigham Exploration Company, our mission has been to improve human beings’ access to the hydrocarbons that power our lives. It is by pursuing this mission that we fulfill our core responsibility to create value for our owners, the essence of our corporate integrity. We are proud of the role that we play in providing energy security throughout economic cycles and in bettering human lives, while also delivering differentiated social and environmental progress.

We have a long history of being good stewards of not only stockholder capital but also of the environments and communities in which we live and operate. Our core obligation is to our stockholders, and we recognize that maximizing value for our stockholders requires that we optimize the outcomes for our broader stakeholders, including our employees, as well as the communities and the environments in which we operate.

After leading Brigham Exploration Company, Brigham Resources Operating, LLC, and Brigham Minerals, Inc. through two successful initial public offerings and two substantial acquisition events, we recognized a compelling opportunity to capitalize on this track record and our experience by assembling the sand mining rights associated with approximately 38,000 acres in the Permian Basin—the most active basin in North America. So, we founded Atlas Sand Company, LLC (“Atlas Energy”) in 2017, led by an experienced team of entrepreneurs from the oil and natural gas, transportation, industrial and proppant industries who have an established history of value creation and positive disruption in the energy industry. As a result, we designed and constructed our operations through the lens of an E&P operator benefitting from our history and roots in the energy industry, and we firmly believe that this orientation and mindset are reflected in our differentiated results. We have a relentless focus on the needs of our customers, and by creating value for them, we ultimately create value for our shareholders.

We are builders, innovators and, at times, constructive disruptors. Our success has stemmed from our ability to (i) generate leading-edge business ideas (leveraging our knowledge and experience), (ii) hire great people and (iii) provide them with a collaborative and entrepreneurial environment. This approach has repeatedly created value for our owners, rewarding experiences for our employees, and attractive outcomes for our stakeholders, all while improving human beings’ access to the hydrocarbons that power our lives.

In order to attract, develop and retain top-tier talent and to optimize their innovation and productivity, we create an entrepreneurial and collaborative work environment and provide our employees with compensation incentives (including equity) that align their interests with our owners. This approach enables us to deliver industry-leading innovation that drives down costs while elevating performance and has created value for our owners, rewarding experiences for our employees and attractive outcomes for our stakeholders.

Our Atlas Energy team has driven innovation and has produced industry-leading environmental benefits by reducing energy consumption, emissions, and our aerial footprint. For example, our mining operations utilize an electrified dredging system, unique within the Permian Basin sand mining

iii

industry, which significantly reduces our emissions¹ by replacing the use of certain diesel-powered heavy machinery and equipment characteristic of traditional mining operations in the Permian Basin. The reputation for environmental leadership that we have earned through such innovations is essential to our ability to attract and retain talent, customers and capital, thereby creating value for our owners.

Supportive and constructive communities are essential to our people and our success. For this reason, we are invested in our communities, and we are proud that these communities are invested in our enterprises. For example, we have built strong relationships with regional high schools and military bases, from which many of our valuable personnel were sourced.

We operate with robust governance standards; this is a responsibility we owe our owners and one that is foundational to our value creation. We recognize that deficiencies in governance elevate corporate risks while mitigating positive optionality for value creation.

We have “walked the walk” when it comes to environmental and social progress by recognizing from day one that our long-term profitability depends on being good stewards of the environment, treating our employees well, being active members of the communities in which we operate, and maintaining a high standard of governance and diligence. Though most of the stakeholders who have benefitted from these initiatives are not owners of our business, their flourishing plays a key role in our success.

This is the harmony of capitalism: companies innovating in free markets to create value for their owners, thereby benefitting all their stakeholders. There is no better empirical validation of property rights and capitalism than the unprecedented prosperity of the United States, and we also enjoy the safest air and water of any major country in the world.

At Atlas Energy, we hold ourselves out as an example of how strict adherence to our fiduciary obligation to our owners generates superior and sustainable outcomes for all our stakeholders. We are focused on enabling the production of energy more cleanly and efficiently, in addition to maximizing reliability and reducing cost, which drives our profitability. Providing energy to North America and to the world is critical; Atlas Energy is proud to facilitate domestic energy production and enhance domestic energy security. Further and importantly, the obvious benefit to mankind has been immense and unprecedented, and those benefits are unmatched by any other energy source.

Our core businesses are fundamentally aligned with a lower emissions economy. We believe that we are well-positioned to help address shortages of raw materials and labor leading to supply shortages of critical fossil fuels, which we believe will contribute to helping individuals access the energy they need to sustain or improve their quality of life, in each case, in a socially and environmentally responsible manner. Because our industry has generated abundant and low-cost fossil fuel supplies, we have accelerated unprecedented human flourishing and have improved lives and extended lifespans well beyond that experienced in human history. Despite that progress, there are still over 1 billion people globally suffering from energy poverty (and, thus, economic poverty) without access to low-cost, reliable energy. Therefore, undeveloped nations and the world’s most vulnerable need more scalable and reliable energy-dense fossil fuel energy, not less. We believe that Atlas Energy is well-positioned, as part of the U.S. oil and gas industry, to continue enabling the supply of efficient, responsibly produced, and low emission intensity oil and gas supplies globally.

Atlas Energy is and will continue to be an industry leader in reducing emissions, importantly with regard to air pollutants that are known to be harmful to humans. We are undertaking our Dune Express initiative, which can be characterized as “electrified sand delivery” via an automated conveyor system.

The types of emissions reduced by our electrified dredging system consist of those typically emitted by diesel engines, which commonly include: carbon monoxide (CO), nitrogen oxides (NOx), water vapor (H2O), carbon dioxide (CO2), particulate matter (PM) and unburned hydrocarbons, among other pollutants.

We believe the Dune Express will represent a first-of-its-kind, transformational energy logistics platform which, in conjunction with the scale of our asset base, will provide the Permian oil and gas industry with increased efficiencies and reliability while substantially reducing emissions. In addition to the emissions benefits of taking thousands of trucks off the commercial roads, the Dune Express will save thousands of lives due to a reduction in traffic and a lower risk of accidents. We call this Sustainable Environmental Progress (“SEP”).

In terms of societal (the “S” in ESG), we hire 100% based on merit, seeking individuals who further our mission described above. As Dr. Martin Luther King Jr. stated, people should “not be judged by the color of their skin, but by the content of their character.” In hiring based on merit, we seek individuals with excellent character, appropriate, diverse and complementary skills, backgrounds and perspectives that add value to our operating performance and culture as we work to achieve our mission. We call this Sustainable Social Progress (“SSP”).

We believe property rights are sacred, that creating value for our owners is virtuous, and that doing so creates positive outcomes for all our stakeholders. This is the essence of our corporate integrity. By delivering on our fiduciary responsibility to our owners we deliver long term profitability, making our business sustainable. Again, this is the harmony of capitalism. We are compounding value not only for our shareholders, but also for our other legitimate stakeholders. We are proud of the fact that our approach to innovation in the hydrocarbon industry while operating in an environmentally responsible manner creates immense value. The hydrocarbons we help produce enhance many aspects of human life due to hydrocarbon-based energy and products, including machines, medicines and vaccines, and we are therefore having a very positive impact on human flourishing.

All of our officers, our board of directors and our employees are committed to this mission and our principles.

Yours sincerely,

Ben M. “Bud” Brigham

SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our Class A common stock. You should read the entire prospectus carefully, including the information under the sections titled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and the notes thereto appearing elsewhere in this prospectus. The information presented in this prospectus assumes (i) an initial public offering price of $21.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) and, unless otherwise indicated, (ii) that the underwriters do not exercise their option to purchase additional shares of our Class A common stock.

Unless we state otherwise or the context otherwise requires, the terms “Company,” “Atlas,” “we,” “us” or “our” refer, prior to the corporate reorganization described in this prospectus, to Atlas LLC and its consolidated subsidiaries, and following the corporate reorganization described in this prospectus, to Atlas Energy Solutions Inc. and its consolidated subsidiaries. We have provided definitions for some of the terms we use to describe our business and industry and other terms used in this prospectus in the “Glossary of Certain Industry Terms” beginning on page A-1 of this prospectus.

The information appearing in this prospectus concerning estimates of our mineral reserves is based on the report of John T. Boyd Company, our independent mining engineers and geologists, as of December 31, 2021, and as updated for December 31, 2022. A summary of John T. Boyd Company’s report is included as an exhibit to the registration statement of which this prospectus forms a part.

Atlas Energy Solutions Inc.

Overview

We are a leading provider of proppant and logistics services to the oil and natural gas industry within the Permian Basin of West Texas and New Mexico, the most active oil and natural gas basin in North America. Our core mission is to maximize value for our stockholders by generating strong cash flow and allocating our capital resources efficiently, including providing a regular and durable return of capital to our investors through industry cycles. In our pursuit of this mission, we deploy innovative techniques and technologies to develop our high-quality resource base and efficiently deliver our products to customers through leading-edge logistics solutions. We believe that our uniquely-positioned asset base and our differentiated approach are distinct competitive advantages that make us a more reliable supplier than our competitors. We believe we have developed a strong brand recognition for reliability and strong customer service that has enabled us to increase the volume of proppant sold every year since the founding of the Company in 2017.

Our unique assets and market positioning, along with our innovation and demonstrated reliability, enables us to expand our business beyond proppant sales. We are launching a transformational logistics offering that we believe will bring a step change in efficiency, safety and sustainability benefits to the Permian Basin. This will include the “Dune Express,” an overland conveyor infrastructure solution, which, coupled with our fleet of fit-for-purpose trucks and trailers, we anticipate will remove a significant number of trucks from public roadways within the Permian Basin.

provide meaningful productivity gains while decreasing emissions. We expect the Dune Express to make public roadways safer by removing trucks from public roadways, thus reducing traffic, accidents and fatalities on public roadways in the region.

Our supplying partners are currently manufacturing fit-for-purpose equipment for our trucking fleet to be used in our existing logistics business. We have designed our trucking operations and delivery processes to significantly expand the daily payload capacity per truck compared to traditional assets. We believe these fit-for-purpose assets with expanded payload capacity are already driving productivity gains since their deployment in January 2023, and will continue to do so as we build our fleet. Our long-term goal is to bring autonomous wellsite delivery to the Permian Basin, which we expect to drive further productivity gains as the technology is developed over the next several years.

Each of these solutions independently represents a significant leap forward in the logistics space. Combined, we believe that our logistics offering will bring substantial benefits to our customers, investors and the local community in the Permian Basin. The relocation of commercial traffic from public roads to private roads creates a dynamic closed-loop system that is well suited for the rapid deployment and advancement of our trucking fleet, while also increasing the mobility and safety of the public roadways for the residents of the region.

According to Lium Research, Permian Basin proppant demand currently exceeds in-basin production capacity and third-party research indicates that this supply shortage has the potential to grow significantly. In 2022, while Permian operators accelerated completions, they also maintained a healthy drilled uncompleted (“DUC”) well inventory at approximately 94% of the 2018–2022 average. Furthermore, Lium Research estimated that Permian operators would spend approximately $42.8 billion in 2022 with spending levels estimated to be approximately 50% higher in 2024, signaling for a significant and continued increase in completions activity. In response to this supply shortage, we are in the process of adding a facility capable of 5.0 million tons of annual production capacity at our location in Kermit, Texas, and we anticipate that construction will be completed by the end of 2023. Due to the robust levels of industry demand for our product, our existing facilities are currently sold out, our contracted volumes continue to grow, and we are both extending term and adding logistics contracts to our portfolio. The modular design of our existing facilities and the size of our resource base provide us with the ability to further expand our production footprint to meet future market demand, should we determine that the potential investment enhances our long-term profitability and free cash flow profile.

Our Company

We were founded in 2017 by Ben (“Bud”) Brigham, our Executive Chairman and Chief Executive Officer, and are led by an entrepreneurial team with a history of constructive disruption bringing significant and complementary experience to this enterprise, including the perspective of longtime exploration and production (“E&P”) operators, which provides for an elevated understanding of the end users of our products and services. We believe this experience and our associated knowledge base differentiates us from our competitors and facilitates our ability to identify and execute as an early mover on critical value drivers, enabling us to maximize the full potential of our business and outcomes for our stockholders and stakeholders alike.

Our executive management team has a proven track record and over 90 years of combined industry experience with a history of generating positive returns and value creation, exemplified by Bud Brigham’s significant experience leading several companies through a successful initial public offering (“IPO”), or an acquisition event:

•

In 2011, Brigham Exploration Company (“Brigham Exploration”), a pioneer in the use of 3-D seismic and horizontal drilling and completions techniques within the oil-rich Bakken Shale was acquired by Statoil ASA (“Statoil”) for $4.7 billion. Brigham Exploration completed an IPO in 1997.

•

In 2017, Brigham Resources Operating, LLC (“Brigham Resources”), an innovator in Delaware Basin drilling and completions techniques (as an early adopter of e-frac technology and tested proppant loadings in excess of 5,000 pounds per foot) was acquired by Diamondback Energy, Inc. (“Diamondback”) for $2.6 billion.

•

In 2022, Brigham Minerals, Inc. (“Brigham Minerals”), a technically sophisticated oil and gas minerals company, combined with Sitio Royalties Corp. (“Sitio Royalties”) in an all-stock merger with a combined enterprise value of $4.8 billion (representing a $2.2 billion value to Brigham Minerals, or a 108% total return since its IPO, with total return calculated as cumulative dividends plus stock price appreciation).

Our experience as E&P operators was instrumental to our understanding of the opportunity created by in-basin sand production and supply in the Permian Basin, which we view as North America’s premier shale resource and which we believe will remain relatively more active through economic cycles. Though the industry has always been focused on increasing efficiencies in resource development, mission critical proppant production and related logistics were historically chaotic and inefficient, particularly given the long and inefficient legacy midwestern supply chain.

We identified the two giant open dunes of the Winkler Sand Trend as the premier sand resource in the region due to their differentiated geologic characteristics, advantaged water access and their large scale/long resource life. As the reserves of these large open dunes have not been subjected to the same degree of soil development, organics and impurities as buried sand deposits, they tend to produce higher and more consistent mining yields relative to buried sand deposits, making the large open dunes economically superior deposits. The giant open dunes’ advantaged access to water stems from the nature of the perched aquifers that have been found to form within these deposits. It is the nature of this water table that has enabled Atlas to become the first and, to our knowledge, the only proppant producer in the Permian Basin to mine by electric dredge, and we expect to transition more of our mining to electric dredging over the next twelve to twenty-four months. We control over 14,500 acres on the giant open dunes, which represents more than 70% of the total giant open dune acreage available for mining. Based on our current total annual production capacity of approximately 10.0 million tons, as of December 31, 2022, our properties have an aggregate expected reserve life of approximately 36 years based on the currently defined mineral reserves, with a potential extension of our reserve life to approximately 200 years based on our total mineral resources.

We believe we are the leader in meeting the evolving proppant needs of an increasingly efficiency-focused oil and natural gas industry. From our inception, our disruptive approach has met the needs of the just-in-time supply model we believed would become the best fit for the industry’s increasingly efficiency-driven focus, and we engineered our facilities to fit this model. Our plants include substantial investments in redundant equipment that aim to maximize our uptime and utilization rates. We believe these are key differentiating factors from some other proppant producers serving the Permian Basin.

The shift to in-basin sand proved to be a disruptive event for the proppant industry, but not sufficient to provide all participants a meaningful advantage. While many companies have attempted to capture the efficiency gains promised by this relocation of the proppant-production hub from the midwestern United States to an in-basin model, few have been able to optimize their efficiency with geologically superior acreage positions and properly designed facilities. It is this combination of geology, water availability and plant design that significantly differentiates our proppant production facilities and we believe makes us more reliable than our competition.

LOGO

Logistics Solutions

We plan to bring meaningful efficiency, safety and sustainability benefits to the Permian Basin through our expanding logistics solutions. We believe that the Permian Basin remains in a multi-year transformation period that began when the innovations that enabled the development of shale resources led to better definition of geologic targets, increased systemization of processes and ultimately resulted in more predictable production outcomes. While enhanced logistics, infrastructure and technology have driven economic gains, they have also increased the technical complexity of execution in the oil and natural gas industry and precipitated a premium on scale, innovation and efficiency. Just as investments in pipeline infrastructure have reduced emissions and improved efficiency and safety by converting a truck-oriented delivery process to an infrastructure-oriented delivery process, our investments into infrastructure and technological improvements to the delivery of proppant aim to harvest similar productivity gains and generate positive community and environmental impacts. These technology and infrastructure investments are integral to and representative of our industry’s long-standing initiatives to reduce the footprint of our operations for the benefit of the local communities we operate within.

The Dune Express Electric Conveyor System: The Dune Express, which will originate at our Kermit facility and stretch into the middle of the Northern Delaware Basin, will be the first long-haul proppant conveyor system in the world. While this is the first application of conveyor infrastructure to long-haul proppant, conveyors are widely used in the proppant industry for short movements of product and are a preferred method of transporting bulk materials in many other industries due to the low transportation cost and increased safety of the accompanying decrease in truck traffic.

Upon completion, we expect the Dune Express to be 42 miles in length, capable of transporting 13 million tons of proppant annually and is designed to have more than 84,000 tons of dry storage within the system. We view the Dune Express as the premier method of moving proppant across the basin and the industry’s best analog to the pipeline infrastructure that moves oil, natural gas, and water around the major producing basins in the U.S. We have secured the contiguous right-of-way, substantially completed the requisite federal and state permitting necessary for construction of the Dune Express and have signed sand supply and logistics contracts with major oil companies for the delivery of proppant by means of the Dune Express. This conveyor system will be strategically located to deliver proppant to the core of the most prolific producing region of the Delaware Basin with flexible loadout capabilities, including both permanent and mobile loadouts.

The Dune Express has the potential to take hundreds of thousands of truckloads off public roads annually, which should reduce traffic accidents and fatalities in the region and significantly reduce emissions generated, relative to the traditional delivery of sand by truck.

We plan to use a portion of the net proceeds from this offering to fund the construction of the Dune Express. We plan to break ground in the first half of 2023, with commercial in-service planned to begin by the end of 2024. Our anticipated cost for completion of the Dune Express is approximately $400 million.

Illustrative Rendering of the Dune Express

LOGO

Please see “Business—Our Company—Significant Innovation Projects—Dune Express” for additional information regarding the Dune Express.

Wellsite Delivery Assets: Our existing logistics business utilizes third-party transportation contractors which we plan to supplement and bring in-house with our own trucks and trailers. As our trucks and trailers continue to be deployed in 2023, we expect to deliver significant productivity gains, as measured by tons per truck that can be delivered daily, compared to the throughput performance of traditional trucking assets. These immediate productivity gains will be made possible through a combination of process improvements and targeted investments in fit-for-purpose equipment. We have partnered with a provider of autonomy and robotic technology with experience in the field of GPS-denied off-road autonomous driving applications to procure a fleet of vehicles equipped with technology designed to support autonomous wellsite delivery. We expect to begin testing in the field during 2023 with the goal of developing this technology over the next several years.

Atlas Logistics Solutions Can Expand Potential Throughput per Vehicle Dramatically

LOGO

Please see “Business—Our Company—Significant Innovation Projects—Wellsite Delivery Assets” for additional information regarding our wellsite delivery assets and goals to bring autonomous wellsite delivery to the Permian.

Combined Impact of Our Logistics Solutions: Together, we believe these initiatives could have a significant impact in driving future revenue and increasing cash flow, reducing emissions, improving safety and relieving traffic and other burdens produced by the existing means of last-mile delivery. Furthermore, by reducing the intermittency of proppant delivery to the wellsite – and thereby increasing the reliability of delivery and potential throughput per truck per day – we believe our delivery solutions significantly mitigate a major bottleneck to the completions supply chain that may support increased pressure-pumping efficiencies.

The graphic below shows the estimated amount of proppant, in tons, that can be delivered to Delaware Basin drilling spacing units in a day by an individual truck. Based on the current supply chain configuration, each truck is limited to very few deliveries per day for a variety of reasons, including the distance from local mines to wellsites that are distributed across a large geographic area, a limited public roadway network and the hours per day that a driver can work. Upon commercialization of the Dune Express and our trucking assets, this throughput potential expands dramatically due to the reduced delivery distance, higher payload capacity and increased asset utilization.

Atlas Logistics Solutions Expand Potential Throughput per Vehicle Dramatically

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Source: Enverus.

for the massive amounts of oilfield traffic that is required for the industry to operate. By reducing the number of trucks required to fulfill proppant deliveries and removing these trucks from public roads, we anticipate that the rate of traffic accidents and associated injuries and fatalities will be reduced. Please see the subsection titled “—Value Proposition to Our Community and Stakeholders: A Demonstration of the Harmony of Capitalism with Sustainable Environmental & Social Progress” below for additional information regarding our anticipated community impact.

Our logistics solutions have been designed to offer a further extension of our promise of reliability to our customers. We believe that customers will seek out our logistics solutions not only due to the compelling technology and infrastructure solutions we offer but also because they are tied into highly reliable production assets in our Kermit and Monahans facilities.

Atlas Logistics Solutions Expand Potential Throughput per Vehicle Dramatically

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Value Proposition to Our Stockholders

Strong Margins and Cash Flow Generation: Our ability to generate cash flow is paramount to our value proposition, as it enables us to reinvest in growth, maintain a healthy balance sheet and regularly return capital to our stockholders. A brief summary of several of our key performance and financial metrics is provided below. Please see the subsection titled “—Summary Historical and Pro Forma Financial and Operating Data—Non-GAAP Financial Measures” for more information.


	Year Ended December 31,
	2022			2021			2020
	(in thousands, except percentages)
Net Income	$	217,006		$	4,258		$	(34,442	)
Adjusted EBITDA(1)	$	263,983		$	71,954		$	24,667
Adjusted EBITDA Margin(1)		54.7	%		41.7	%		22.1	%
Net Cash Provided by Operating Activities	$	206,012		$	21,356		$	12,486
Adjusted Free Cash Flow(1)	$	228,510		$	64,239		$	19,686
Adjusted Free Cash Flow Margin(1)		47.3	%		37.3	%		17.6	%

(1)	Please read “—Summary Historical and Pro Forma Financial and Operating Data—Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted EBITDA

Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

Focus on Return of Capital: We commenced paying cash distributions in December 2021 and have paid $70.0 million in distributions to our unitholders since that time. We intend to continue to recommend to our board of directors that we continue to regularly return capital to our stockholders through a dividend framework that will be communicated to stockholders in the future. Furthermore, our credit agreements contain provisions that allow us to pay dividends, subject to certain covenants, including pro forma liquidity and leverage ratios. Please see the section titled “Dividend Policy” for more information.

Management & Historical Successes: We were founded by Bud Brigham, our Executive Chairman and Chief Executive Officer, and are led by an experienced team of entrepreneurs from oil and natural gas, transportation, industrial automation and proppant industry backgrounds. We believe our management team’s deep industry experience, record of successful value creation and established history as entrepreneurs and positive disruptors in the energy industry are unique advantages that enable us to continually identify critical value-creation drivers that will allow us to maximize the full potential of our business and the outcomes for our stockholders and stakeholders alike. While our management team has had significant success, past performance is not a guarantee of our future success or similar results. You should not rely on the historical record of our management team, our directors or their affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.

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Brigham Exploration - Prior to founding Atlas LLC, Bud Brigham founded Brigham Exploration, a positive disruptor and innovator in the E&P space. Brigham Exploration was an early pioneer in 3-D seismic exploration onshore, and completed its IPO in 1997. In subsequent years, Mr. Brigham oversaw the identification, acquisition, delineation and development of approximately 375,000 net acres in the Williston Basin. Brigham Exploration established itself as a leading innovator in horizontal drilling and fracking, as well as oil, gas and water gathering and distribution. The company delivered industry leading operational and economic performance, leading up to Brigham Exploration’s sale to Statoil in December 2011 for an enterprise value of $4.7 billion.

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Brigham Resources - Immediately following the sale of Brigham Exploration, Bud Brigham and others from the Brigham Exploration management team founded Brigham Resources and executed on similar strategies in the Southern Delaware Basin in West Texas. By applying rigorous geologic evaluation criteria, Brigham Resources was an early entrant in the Southern Delaware Basin in Pecos County, Texas, where it assembled an approximately 80,185 net acre leasehold position in a largely contiguous block. Like Brigham Exploration, Brigham Resources again was a leading innovator in the play, generating significant enhancements in operational and economic performance, prior to selling its assets to Diamondback in February 2017 for approximately $2.6 billion.

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Julesburg Basin in Colorado and Wyoming and the Williston Basin in North Dakota, prior to entering into an all-stock merger with Sitio Royalties in 2022 with a combined enterprise value of $4.8 billion (representing a $2.2 billion value to Brigham Minerals, or a 108% total return since its IPO, with total return calculated as cumulative dividends plus stock price appreciation).

Value Proposition to Our Community and Stakeholders: A Demonstration of the Harmony of Capitalism with Sustainable Environmental & Social Progress

As a result, we deliver leadership across all aspects of Sustainable Environmental and Social Progress (“SESP”). Our aptitude on SESP benefits from our commitment to identifying and executing upon opportunities to transform our business which enhance our growth and profitability through the implementation of new technologies. Our planned Dune Express is one of several initiatives we have undertaken that exhibits our initiatives to transform our business, enhance growth and increase our profitability, while simultaneously providing substantial environmental and safety benefits. This is the harmony of capitalism – innovation can and often does drive both profitability and environmental and/or social progress through free market activity.

The graphic below summarizes our estimates of the reduction in the truck miles driven and associated traffic accidents, traffic fatalities, truck miles driven and emissions attributable to the anticipated operation of the Dune Express as compared to traditional practices.

The Potential Long-Range Environmental & Safety Benefits from The Dune Express are Significant²

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Source: Management’s internal analysis, based on results of study completed by Texas A&M Transportation Institute

Sustainable Environmental Progress (“SEP”)

To our knowledge, we are the only proppant producer in the Permian Basin that engages in electric dredge mining. Furthermore, we plan to continue transitioning our mining activities from diesel powered mining methods to electric dredging (or “e-mining”) over the next twelve to twenty-four months, which generates materially lower emissions when compared to traditional sand mining. Our shift towards e-mining at both of our Kermit and Monahans facilities exemplifies the alignment of both our operational and SEP leadership, as dredge mining, based on our estimates, will materially improve

²	Charts reflect anticipated reductions over a 30-year period.

safety and reduce emissions by approximately 50% versus traditional sand mining methods due to the significant reduction in diesel fuel usage required to mine sand traditionally, partially offset by increased electricity consumption from our electric dredges. Our dredge mining process also leads to less surface area disturbance per ton of sand produced as we mine to greater depth as compared to mining associated with buried sand deposits.

Our giant open-dune reserves, paired with the replenishing water sources from our acreage’s in-ground aquifers, are the key reasons why we are able to adopt a technology more often reserved for use in rivers and other naturally occurring bodies of water for use in the desert of West Texas. Our reserves benefit from a naturally occurring water table near the surface of our mines, which is unique in the Permian Basin sand fairway (the “Winkler Sand Trend”) and provides an ample natural supply of costless water for dredge and wash plant operations.

Atlas Electric Dredges

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Additionally, the results of a study commissioned by us with the Texas A&M Transportation Institute, an independent research agency (the “Transportation Study”), when integrated with our management’s internal analysis, support our estimate that our planned Dune Express could significantly reduce emissions that would otherwise be produced by trucking-related activities associated with the delivery of proppant from the mines of Permian Basin providers to end users. Our estimates project that the system will result in an approximate 70% reduction in carbon dioxide emissions and other emissions, including other pollutants that are harmful to humans. Please see “Business—Our Company—Significant Innovation Projects—Dune Express” for additional information regarding the Dune Express.

Our management team has been proactive with respect to the protection of the dunes sagebrush lizard (“DSL”) and its habitat in an effort to reduce the risk that our business and operations will be materially interrupted in the event that the DSL is listed under the Endangered Species Act (“ESA”). We have adopted numerous best practices to promote active conservation measures for the benefit of

the DSL, including our identification of up to 17,000 acres of land for potential set asides, our pursuit of more environmentally friendly mining practices and our participation in the Candidate Conservation Agreement with Assurances (“CCAA”) for the DSL. Please see the subsection titled “—Competitive Strengths—Proactive approach to the well-being of the environment and our employees” below.

In January 2021, the CCAA was approved by the U.S. Fish and Wildlife Service (“USFWS”) to provide a framework for entry into voluntary conservation agreements between the USFWS and stakeholder participants under which the parties work together to identify threats to the DSL, design and implement conservation measures to address these threats and monitor their effectiveness, among other things. Atlas has been a supporter of the CCAA since its inception and was the first proppant producer to apply for a permit under, and be accepted into, the CCAA. Due to our participation in the CCAA and other conservation measures that we have voluntarily adopted, we do not anticipate that a listing of the DSL as an endangered species would materially reduce sand production at our Kermit and Monahans facilities. We are currently only one of three companies participating in the CCAA. In the event that the DSL is listed as an endangered species under the ESA, it is possible that companies that are not participants in the CCAA at the time of a potential ESA listing would see a disruption to their operations.

Sustainable Social Progress (“SSP”)

We have committed to fostering a safe environment at our worksites and we are committed to extending this culture of safety far beyond our premises. We have a rigorous safety training program with well-developed protocols. We have automated or have invested in remote operations technology to substantially reduce the amount of the activities at the plant sites that require physical interaction between human beings and industrial equipment, and in doing so have removed many of the safety hazards at our facilities.

We anticipate that our planned Dune Express will provide significant environmental benefits, while also benefitting the surrounding region, making it a safer place to live and work. Our management’s analysis of the results of the Transportation Study supports our expectation that the Dune Express will contribute to a meaningful reduction in Permian Basin traffic accidents, congestion and automobile fatalities, by taking trucks off public roads and operating in a much more efficient manner than the industry has historically operated. We believe this will also benefit the community by reducing the wear and tear on local infrastructure, while making the region a safer and better place to live and work. Furthermore, by reducing the number of drivers needed per well and in the aggregate, these initiatives can meaningfully reduce trucking-related hazards on customer wellsites and mitigate future driver shortages.

We are actively engaged in the West Texas community in which we operate, as we believe that by supporting our community, our community will support us. We sponsor a number of programs benefitting schools and the youth in Winkler and Ward Counties, Texas, including supporting after-school programs for children and skill-development programs for high school students.

convenient, safe and comfortable living facilities at Wyatt’s Lodge, our distinctive alternative to the traditional, notoriously unsafe and unsanitary housing accommodations provided for many oilfield employees. Wyatt’s Lodge provides employees with fully furnished housing, a full cafeteria with a chef and a diverse menu including healthy options, a workout facility, as well as a recreational room and a movie theater. The success of our efforts to create a high-quality workplace is evidenced by our low employee turnover and accolades that include the “Great Place to Work” certification from the Great Place to Work Institute, Inc. for the years ended December 31, 2019, 2020, 2021 and 2022, as well as the “Top Work Places” Award of Recognition from Austin American-Statesman for the years ended December 31, 2021 and 2022.

We believe that the men and women who have served in the United States armed forces have earned a special place in our society. As such, at our founding we created a dedicated effort to support our veterans in our hiring. We have found our focus on recruiting veterans to work for Atlas has brought us many hardworking and outstanding employees over the years and has positively influenced our corporate values. We have received external recognition for our veteran hiring practices, including the Hire Vets Medallion from the U.S. Department of Labor (“DOL”) in 2019, 2020, 2021 and 2022. As of December 31, 2022, 8.4% of our employees served in the U.S. military as compared to an average of 5.6% across all employers nationally.

Governance

We believe that the alignment of our employees, our management and our board of directors with our stockholders is paramount. A few examples of the actions that we will take in connection with this offering or the characteristics that highlight the alignment of interests between our management and stockholders are as follows:

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We will establish a diverse and independent board of directors with complementary skills and backgrounds.

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We will adopt an executive compensation program that encourages return of capital to stockholders, including through the use of performance-based compensation, with performance metrics that focus business strategy and corporate objectives on total shareholder return, and equity-based long-term incentives.

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We will adopt a director compensation policy for our non-employee directors in which a significant portion of the total compensation package is equity-based to further align the interests of our directors with our stockholders.

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Management and their affiliates will maintain significant initial ownership in the Company after completion of this offering.

Our organizational structure following the offering and corporate reorganization is commonly referred to as an umbrella partnership-C corporation (or “Up-C”) structure. Pursuant to this structure, following this offering we will hold a number of Atlas Units (as defined below) equal to the number of shares of Class A common stock issued and outstanding, and holders of Atlas Units (each, an “Atlas Unitholder”) (other than us) will hold a number of Atlas Units equal to the number of shares of Class B common stock issued and outstanding. The Up-C structure was selected in order to (i) allow certain existing (direct or indirect) holders of membership interests in Atlas LLC (“Legacy Owners”) the option to continue to hold their economic ownership in Atlas LLC in “pass-through” form for U.S. federal income tax purposes through their direct and indirect ownership of Atlas Units (as defined below), and (ii) potentially allow us to benefit from certain net cash tax savings that we might realize as a result of certain increases in tax basis that may occur as a result of Atlas Inc.’s (as defined below) acquisition (or deemed acquisition for U.S. federal income tax purposes) of Atlas Units pursuant to the exercise of the Redemption Right (as defined below) or the Call Right (as defined below). In contrast to many offerings

by issuers choosing an Up-C structure, we have made the decision not to enter into a tax receivable agreement with the Legacy Owners with respect to any such cash tax savings we might realize, which we believe provides for increased alignment between us and our stockholders over the long term.

Assets and Operations

We currently control the largest and, we believe, the highest quality sand position in West Texas. We have developed our Kermit and Monahans facilities as in-basin proppant mines on approximately 38,000 surface acres that we own or lease in Winkler and Ward Counties, Texas. We control 14,575 acres of large open-dune reserves and resources, which represent more than 70% of the total giant open dune acreage in the Winkler Sand Trend available for sand mining. The Monahans Dune consists of approximately 8,750 acres of premium open-dune reserves. Additionally, we have substantial off-dune acreage at Monahans that is not included in our estimated reserves or resources but that could be mined following our removal of material, such as soil and unusable sand, that lies above the useable sand and must be removed to excavate the useable sand, which we refer to as “overburden.” The Kermit Dune consists of approximately 5,826 acres of premium open-dune reserves.

The following map shows the location of our Kermit and Monahans facilities in Winkler and Ward Counties, Texas, as well as the secured right-of-way for the Dune Express alongside a recent snapshot of the rig count in the Permian Basin as of December 31, 2022:

Map of Operations

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Source: Enverus, Baker Hughes.

Our “twin” mines, located on the bookends of the Winkler Sand Trend, provide optimal logistics to serve both the Southern and Northern portions of the Delaware and Midland Basins and, as of

December 31, 2022, have a combined annual production capacity of 10.0 million tons, 70,000 tons of dry storage, 700,000 tons of wet storage and 14 loadout lanes. Innovative plant design and large-scale operations ensure low-cost operations and continuity on site. Redundancies were designed into our facilities to remove singular points of failure that can disrupt the production process, ensuring maximum reliability of proppant production and delivery.

Atlas’s Facilities are Strategically Located

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Source: Enverus, Baker Hughes.

Our Kermit and Monahans facilities were built to produce high quality 40/70-mesh and 100-mesh sands, each of which are used extensively in upstream operations in the Permian Basin. As of December 31, 2022, each facility is capable of producing 5.0 million tons of proppant annually for a combined annual production capacity of 10.0 million tons.

Each facility was constructed with a modular design that provides us with the flexibility to expand one or both of the existing facilities to achieve incremental production capacity if such expansion were found to be necessary or desirable in light of customer demand, broader market conditions or other relevant considerations. The facilities are capable of operating year-round and feature advanced safety designs, onsite water supply, power infrastructure and access to low-cost natural gas through connections to interstate natural gas lines. Further, we strategically benefit from the locations of our facilities proximal to major highways at the south and north ends of the Winkler Sand Trend. Our Kermit facility is bisected by two state highways, while our Monahans facility its adjacent to two highways, one of which is Interstate 20, facilitating efficient transportation of our proppant to customers located at various points within the Permian Basin.

The operations of both sand facilities are managed and monitored in a highly automated manner from our command center in Austin, Texas. We have designed and/or adopted cutting-edge technology that we believe delivers one of the most efficient production and truck loading processes in the industry. The remote ecosystem allows our employees to simultaneously manage processes at both facilities, resulting in significant personnel productivity gains.

As of December 31, 2022, we had 357 million tons of proven and probable sand reserves at our Kermit and Monahans facilities according to estimates by John T. Boyd Company, our independent mining engineers and geologists. Based on our current total annual expected production capacity of approximately 10.0 million tons as of December 31, 2022, our reserve life is expected to be approximately 36 years. As of December 31, 2022, our reserves are composed of approximately 59% 40/70-mesh and 41% 70/140-mesh substrate sand. We believe our reserve composition is attractive to customers that want to consolidate sourcing and positions us as a go-to provider of high quality in-basin proppant.

In response to the significant increase in market demand and also in connection with the expansion of our logistics offering, we are expanding our Kermit production capacity to add a facility capable of 5.0 million tons of annual production capacity by the end of 2023. Our plants were designed modularly to accommodate efficient expansion—maximizing the increase in production capacity while minimally increasing the facilities’ footprint. Pro forma for the completion of our ongoing capacity expansion, the Kermit Facility will have a total of six dryers averaging approximately 225 tons-per-hour, 27 screeners, two dredges, three wet sand storage facilities (totaling approximately 840,000 tons of total wet sand storage), four wet plants with attrition scrubbers, and 10 loadout lanes and silos.

The Permian Basin Proppant and Proppant Logistics Market

The oil and natural gas proppant industry is comprised of businesses involved in the mining, manufacturing, distribution and sale of the propping agents used in the stimulation of hydrocarbon-bearing shale reservoirs as a method to enable production from oil and natural gas wells. During this process, proppants are blended into a fluid mixture and injected downhole into the wellbore at high pressure. This creates cracks in the resource-bearing rock allowing for proppants to become lodged in these cracks, resulting in increased permeability of the reservoir, and in turn, driving greater production of hydrocarbons over the life of the well.

Key Permian Basin Drilling, Completions and Proppant Consumption Metrics

(1)	Per Lium + Management Estimates.

(2)	Assumes 23.5 tons per truckload of proppant.

(3)	Assumes 70 tons per Atlas double-trailer truckload of proppant.

Source: Baker Hughes, EIA, Lium and management estimates.

A typical horizontal well-design in the Permian Basin can call for greater than 10,000 tons of proppant for completion, which implies greater than 425 truckloads of proppant per well, more than 50,000 miles driven per well, and more than 250 million miles driven per year, according to Rystad Energy. Rystad Energy also estimates an average day in 2021 in the Permian Basin had more than 3,000 trucks transporting proppant over the surrounding network of public highways and lease roads. Prior to the development of in-basin sand facilities, proppant was predominately shipped long distances in bulk from processing facilities in the midwestern United States by rail and barge to various resource basins. It was then further transferred to a truck for “last mile” wellsite delivery. This long supply chain made transportation costs a significant portion of the customer’s overall proppant cost. The discovery and subsequent development of in-basin proppant deposits afforded customers a significant cost-saving alternative. The supply chain was shortened to remove the costly rail or barge portion of the transportation cost, and in the Permian Basin customers have effectively reached full adoption of in-basin proppants. With the relocation of the proppant supply stack to the Permian Basin, which shortened the supply chain and eliminated extended seasonal disruptions, the proppant industry has been transformed into a “just-in-time” delivery model reliant on large quantities of trucks to fulfill orders. In-basin deliveries take place over a matter of hours, whereas the legacy mid-western supply chain

required weeks for the fulfillment of delivery. While this has reduced the severity of fulfillment disruptions experienced as compared to the legacy rail-based midwestern supply chain, it has increased pressure on in-basin proppant-production facilities to maximize uptime and on trucking companies to supply a sufficient quantity of trucks to effectively and efficiently fulfill deliveries to end-users.

As customers continue to drive efficiencies and productivity in their drilling and completions programs, in turn drives the demand for more proppant, we expect increased demand for the products and services that we provide. Please see the section titled “Industry” for additional information regarding the Permian Basin proppant and logistics market.

In-Basin Sand Disrupted the Industry and Placed a Premium on Efficiency

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Source: Management’s internal analysis, based on results of study completed by Texas A&M Transportation Institute

Competitive Strengths

We believe the following competitive strengths will allow us to successfully execute our business strategies, achieve our primary business objectives and generate free cash flow, including:

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Superior geology combined with next-generation plant design promotes efficiency & reliability. Our Kermit and Monahans acreage holds a unique combination of key attributes that drive our differentiated business profile, including (i) unmatched scale of reserves and acreage within the two large open-dune deposits at the northern and southern ends of the

Winkler Sand Trend, (ii) the associated high quality of proppant, (iii) the associated ease of access to our reserves and resources, (iv) the depth of our deposit, which provides a smaller areal footprint per ton produced, and (v) plentiful availability of water. We are not aware of any other area in the Permian Basin that is able to replicate this combination of key attributes. As of December 31, 2022, our combined facilities have 10.0 million tons of annual production capacity, two dredges, six dryers, 70,000 tons of onsite, finished-good storage, 14 dedicated truck loadout lanes with high-speed loadout silos, a comprehensive water recycling system at each plant, which allows us to reuse approximately 95% of the water used in the production process, and 700,000 tons of damp sand storage. Our facilities are capable of operating year-round and feature advanced safety designs, onsite water supply and recycling, power infrastructure and access to low-cost natural gas through connections to interstate natural gas lines.

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High margins and strong balance sheet drive compelling combination of growth & yield. Our margin profile has been tested through industry cycles, and we have demonstrated strong performance relative to our peers in both high and low proppant price environments. We maintain modest levels of debt and intend to continue to reduce our debt over time. As of December 31, 2022, we have a Net Debt/LTM Adjusted EBITDA multiple of 0.3x. We are currently pursuing attractive growth projects and have been returning capital to stockholders. We plan to offer a balanced value proposition to stockholders that we believe will include growth and yield while maintaining financial flexibility and a strong balance sheet.

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Unique logistics offering. Our Dune Express and wellsite delivery assets hold the potential to revolutionize the delivery of proppant in the Permian Basin. By leveraging technology and infrastructure, we will increase asset utilization and payload per delivery resulting in increased efficiency and reliability for our customers. This will also reduce the miles driven on public roadways in the Permian Basin, which will improve the road safety in the basin.

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Strategically located facilities. Our facilities are located on the giant open dunes near Kermit and Monahans, Texas, that bookend the Winkler Sand Trend and enable us to reliably and efficiently meet the proppant demand of our customers in both the Delaware and Midland Basins. In addition, we strategically located our Kermit facility to be bisected by two state highways and positioned our Monahans facility adjacent to two highways to facilitate the efficient transportation of our proppant. Our Kermit facility’s location also provides a strategic origination point for the initial Dune Express, which will travel across the Texas-New Mexico state line area, one of the highest development intensity sections of the Permian Basin.

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Strong brand recognition for reliability drives contracting and solidifies valuable relationships with a diverse group of customers. The success of our business has been underpinned by our relationships with some of the most respected operators and service companies in the Permian Basin. Our customers range from high-profile, public oil and natural gas and service companies to private, independent enterprises. We also have a diverse customer base, which we believe minimizes counterparty risk. During the year ended December 31, 2022, we had 39 customers, with the top 10 customers accounting for approximately 68% of our revenue for that period. During the year ended December 31, 2021, we had 39 customers, with the top 10 customers accounting for approximately 79% of our revenue for that period. Our ability to secure and maintain these robust relationships lends support to our ability to weather economic headwinds. In 2020, we continued to operate throughout the height of the pandemic, grew sales volumes year over year from 2019 to 2020, and increased our market share, as we expanded our customer base by the addition of 14 new customers since January 1, 2020. While our contracting strategy changes over time and through industry cycles, we are currently highly contracted on our existing production capacity, which provides for significant visibility in our future revenue and cash flow. We plan to continue to pursue contracts when they stand to benefit our business over the long term.

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Ability to leverage technology in optimizing cost structure and addressing our customer’s sustainable environmental progress (SEP) goals. Our ability to generate cash flow in various commodity price environments and through industry cycles is underpinned by our commitment to the continuous optimization of our operating and capital cost structures. The move from traditional excavation methods to e-mining reduces the need for on-site personnel, heavy equipment and diesel fuel. Further, this technology also provides us the ability to enhance our customers’ SEP initiatives. Numerous employees once located on-site in the Permian Basin now work in a smaller group at our command center in Austin, Texas, monitoring and operating the facilities by video and telecom. This has led to cost reductions and also has enabled us to attract and retain an exceptionally credentialed workforce as compared to competitors with traditional operations that by nature do not provide such flexibility with respect to the location of personnel deployment.

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Unique equity investor capitalization of the Company. We are differentiated and advantaged by our unique equity investor capitalization. Rather than sourcing private equity capital, Bud Brigham funded the initial investments in us. Subsequently, we conducted a successful “friends and family” equity capital raise, which included many investors that had previously invested in Bud Brigham’s prior enterprises. Importantly, approximately 40 of our equity investors are energy entrepreneurs, energy executives and sophisticated energy investors, providing both a validation of the business and facilitating our growth. As a result, we are differentiated in our space with a diverse and sophisticated investor group that is aligned and actively supportive of our shareholder value creation objectives. Furthermore, the lack of traditional private-equity ownership has enabled us to elect to forgo a tax receivable agreement, which we believe provides for increased alignment between the Company and its stockholders over the long term. This is an example of the shareholder alignment we intend to instill through corporate governance policy.

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Incentivized board of directors and management team with significant experience in the Permian Basin and a track record of stockholder value creation. Our executive management team has a combined total of over 90 years of experience in the energy industry. This experience includes two successful IPOs, three successful company sales or mergers, multiple asset monetization events and the successful building of other enterprises. Please see the subsection titled “—Value Proposition to Our Stockholders—Management & Historical Successes” above. Management benefits from extensive experience in the Permian Basin, where our founder was born and raised, and he and other management members have extensive relationships built over a long history of involvement with various businesses in the region across upstream operations, non-operated enterprises, sand mine development, mineral acquisitions and water sourcing. We believe our management team’s experience managing upstream operations in the Permian Basin lends a unique perspective that provides us with a network of key potential customers, suppliers, vendors and employees, contributes to our ability to provide a high-quality customer experience and serves as a strong foundation for our role as a collaborative partner in meeting the advanced completion needs of our customers. Further, our management team has extensive experience in identifying attractive operating areas and evaluating resource potential through a variety of means, including extensive geologic studies; we believe this experience will continue to allow us to expand our operations by selectively pursuing organic development opportunities and innovations in the Permian Basin.

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we have already agreed. Our large acreage position also provides us with the flexibility to set

aside as much as 17,000 acres of high suitability DSL habitat for conservation protection, which would exempt us from certain enrollment fees otherwise required under the CCAA. The smaller acreage position of many of our Permian Basin competitors may make similar set-asides commercially challenging for them. We believe that our voluntary participation under the CCAA will help to safeguard our assets and operations against adverse effects that could result from non-participation or any future listing of the DSL as an endangered species. We believe potential customers, focused on improving the sustainability profile of their own operations, value our proactive stance towards environmental risk management. As we focus on the well-being of the environment we operate in, we also focus on the well-being of our employees through initiatives such as our compensation and benefits package and Wyatt’s Lodge. We believe that this differentiated investment in our employees creates a culture of pride and ownership that fosters the positive disruptions and innovations our business successes are built on.

Business Strategies

Our principal business objective is to drive improvements to critical products and services in the Permian Basin through innovation which may reduce environmental impacts and optimize our cost structure, while driving notable value creation for our stockholders and stakeholders alike.

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Continuously optimize cost structure in order to deliver free cash flow across commodity cycles. Demand for services used in the development of unconventional resources in the United States varies notably based on the pace and intensity of such development, which is driven in large part by the prevailing commodity price environment. Since the beginning of 2020 through December 31, 2022, per-barrel prices of West Texas Intermediate (“WTI”) crude oil exhibited substantial volatility ranging from $16.55 to $114.84, and we expect commodity prices to continue to be unpredictable going forward; as such, since our inception, we have continuously strived to optimize our cost structure and we believe we are able to provide our stockholders with a return of capital through cycles. For instance, substantial up-front investments were made in our Kermit and Monahans facilities and associated equipment in order for their design to maximize uptime and reliability. Our access to a natural water table near the surface of our deposit has allowed us to significantly lower our production costs through dredge mining. Our transition to e-mining, when fully completed is expected to result in reduced production costs, as we have seen historically when we have been able to use electric dredging as our primary mining method. In the future, the modular designs of our facilities will accommodate future expansions at a significantly reduced expense as compared to the conventionally designed facilities of our Permian Basin competitors.

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Seek out opportunities to positively disrupt the market for products and services critical to unconventional resource development projects. Innovation is central to our corporate culture, as it has been since the leadership role of certain members of our management team in the Bakken Formation’s evolution via Brigham Exploration, and we continuously strive to holistically improve unconventional resource development in the United States, particularly in the Permian Basin. We were a leader in the disruption in the proppant supply chain as early entrants into “in-basin” sand which eliminated the need for in excess of 1,000-mile train hauls from the midwestern United States and in excess of 250-mile truck hauls from central Texas, providing substantial economic and environmental benefits. More recently, we were the first to bring e-mining to the Permian Basin, and we are advancing our initiative to meaningfully electrify sand delivery operations in the Permian Basin through our Dune Express and autonomous wellsite delivery initiatives.

•

an unpredictable schedule. With the onset of in-basin sand, we recognized the need for our facilities to operate on a just-in-time delivery basis and took to redesigning the traditional facility to ensure that redundancy was built in at critical junctures to mitigate the effects of unplanned equipment downtime. Additional early measures included investments into the automation of our loadout lanes to drive down load times and the automation of many of our operations activities to improve efficiency and safety. More recently, we were the first, and currently the only, Permian Basin miner to partially electrify the mining of proppant through the use of electric dredges, and we plan to increase our electric dredge volumes over the next twelve to twenty-four months. Our Dune Express and wellsite delivery assets are the next positive major disruptions that we are bringing to the Permian Basin. As a positive disruptive industry technology, the Dune Express replaces much of the trucking haul with electric, conveyor-based transportation, which is likely to provide substantial SESP benefits, including a significant reduction in the emissions generated, relative to the traditional delivery of sand to customer wellsites due to the reduction in miles driven per ton of payload delivered. These strategic initiatives and other innovations are clear demonstrations of our commitment to evaluate and pursue strategies and technologies that positively disrupt our industry and continue to establish, maintain and optimize aspects of our business that provide distinct advantages over our competitors.

•

Grow business around anchor contracts with high quality counterparties. Innovation and the pursuit of additional projects like the Dune Express are central to our strategy, but they are only made possible by our relationships with high-quality, top-tier companies that operate in the Permian Basin. We have supply contracts in place with a variety of leading oil and natural gas and oilfield services companies, many of which are high-credit quality customers. The quality of our customer base is reflected in our collections rate over the year ended December 31, 2022, which exceeded 99.9%. We had similar collection rates for the years ended December 31, 2021, 2020 and 2019, which also exceeded 99.9%. Our transition to e-mining, when fully completed is expected to result in reduced production costs, as we have seen historically when we have been able to use electric dredging as our primary mining method. While many factors influence the selection of proppant providers, we believe that our differentiated environmental profile, resulting from our major electrification projects, paired with our ability to reliably provide large volumes of quality proppant at attractive rates makes us a preferred partner for customers similarly prioritizing enhanced sustainability of operations and cost structure optimization.

•

Drive stockholder value creation by prioritizing our other stakeholders through sustainable environmental and social progress. We have recognized, from our founding, that long-term profitability for our stockholders can be achieved only by delivering positive outcomes for our other stakeholders—treating our employees well, executing as good stewards in the communities and the environments we do business in, and operating with the highest governance and diligence standards. Though many of our stakeholders are not owners of our business, they do have a meaningful influence in the success of our business. Therefore, to optimize value creation for our stockholders, we strive to provide attractive outcomes for our stakeholders.

•

Maintain a conservative financial profile in order to provide durable capital returns in a cyclical industry. The energy services business is historically cyclical, and we believe that a strong balance sheet and substantial liquidity are key, not only for the long-term health of the Company, but also for its ability to continuously return capital to its stockholders through cycles. As of December 31, 2022, on a pro forma basis after giving effect to this offering and the 2023 ABL Credit Facility (as defined below), we expect to have approximately $444.3 million of cash on

hand, approximately $68.3 million available under our asset-based loan credit facility (the “2023 ABL Credit Facility”), and approximately $149.0 million outstanding under our credit agreement with Stonebriar Commercial Finance LLC (the “Term Lender”) pursuant to which the Term Lender extended a $180.0 million single advance six-year term loan credit facility (the “2021 Term Loan Credit Facility”). Further, we plan to continue making regular stockholder distributions as we transition into a public company, likely in the form of regular base dividends and potentially a combination of special dividends and share repurchases. Please see the subsection titled “—Recent Developments—Cash Distribution” and the section titled “Dividend Policy.”

Recent Developments

Cash Distribution and Debt Repayment

In January 2023, we made cash distributions to unitholders of Atlas LLC in the aggregate amount of $15.0 million as permitted by the terms of the Third Amended and Restated Limited Liability Company Agreement of Atlas LLC. Concurrent with this distribution, Atlas LLC repaid $3.75 million of the 2021 Term Loan Credit Facility at par per the terms of the 2021 Term Loan Credit Facility agreement.

Sand Supply & Logistics Agreements with Provisions to Support the Dune Express

Atlas has recently signed sand supply and logistics contracts with major oil companies for the delivery of proppant via the Dune Express upon commercial in-service, which is currently expected to take place in 2024.

2023 ABL Credit Facility

On February 22, 2023, the Company, Bank of America, N.A., as administrative agent, and certain financial institutions party thereto as lenders (the “ABL Lenders”) entered into a Loan, Security and Guaranty Agreement (the “ABL Credit Agreement”) pursuant to which the ABL Lenders provide revolving credit financing to the Company in an aggregate principal amount of up to $75.0 million with availability thereunder subject to a borrowing base as described in the ABL Credit Agreement. The 2023 ABL Credit Facility includes a letter of credit sub-facility, which permits issuances of letters of credit up to an aggregate amount of $25.0 million. The scheduled maturity date of the 2023 ABL Credit Facility is February 22, 2028.

Corporate Reorganization

Atlas LLC was formed on April 20, 2017 for the purpose of being an in-basin, pure-play producer and provider of proppant primarily in the Permian Basin.

Atlas Energy Solutions Inc. (“Atlas Inc.”) was incorporated as a Delaware corporation in February 2022. Following this offering and the corporate reorganization described below, (i) Atlas Inc. will be a holding company whose sole material asset will consist of membership interests in Atlas Sand Operating, LLC (“Atlas Operating”), (ii) Atlas Operating will be a holding company whose sole material asset will be 100% of the membership interests in Atlas LLC and (iii) Atlas LLC will own, directly or indirectly, all of our operating assets. After the consummation of this offering and the corporate reorganization described below, Atlas Inc. will be the managing member of Atlas Operating, will be responsible for all operational, management and administrative decisions relating to Atlas LLC’s business and will consolidate the financial results of Atlas LLC and its subsidiaries.

In connection with the completion of this offering, we will engage in the following transactions, which we refer to as the “corporate reorganization”:

•

a merger will be effected in which Atlas LLC will survive as a wholly owned subsidiary of Atlas Operating;

•

recently formed holding companies (“HoldCos”) will hold the Legacy Owners’ membership interests in Atlas Operating, which membership interests will be represented by a single class of common units (“Atlas Units”);

•

the Legacy Owners will indirectly, through the HoldCos, transfer all or a portion of their Atlas Units and voting rights, as applicable, in Atlas Operating to Atlas Inc. in exchange for shares of Class A common stock and, in the case of Legacy Owners continuing to hold Atlas Units through the HoldCos, shares of Class B common stock (so that such Legacy Owners continuing to hold Atlas Units will, through the HoldCos, hold one share of Class B common stock for each Atlas Unit held by them immediately following this offering); and

•

Atlas Inc. will contribute all of the net proceeds received by it in this offering to Atlas Operating in exchange for a number of Atlas Units (such that the total number of Atlas Units held by Atlas Inc. equals the number of shares of Class A common stock outstanding after this offering), and Atlas Operating will further contribute the net proceeds received to Atlas LLC.

In the event we increase or decrease the number of shares of Class A common stock sold in this offering, the number of Atlas Units held by us immediately following this offering will correspondingly increase or decrease, respectively.

Immediately following this offering, each Legacy Owner’s ownership interest in any shares of Class A common stock, Class B common stock and/or Atlas Units, as the case may be, will be indirect ownership of such securities by virtue of such Legacy Owner’s direct ownership interest in one or more of the HoldCos, which will be the direct record owners of all such securities.

After giving effect to these transactions and this offering and assuming the underwriters’ option to purchase additional shares is not exercised:

•

the Legacy Owners will collectively own all of the outstanding shares of Class B common stock and 31,783,082 shares of Class A common stock, collectively representing 82.0% of the voting power and 63.8% of the economic interest of Atlas Inc.;

•

Atlas Inc. will own an approximate 49.8% interest in Atlas Operating; and

•

the Legacy Owners that continue to hold Atlas Units immediately following the corporate reorganization and this offering will collectively own an approximate 50.2% interest in Atlas Operating.

If the underwriters’ option to purchase additional shares is exercised in full:

•

the Legacy Owners will collectively own all of the outstanding shares of Class B common stock and 31,783,082 shares of Class A common stock, collectively representing 79.8% of the voting power and 60.6% of the economic interest of Atlas Inc.;

•

Atlas Inc. will own an approximate 51.1% interest in Atlas Operating; and

•

the Legacy Owners that continue to hold Atlas Units immediately following the corporate reorganization and this offering will collectively own an approximate 48.9% interest in Atlas Operating.

Each share of Class B common stock has no economic rights but entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders of Class A common stock and Class B common stock will vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or by our amended and restated certificate of incorporation. We do not intend to list our Class B common stock on any exchange.

Our organizational structure following the offering and corporate reorganization is commonly referred to as an “Up-C” structure. Pursuant to this structure, following this offering we will hold a number of Atlas Units equal to the number of shares of Class A common stock issued and outstanding, and the Atlas Unitholders (other than us) will hold a number of Atlas Units equal to the number of shares of Class B common stock issued and outstanding. The Up-C structure was selected in order to (i) allow certain Legacy Owners the option to continue to hold their economic ownership in Atlas LLC in “pass-through” form for U.S. federal income tax purposes through their direct and indirect ownership of Atlas Units, and (ii) potentially allow us to benefit from certain net cash tax savings that we might realize as a result of certain increases in tax basis that may occur as a result of Atlas Inc.’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of Atlas Units pursuant to the exercise of the Redemption Right (as defined below) or the Call Right (as defined below). In contrast to many offerings by issuers choosing an Up-C structure, we have made the decision not to enter into a tax receivable agreement with the Legacy Owners with respect to any such cash tax savings we might realize, which we believe provides for increased alignment between us and our stockholders over the long term.

Following this offering, under the Amended and Restated Limited Liability Company Agreement of Atlas Sand Operating, LLC (the “Atlas Operating LLC Agreement”), the Atlas Unitholders, other than Atlas Inc., will, subject to certain limitations, have the right (the “Redemption Right”) to cause Atlas Operating to acquire all or a portion of their Atlas Units for, at Atlas Operating’s election, (i) shares of our Class A common stock at a redemption ratio of one share of Class A common stock for each Atlas Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (ii) an equivalent amount of cash. We will determine whether to issue shares of Class A common stock or cash based on facts in existence at the time of the decision, which we expect would include the relative value of the Class A common stock (including the trading prices for the Class A common stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an issuance of preferred stock) to acquire the Atlas Units and alternative uses for such cash. Alternatively, upon the exercise of the Redemption Right, Atlas Inc. (instead of Atlas Operating) will have the right (the “Call Right”) to, for administrative convenience, acquire each tendered Atlas Unit directly from the redeeming Atlas Unitholder for, at its election, (x) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (y) an equivalent amount of cash. In connection with any redemption of Atlas Units pursuant to the Redemption Right or the Call Right, a corresponding number of shares of Class B common stock will be cancelled. Please see the section titled “Certain Relationships and Related Party Transactions—Atlas Operating LLC Agreement.”

The following diagram indicates our simplified ownership structure immediately following this offering and the transactions related thereto (assuming the underwriters’ option to purchase additional shares is not exercised):

LOGO

Summary Risk Factors

Investing in our Class A common stock involves risks. You should carefully read the section of this prospectus titled “Risk Factors” and the other information in this prospectus for an explanation of these risks before investing in our Class A common stock. In particular, the following is a summary of some of the principal risks that could materially adversely affect our business, financial condition and results of operations, which could cause a decrease in the price of our Class A common stock and a loss of all or part of your investment.

Risks Related to Our Business and Operations

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Our proppant production and logistics operations depend on the level of activity in the oil and natural gas industries, which experiences substantial volatility due to a number of factors, including demand for oil and natural gas, the COVID-19 pandemic, weather, seasonality and demand for proppant, among others.

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Increasing costs, a lack of dependability or availability of transportation services, or infrastructure or an oversupply of transportation services could have an adverse effect on our business, financial condition and results of operations.

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We may be adversely affected by decreased demand for proppant or the development of technically and cost-effective alternative proppants or new processes to replace hydraulic fracturing.

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Given the nature of our proppant production operations, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and operational breakdowns.

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The development of the Dune Express is a complex and challenging process that may take longer and cost more than estimated, or not be completed at all. In addition, successful development and operation of the Dune Express will depend on certain factors that may be outside of our control, and the storage and transportation capacity or other anticipated benefits of our Dune Express may not be achieved.

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A negative shift in investor sentiment towards the oil and natural gas industry and increased attention to ESG and conservation matters may adversely impact our business.

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Most of our product sales are currently generated at two facilities. Any adverse developments at those facilities could have an adverse effect on our business, financial condition and results of operations.

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If we or our customers are not able to obtain and maintain necessary permits, our results of operations could suffer.

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An increase in the supply of proppant having similar characteristics as the proppant we produce could make it more difficult for us to renew or replace our existing contracts on favorable terms, or at all.

Risks Related to Financial Conditions

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Our indebtedness could adversely affect our financial flexibility and our competitive position.

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Our supply agreements contain provisions requiring us to deliver minimum amounts of sand-based proppant. If we are unable to meet our minimum requirements under these contracts, we may be required to pay penalties or the contract counterparty may be able to terminate the agreement.

Risks Related to Environmental, Mining and Other Regulations

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Silica-related health issues and legislation, including compliance with existing or future regulations relating to respirable crystalline silica, or litigation could have an adverse effect on our business, reputation 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, additional operating restrictions or delays for our customers, which could cause a decline in the demand for our proppant and negatively impact our business, results of operations and financial condition.

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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.

Risks Related to Our Class A Common Stock and Organizational Structure

•

We are a holding company. Our sole material asset after completion of this offering and our corporate reorganization will be our equity interest in Atlas Operating, and we will accordingly be dependent upon cash distributions from Atlas Operating to cover our taxes and corporate and overhead expenses, among other expenses.

•

The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

Emerging Growth Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as we are an emerging growth company, unlike other public companies that are not emerging growth companies under the JOBS Act, we are not required to:

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provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

•

provide more than two years of audited financial statements and related management’s discussion and analysis of financial condition and results of operations;

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comply with any new requirements that may be adopted by the Public Company Accounting Oversight Board (the “PCAOB”) requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

•

provide certain disclosure regarding executive compensation required of larger public companies or hold stockholder advisory votes on executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act; or

•

obtain stockholder approval of any golden parachute payments not previously approved.

We will cease to be an emerging growth company upon the earliest of:

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the last day of the fiscal year in which we have $1.235 billion or more in annual revenues;

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the date on which we become a “large accelerated filer” (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);

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the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

•

the last day of the fiscal year following the fifth anniversary of our initial public offering.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. Our election to use the phase-in periods permitted by this election may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the longer phase-in periods under Section 107 of the JOBS Act and who will comply with new or revised financial accounting standards. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

Principal Executive Offices and Internet Address

Our principal executive offices are located at 5918 W. Courtyard Drive, Suite 500, Austin, Texas 78730, and our telephone number at that address is (512) 220-1200. Our website address is https://atlas.energy. We expect to make our periodic reports and other information filed with or furnished to the SEC available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information contained on, or otherwise accessible through, our website or any other website is not incorporated herein by reference and does not constitute part of this prospectus.

The Offering

Class A common stock offered by us

18,000,000 shares (20,700,000 shares if the underwriters’ option to purchase additional shares is exercised in full).

Class A common stock to be outstanding immediately after completion of this offering

49,783,082 shares (52,483,082 shares if the underwriters’ option to purchase additional shares is exercised in full).

Class B common stock to be outstanding immediately after completion of this offering

50,216,918 shares, or one share for each Atlas Unit held by certain Legacy Owners immediately following this offering and any exercise of the underwriters’ option to purchase additional shares. Class B shares are non-economic. In connection with any redemption of Atlas Units pursuant to the Redemption Right or the Call Right, a corresponding number of shares of Class B common stock will be cancelled.

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

49.8% (or (i) 51.1% if the underwriters’ option to purchase additional shares is exercised in full and (ii) 100% if all outstanding Atlas Units held by certain Legacy Owners were redeemed, along with a corresponding number of shares of our Class B common stock, for newly issued shares of Class A common stock on a one-for-one basis).

Voting power of Class B common stock after giving effect to this offering

50.2% (or (i) 48.9% if the underwriters’ option to purchase additional shares is exercised in full and (ii) 0% if all outstanding Atlas Units held by certain Legacy Owners were redeemed, along with a corresponding number of shares of our Class B common stock, for newly issued shares of Class A common stock on a one-for-one basis).

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. Each share of our Class B common stock entitles its holder to one vote on all matters to be voted on by stockholders generally. Holders of our Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or

approval, except as otherwise required by applicable law or by our amended and restated certificate of incorporation. Please see “Description of Capital Stock.”

Use of proceeds

We expect to receive approximately $355.3 million of net proceeds from the sale of Class A common stock, after deducting underwriting discounts and estimated offering expenses payable by us (assuming the midpoint of the price range set forth on the cover page of this prospectus) (or approximately $409.8 million if the underwriters’ option to purchase additional shares is exercised in full).

We intend to contribute all of the net proceeds of this offering to Atlas Operating in exchange for Atlas Units and Atlas Operating will further contribute the net proceeds received to Atlas LLC. Atlas LLC will use:

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approximately $350.0 million of the net proceeds of this offering to fund the construction of the Dune Express; and

•

approximately $5.3 million of the net proceeds of this offering to fund general corporate purposes.

Please see “Use of Proceeds” for a more complete description of the intended use of proceeds from this offering.

Dividend policy

We expect to pay dividends on our Class A common stock in amounts determined from time to time by our board of directors. Future dividend levels will depend on the earnings of our subsidiaries, their financial condition, cash requirements, regulatory restrictions any restrictions in financing agreements and other factors deemed relevant by the board of directors. Please see “Dividend Policy.”

Redemption rights of Atlas Unitholders

Following this offering, under the Atlas Operating LLC Agreement, the Atlas Unitholders, other than Atlas Inc., will, subject to certain limitations, have the right, pursuant to the Redemption Right, to cause Atlas Operating to acquire all or a portion of their Atlas Units for, at Atlas Operating’s election, (i) shares of our Class A common stock at a redemption ratio of one share

of Class A common stock for each Atlas Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (ii) an equivalent amount of cash. Alternatively, upon the exercise of the Redemption Right, Atlas Inc. (instead of Atlas Operating) will have the right, pursuant to the Call Right, to, for administrative convenience, acquire each tendered Atlas Unit directly from the redeeming Atlas Unitholder for, at its election, (x) one share of Class A common stock, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (y) an equivalent amount of cash. In connection with any redemption of Atlas Units pursuant to the Redemption Right or the Call Right, a corresponding number of shares of Class B common stock will be cancelled. Please see “Certain Relationships and Related Party Transactions—Atlas Operating LLC Agreement.”

Directed share program

At our request, an affiliate of BofA Securities, Inc., a participating Underwriter, has reserved for sale, at the initial public offering price, up to 5% of the shares offered by this prospectus for sale to some of our directors, officers, employees, distributors, dealers, business associates and related persons. If these persons purchase reserved shares it will reduce the number of shares available for sale to the general public. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus.

Proposed listing symbol

We have been approved to list our Class A common stock on the NYSE under the symbol “AESI.”

Risk factors

You should carefully read and consider the information set forth under the heading “Risk Factors” and all other information set forth in this prospectus before deciding to invest in our Class A common stock.

The information above excludes (i) shares of Class A common stock reserved for issuance under our long-term incentive plan (the “LTIP”), which we intend to adopt in connection with the completion of this offering and (ii) shares of Class A common stock reserved for issuance in connection with any exercise of the Redemption Right or Call Right.

Summary Historical and Pro Forma Financial and Operating Data

Atlas Inc. was formed on February 3, 2022 and does not have historical financial results. The following table shows the summary historical condensed consolidated financial information of our Predecessor and the summary pro forma financial information of Atlas Inc. for the periods and as of the dates indicated.

The summary historical condensed consolidated financial information of our Predecessor as of and for the years ended December 31, 2022, 2021, and 2020 was derived from the historical audited consolidated financial statements of our Predecessor included elsewhere in this prospectus.

The summary unaudited pro forma statement of operations and balance sheet data as of and for the year ended December 31, 2022 has been prepared to give pro forma effect to (i) the reorganization transactions described under “Corporate Reorganization” and (ii) this offering and the application of the net proceeds therefrom as if each had been completed as of January 1, 2022, in the case of the statement of operations data, and on December 31, 2022, in the case of the balance sheet data. This information is subject to and gives effect to the assumptions and adjustments described in the notes accompanying the unaudited pro forma financial statements included elsewhere in this prospectus. The summary unaudited pro forma financial and operating data is presented for informational purposes only and should not be considered indicative of actual results of operations that would have been achieved had such transactions been consummated on the dates indicated, and does not purport to be indicative of statements of financial position or results of operations as of any future date or for any future period.

The following table should be read together with the sections titled “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Corporate Reorganization,” and the historical consolidated financial statements of our Predecessor, our pro forma financial statements and related notes included elsewhere in this prospectus.


	Predecessor
	Year ended December 31,
	2022			2021			2020
	(In thousands, except percentages and per ton amounts)
Statement of Operations Data:
Total sales	$	482,724		$	172,404		$	111,772
Cost of sales (excluding depreciation, depletion and accretion expense)		198,918			84,656			73,118
Depreciation, depletion and accretion expense		27,498			23,681			20,887

Gross profit		256,308			64,067			17,767
Selling, general and administrative expense		24,317			17,071			17,743
Impairment of long-lived assets		—			—			1,250

Operating income (loss)		231,991			46,996			(1,226	)
Interest expense, net(1)		(15,760	)		(42,198	)		(32,819	)
Other income (loss)		2,631			291			(25	)

Income (loss) before income taxes		218,862			5,089			(34,070	)
Income tax expense		1,856			831			372

Net income (loss)	$	217,006		$	4,258		$	(34,442	)


	Predecessor
	Year ended December 31,
	2022			2021			2020
	(In thousands, except percentages, per ton amounts and number of shares)
Pro Forma Information (unaudited):
Pro forma net income(2)	$	194,117
Pro forma net income attributable to redeemable non-controlling interest(3)	$	108,937
Pro forma net income attributable to common stockholders(4)	$	85,180
Pro forma net income per common share attributable to common stockholders(2)(4)
Basic	$	1.71
Diluted	$	1.71
Pro forma weighted-average shares outstanding(4)
Basic		49,783,082
Diluted		49,783,082
Other Data:
Sales Volumes (tons)		10,186,886			8,279,036			6,317,716
Contribution Margin(5)	$	283,806		$	87,748		$	38,654
Adjusted EBITDA(5)	$	263,983		$	71,954		$	24,667
Adjusted EBITDA Margin(5)		54.7	%		41.7	%		22.1	%
Adjusted Free Cash flow(5)	$	228,510		$	64,239		$	19,686
Adjusted Free Cash Flow Margin(5)		47.3	%		37.3	%		17.6	%
Adjusted Free Cash Flow Conversion(5)		86.6	%		89.3	%		79.8	%
Net Debt	$	87,140		$	137,773		$	158,736
Cost of Sales per ton(6)	$	19.53		$	10.23		$	11.57
Statement of Cash Flows Data:
Net cash provided by operating activities	$	206,012		$	21,356		$	12,486
Net cash used in investing activities		(89,592	)		(19,371	)		(9,532	)
Net cash provided by (used in) financing activities		(74,811	)		2,344			11,826

Net increase in cash and cash equivalents	$	41,609		$	4,329		$	14,780

Balance Sheet Data (at end of period):
Cash and cash equivalents	$	82,010		$	40,401		$	36,072
Total assets	$	750,999		$	543,850		$	521,742
Long-term debt, net of discount and deferred financing costs(7)		126,588			159,712			134,844
Total liabilities		239,642			205,153			190,045
Total members’ equity	$	511,357		$	338,697		$	331,697

(1)

For the year ended December 31, 2021, includes loss on extinguishment of debt of $11.9 million resulting from the recognition of unamortized debt discount and deferred financing costs upon redemption of the 2018 Term Loan Credit Facility. Additionally, there was a make-whole premium of $4.5 million paid upon redemption of the 2018 Term Loan Credit Facility.

(2)

Pro forma net income (loss) reflects pro forma income tax expense of $24.7 million for the year ended December 31, 2022 associated with the income tax effects of this offering and the corporate reorganization described under the section titled “Corporate Reorganization.” Atlas Inc. is a corporation and is subject to U.S. federal income tax. Our Predecessor is and was generally not subject to U.S. federal income tax at an entity level. As a result, the consolidated net income in our Predecessor’s historical financial statements does not reflect the tax expense we would have incurred if we had been subject to U.S. federal income tax at an entity level during such periods.

(3)	Reflects the pro forma adjustment to non-controlling interest and net income attributable to common stockholders to reflect the ownership of Atlas Units by the Legacy Owners holding Atlas Units immediately following the corporate reorganization and this offering.

(4)

Pro forma net income per share attributable to common stockholders and weighted average shares reflect the estimated number of shares of Class A common stock we expect to have outstanding upon the completion of our corporate reorganization described under the section titled “Corporate Reorganization” and this offering. On a pro forma basis for the year ended December 31, 2022, the potential redemption of Atlas Units and cancellation of the corresponding shares of Class B common stock has been excluded from the reported diluted weighted average shares outstanding used to compute diluted earnings per share as the impact of such redemption would not have an impact on dilutive earnings per share. We use the “if-converted” method to determine the potential dilutive effect of our Class B common stock.

(5)

Please read “—Non-GAAP Financial Measures” below for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt and a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt to our most directly comparable financial measures calculated and presented in accordance with GAAP.

(6)	Includes the cost of sales for product sales and service sales. Excludes cost of sales depreciation, depletion and accretion expense.

(7)	Excludes long-term finance right-of-use lease liabilities.

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures, assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financing methods, capital structure, levels of reinvestment or historical cost basis.

We define Adjusted EBITDA as net income (loss) before depreciation, depletion and accretion, interest expense, net, income tax expense, expense related to workforce reduction, impairment of long-lived assets, unit-based compensation, loss on disposal of property, plant and equipment, gain (loss) on extinguishment of debt and unrealized commodity derivative gain (loss). Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate our operating performance and compare the results of our operations from period to period and against our peers without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired.

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total sales.

We define Adjusted Free Cash Flow as Adjusted EBITDA less maintenance capital expenditures. We define Adjusted EBITDA less Capital Expenditures as Adjusted EBITDA less Net Cash Used in Investing Activities. We believe that Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures are useful to investors as it provides a measure of the ability of our business to generate cash.

We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total sales.

We define Adjusted EBITDA less Capital Expenditures Margin as Adjusted EBITDA less Capital Expenditures divided by total sales.

We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA.

We define Contribution Margin as gross profit plus depreciation, depletion and accretion expense.

We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures.

We define Net Debt as total debt, net of discount and deferred financing costs, plus discount and deferred financing costs, plus right-of-use lease liabilities, less cash and cash equivalents.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, cash flows provided by operating activities or any other measure of financial performance presented in accordance with GAAP as measures of our financial performance. Adjusted EBITDA, Adjusted Free Cash Flow, and Adjusted EBITDA less Capital Expenditures have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt may differ from computations of similarly titled measures of other companies.

The following table presents a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt to the most directly comparable GAAP financial measure for the periods indicated.


	Predecessor
	Year ended December 31,
	2022		2021			2020
	(In thousands)
Net income (loss)(1)	$	217,006	$	4,258		$	(34,442	)
Depreciation, depletion and accretion expense		28,617		24,604			21,579
Interest expense, net		15,760		30,276			32,819
Income tax expense		1,856		831			372

EBITDA		263,239		59,969			20,328
Unit-based compensation expense		678		129			2,545
Impairment of long-lived assets		—		—			1,250
Reduction in workforce expense		—		—			426
Loss on disposal of property, plant and equipment		—		—			118
Loss on extinguishment of debt		—		11,922			—
Unrealized derivative (gain) loss		66		(66	)		—

Adjusted EBITDA		263,983		71,954			24,667
Maintenance Capital Expenditures		35,473		7,715			4,981

Adjusted Free Cash Flow	$	228,510	$	64,239		$	19,686


	Predecessor
	For the Year Ended December 31,
	2022		2021			2020
	(In thousands)
Net income (loss)(1)	$	217,006	$	4,258		$	(34,442	)
Depreciation, depletion and accretion expense		28,617		24,604			21,579
Interest expense, net		15,760		30,276			32,819
Income tax expense		1,856		831			372

EBITDA		263,239		59,969			20,328
Unit-based compensation expense		678		129			2,545
Impairment of long-lived assets		—		—			1,250
Reduction in workforce expense		—		—			426
Loss on disposal of property, plant and equipment		—		—			118
Loss on extinguishment of debt		—		11,922			—
Unrealized derivative (gain) loss		66		(66	)		—

Adjusted EBITDA		263,983		71,954			24,667

Capital expenditures		89,592		19,371			9,532

Adjusted EBITDA less Capital Expenditures	$	174,391	$	52,583		$	15,135


	Predecessor
	Year ended December 31,
	2022			2021			2020
	(In thousands)
Cash from operating activities	$	206,012		$	21,356		$	12,486
Repayment of paid-in-kind interest borrowings		—			22,233			—
Current income tax expense (benefit)(2)		1,858			471			(294	)
Change in operating assets and liabilities		41,774			8,622			(369	)
Cash interest expense(2)		14,904			19,173			12,136
Maintenance Capital Expenditures		(35,473	)		(7,715	)		(4,981	)
Other		(565	)		99			282
Reduction in workforce expense		—			—			426

Adjusted Free Cash Flow	$	228,510		$	64,239		$	19,686


	Predecessor
	For the Year Ended December 31,
	2022			2021			2020
	(In thousands, except percentages)
Cash from operating activities	$	206,012		$	21,356		$	12,486
Repayment of paid-in-kind interest borrowings		—			22,233			—
Current income tax expense (benefit)(2)		1,858			471			(294	)
Change in operating assets and liabilities		41,774			8,622			(369	)
Cash interest expense(2)		14,904			19,173			12,136
Capital expenditures		(89,592	)		(19,371	)		(9,532	)
Other		(565	)		99			282
Reduction in workforce expense		—			—			426

Adjusted EBITDA less Capital Expenditures	$	174,391		$	52,583		$	15,135

Adjusted EBITDA Margin		54.7	%		41.7	%		22.1	%
Adjusted EBITDA less Capital Expenditure Margin		36.1	%		30.5	%		13.5	%
Adjusted Free Cash Flow Margin		47.3	%		37.3	%		17.6	%
Adjusted Free Cash Flow Conversion		86.6	%		89.3	%		79.8	%

Predecessor

Year ended December 31,

2022

2021

2020

(In thousands)

Gross Profit

256,308

64,067

17,767

Depreciation, depletion and accretion expense

27,498

23,681

20,887

Contribution Margin

283,806

87,748

38,654


	Predecessor
	Year ended December 31,
	2022			2021			2020
	(In thousands)
Total Debt	$	147,174		$	175,275		$	174,428
Discount and deferred financing costs		1,821			2,264			19,591
Finance right-of-use lease liabilities(3)		20,155			—			—
Capital lease liabilities(3)		—			635			789
Less: Cash and cash equivalents		(82,010	)		(40,401	)		(36,072	)

Net Debt	$	87,140		$	137,773		$	158,736

(1)

Pro forma net income (loss) reflects pro forma income tax expense of $24.7 million for the year ended December 31, 2022, associated with the income tax effects of this offering and the corporate reorganization described under the section titled “Corporate Reorganization.” Atlas Inc. is a corporation and is subject to U.S. federal income tax. Our Predecessor is and was generally not subject to U.S. federal income tax at an entity level. As a result, the consolidated net income in our Predecessor’s historical financial statements does not reflect the tax expense we would have incurred if we had been subject to U.S. federal income tax at an entity level during such periods.

(2)	A reconciliation of the adjustment of these items used to calculate Adjusted Free Cash Flow to the Consolidated Financial Statements is included below.

(3)

On January 1, 2022, the Company adopted ASU 2016-02, Leases (Topic 842), which resulted in the recognition of $0.6 million of finance right-of-use lease liabilities, previously recognized as capital lease liabilities. Information prior to January 1, 2022 has not been restated and continues to be reported under the accounting standards in effect for the period (ASC Topic 840).


	Predecessor
	Year ended December 31,
	2022			2021			2020
	(In thousands)
Current tax expense reconciliation
Income tax expense	$	1,856		$	831		$	372
Less: deferred tax liabilities		2			(360	)		(666	)

Current income tax expense	$	1,858		$	471		$	(294	)

Cash interest expense reconciliation
Interest expense, net, excluding loss on extinguishment of debt	$	15,760		$	30,276		$	32,819
Less: Interest paid-in-kind through issuance of additional term loans		—			(3,039	)		(11,794	)
Less: Amortization of debt discount		(457	)		(7,320	)		(8,110	)
Less: Amortization of deferred financing costs		(442	)		(739	)		(791	)
Less: Other		43			(5	)		12

Cash interest expense	$	14,904		$	19,173		$	12,136

Maintenance capital expenditures, accrual basis reconciliation
Purchase of property, plant and equipment	$	89,592		$	19,371		$	9,532
Changes in operating assets and liabilities associated with investing activities(1)		20,747			2,362			(844	)
Less: Growth capital expenditures and capital lease additions		(74,866	)		(14,018	)		(3,707	)

Maintenance Capital Expenditures, accrual basis	$	35,473		$	7,715		$	4,981

(1)	Positive working capital changes reflect capital expenditures in the current period that will be paid in a future period. Negative working capital changes reflect capital expenditures incurred in a prior period but paid during the period presented.

RISK FACTORS

Investing in our Class A common stock involves risks. The risks described below as well as information in this prospectus should be considered carefully, including our consolidated financial statements and the notes thereto, and the matters addressed under the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Cautionary Statement Regarding Forward-Looking Statements,” before making an investment decision. The risks and uncertainties described below are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also materially affect our business. The occurrence of any of the following risks or additional risks and uncertainties that are currently immaterial or unknown could materially and adversely affect our business, financial condition, liquidity, results of operations, cash flows and prospects. In such an event, the trading price of our Class A common stock could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Operations

Our proppant production and logistics operations depend on the level of activity in the oil and natural gas industries, which experience substantial volatility.

Our operations that produce and transport proppant are materially dependent on the levels of activity in oil and natural gas exploration, development and production. More specifically, the demand for the proppant we produce is closely related to the number of oil and natural gas wells completed in geological formations where sand-based proppant is used in fracture treatments. These activity levels are affected by both short- and long-term trends in oil and natural gas prices. In recent years, oil and natural gas prices and, therefore, the level of exploration, development and production activity, have experienced significant volatility.

When oil and natural gas prices decrease, exploration and production companies may reduce their exploration, development, production and well completion activities. During such periods, demand for our product and services which supply oil and natural gas wells, including our transportation and logistics solutions, may decline, and may lead to a decline in the market price of proppant, if the supply of proppant is not similarly reduced. When demand for proppant increases, there may not be a corresponding increase in the prices for our products or our customers may not increase use of our products, which could have an adverse effect on our business, financial condition and results of operations.

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 oil and natural gas price volatility. For example, in February 2022, Russia invaded Ukraine and is still engaged in active armed conflict against the country. The conflict and the sanctions imposed in response have led to regional instability and caused dramatic fluctuations in global financial markets and have increased the level of global economic uncertainty, including uncertainty about world-wide oil supply and demand, which in turn has caused increased volatility in commodity prices. Additionally, warmer than normal winters in North America and other weather patterns may adversely impact the short-term demand for natural gas and, therefore, demand for our products. Reduction in demand for natural gas to generate electricity could also adversely impact the demand for proppant. In addition, any future decrease 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, technological innovations that result in new processes for oil and natural gas production that do not require proppant or other factors, could adversely affect the demand for our products, even in a stronger oil and natural gas price environment. Moreover, the energy transition to a low carbon economy, increased deployment of renewable power generation,

renewable fuels and electric vehicles all have the potential to reduce demand for oil and natural gas and consequently the services we provide. The continued or future occurrence of any of these risks could have an adverse effect on our business, financial condition and results of operations.

Our business is subject to the cyclical nature of our customers’ businesses and on the oil and natural gas industry.

Our business is directly affected by capital spending to explore for, develop and produce oil and natural gas in the United States. The oil and natural gas industry is cyclical and historically has experienced periodic downturns in activity. During periods of economic slowdown in one or more of the industries or geographic regions we serve or in the worldwide economy, our customers often reduce their production and capital expenditures by deferring or canceling pending projects, even if such customers are not experiencing financial difficulties. These developments can have an adverse effect on sales of our products and our results of operations.

Weakness in the industries we serve has had, and may in the future have, an adverse effect on sales and our results of operations. A continued or renewed economic downturn in one or more of the industries that we serve, or in the worldwide economy, could cause actual results of operations to differ materially from historical and expected results.

Industry conditions are influenced by numerous factors over which we have no control, including:

•

expected economic returns to E&P companies of new well completions;

•

domestic and foreign economic conditions and supply of and demand for oil and natural gas;

•

the level of prices, and expectations about future prices, of oil and natural gas;

•

the level of global oil and natural gas exploration and production, and inventories;

•

federal, state and local regulation of hydraulic fracturing and exploration and production activities;

•

United States federal, tribal, state and local and non-United States governmental laws, regulations and taxes, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves;

•

changes in the transportation industry that services our business, including the price and availability of transportation;

•

political and economic conditions in oil and natural gas producing countries, including uncertainty or instability resulting from civil unrest, terrorism or war, such as the current conflict between Russia and Ukraine;

•

actions by members of OPEC, Russia and other oil-producing countries with respect to oil production levels and announcements of potential changes in such levels, including the failure of such countries to comply with supply limitation and production cuts;

•

global or national health epidemics, such as the ongoing COVID-19 pandemic (including the spread of variants or mutant strains);

•

political or civil unrest in the United States or elsewhere;

•

worldwide political, military and economic conditions;

•

stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or restrict the exploration, development and production of oil and natural gas;

•

advances in exploration, development and production technologies or in technologies affecting energy consumption; and

•

the potential acceleration of development of alternative fuels.

Decreased demand for proppant or the development of technically and cost-effective alternative proppants or new processes to replace hydraulic fracturing would negatively impact our business.

Frac sand is the most commonly used proppant in the completion and re-completion of oil and natural gas wells through hydraulic fracturing. A significant shift in demand from frac sand to other proppants, such as ceramic proppant, the development and use of other effective alternative proppants, or the development of new processes to replace hydraulic fracturing altogether, could cause a decline in demand for frac sand that we produce and would have an adverse effect on our business, financial condition and results of operations.

In addition, 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 reduced demand for oil and natural gas may have an 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 oil and natural gas and therefore for our product and services, which would lead to a reduction in our revenues and negatively impact our business, financial condition and results of operations.

Our future performance will depend on our ability to succeed in competitive markets and on our ability to appropriately react to potential fluctuations in demand for, and supply of, our products and services.

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. Transportation costs are a significant portion of the total cost to customers of proppant (in many instances transportation costs can represent more than 50% of delivered cost), the proppant market is typically local, and competition from beyond the local area is limited. Further, competition in the industry is based on customer relationships, reliability of supply, consistency and quality of product, customer service, site location, distribution capability, breadth of product offering, technical support and price.

Some of our competitors may have or may develop greater financial, natural and other resources than we do. Periodically, some of our competitors may reduce the pricing that they offer to our customers for a variety of reasons. One or more of our competitors may develop technology superior to ours or may have production facilities located in closer proximity to certain customer location than we do. For example, mobile mines may be able to mine resources in close proximity to wells, enabling them to deliver sand with significantly lower transportation costs. When the demand for hydraulic fracturing services decreases or the supply of proppant available in the market increases, prices in the proppant market can materially decrease. Our competitors may choose to consolidate, which could provide them with greater financial and other resources than us and improve their competitive positioning. Furthermore, oil and natural gas exploration and production companies and other providers of hydraulic fracturing services have acquired, and in the future may acquire, their own proppant reserves to fulfill their proppant requirements, and these other market participants may expand their existing proppant production capacity, all of which would negatively impact demand for our proppant. In addition, increased competition in the proppant industry could have an adverse impact on our ability to enter into long-term contracts or to enter into contracts on favorable terms.

Past performance by members of our management team, our directors or their respective affiliates may not be indicative of future performance of an investment in us.

Information regarding performance by, or businesses associated with, our management team, our directors and their affiliates is presented for informational purposes only. Past performance of our management team, our directors and their affiliates is not a guarantee of our future success or similar results. You should not rely on the historical record of the performance of our management team, our directors or their affiliates as being indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.

Increasing costs, a lack of dependability or availability of transportation services or infrastructure or an oversupply of transportation services could have an adverse effect on our business, financial condition and results of operations.

The transportation industry is subject to possible legislative and regulatory changes that may affect the economics of the industry by requiring changes in operating practices or by changing the demand or the cost of providing truckload services.

Transportation and related costs tend to be a significant component of the total delivered cost to our customers purchasing our proppant. The high relative cost of transportation related expense tends to favor manufacturers located in close proximity to the customer. Additionally, increases in the price of transportation costs, including freight charges, fuel surcharges and demurrage costs, could negatively impact operating costs if we are unable to pass those increased costs along to our customers. Failure to find long-term solutions to these logistical challenges could adversely affect our ability to respond quickly to the needs of our customers or result in additional increased costs, and thus could negatively impact our business, results of operations and financial condition.

Our operations are subject to operational hazards and inherent risks, some of which are beyond our control, and some of which may not be fully covered by insurance.

Our business and operations may be affected by natural or man-made disasters and other external events, many of which are not in our control. In addition to the other risks described in these risk factors, these risks include:

•

unanticipated ground, grade or water conditions;

•

environmental hazards;

•

physical facility security breaches;

•

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

•

failure to maintain dust controls and meet restrictions on respirable crystalline silica dust;

•

failures in quality control systems or training programs;

•

technical difficulties or key equipment failures;

•

inability to obtain necessary mining or production equipment or replacement parts;

•

fires, explosions or industrial accidents or other accidents; and

•

facility shutdowns in response to environmental regulatory actions.

These hazards can also cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension or cancellation of operations. Any prolonged downtime or shutdowns at our mining properties or production facilities

could have an adverse effect on our business, financial condition and results of operations. In addition, our operations are subject to, and exposed to, employee/employer liabilities and risks such as wrongful termination, discrimination, labor organizing, retaliation claims and general human resource related matters.

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 an adverse effect on our business, financial condition and results of operations.

Our ability to produce our products economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our dredging operations.

The dredging process that we currently employ to produce from our Kermit and Monahans facilities requires significant quantities of water from the aquifer underlying our acreage. If in the future there is insufficient capacity available from this aquifer to provide a source of water for our dredging and associated processes as a result of drought or similar conditions affecting the environment, we will be required to obtain water from other sources that may not be available, or may be too costly, and we may be unable to continue our dredge mining operations entirely. The effects of climate change may also further exacerbate water scarcity in certain regions, including at the aquifer on our acreage. If such an event were to require us to discontinue dredging and resume operations using traditional proppant production processes, this could impair our cost of operations and ability to economically produce our reserves and would have an adverse effect on our financial condition, results of operations and cash flows.

Failure to maintain effective quality control systems at our mining and production facilities could have an adverse effect on our business, financial condition and operations.

The quality and safety of our products are critical to the success of our business. These factors depend significantly on the effectiveness of our quality control systems, which, in turn, depend 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 an adverse effect on our business, financial condition, results of operations and reputation.

Our business involves significant risks and hazards, including environmental hazards, industrial accidents and breakdowns of equipment and machinery. Our electric dredge mining operations are subject to delays and accidents associated with electrical supply, repositioning and maintenance. Furthermore, during operational breakdowns, the relevant facility may not be fully operational within the anticipated timeframe, which could result in further business losses. The occurrence of any of these or other hazards could delay production, suspend operations, increase repair, maintenance or medical costs and, due to the integration of our facilities, could have an adverse effect on the productivity and profitability of a particular facility or on our business as a whole. Although insurance policies provide limited coverage for these risks, such policies will not fully cover some of these risks.

The development of the Dune Express is a complex and challenging process that may take longer and cost more than estimated, or not be completed at all. In addition, successful

development and operation of the Dune Express will depend on certain factors that may be outside of our control, and the storage and transportation capacity or other anticipated benefits of our Dune Express may not be achieved.

We may encounter adverse geological conditions, regulatory procedures or other legal requirements that could impede the construction or operation of the Dune Express. The inability to obtain any permits and other federal, state or local approvals that may be required, and any excessive delays in obtaining such permits and approvals due, for example, to litigation or third-party appeals, could potentially prevent us from successfully constructing and operating the Dune Express in a timely manner.

We plan to engage qualified construction firms to perform work associated with the construction of the Dune Express. However, if such firms experience delays, if they perform sub-standard work or if we fail to properly monitor the quality of their work or the timeliness of their progress, we may not be able to complete construction or begin operation of the Dune Express by the date or at the cost currently estimated. In any such circumstance, we could also face difficulties meeting certain delivery obligations to our customers or incur additional costs in making such deliveries by truck or other alternative means. Any material delay caused by our construction firms and subcontractors could therefore ultimately impact our ability achieve the anticipated benefits of the Dune Express and its integrated mining facilities and have an adverse effect on our business, financial condition and results of operations.

Operation of the Dune Express will depend on transmission and distribution facilities. If transmission to the Dune Express or any of its integrated mining facilities were to be interrupted physically, mechanically or with cyber means, it may hinder our ability to mine, sell or deliver proppant to our customers, satisfy our contractual obligations or otherwise operate or fully realize the expected benefits of the Dune Express.

A negative shift in investor sentiment towards the oil and natural gas industry and increased attention to environmental, social and governance (“ESG”) and conservation matters may adversely impact our business.

Increasing attention to climate change and natural capital, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative sources of energy may result in increased costs (including but not limited to increased costs associated with compliance, stakeholder engagement, contracting, and insurance), reduced demand for our customers’ hydrocarbon products and our product and services, reduced profits, increased legislative and judicial scrutiny, investigations and litigation, and negative impacts on our stock price and access to capital markets. Increasing attention to climate change and environmental conservation, for example, may result in demand shifts for our customers’ hydrocarbon products and additional governmental investigations and private litigation against those customers. To the extent that societal pressures or political or other factors are involved, it is possible that liability could be imposed on our customers without regard to their causation of or contribution to the asserted damage, or to other mitigating factors. To date, however, changes in societal pressures and consumer demand related to increased attention to ESG and conservation matters have not had a material impact on our customers’ operations or otherwise materially and adversely affected our business. Voluntary disclosures regarding ESG matters, as well as any ESG disclosures mandated by law, could result in private litigation or government investigation or enforcement action regarding the sufficiency or validity of such disclosures. In addition, failure or a perception (whether or not valid) of failure to implement ESG strategies or achieve ESG goals or commitments, including any GHG reduction or neutralization goals or commitments, could result in governmental investigations or enforcement, private litigation and damage our reputation, cause our investors or consumers to lose confidence in our Company, and negatively impact our operations.

Moreover, while we may create and publish disclosures regarding ESG matters, many of the statements in those disclosures may be on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying and measuring many ESG matters. Such disclosures may also be partially reliant on third-party information that we have not or cannot independently verify. Additionally, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters, and increased regulation will likely to lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us or our customers and to the diversion of investment to other industries, which could have a negative impact on our stock price and our or our customers’ access to and costs of capital. Also, institutional lenders may, of their own accord, decide not to provide funding for fossil fuel industry companies based on climate change, natural capital, or other ESG related concerns, which could affect our or our customers’ access to capital for potential growth projects. Moreover, to the extent ESG matters negatively impact our or the fossil fuel industry’s reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations.

Our business may suffer if we lose or are unable to attract and retain members of our workforce.

We depend to a large extent on the services of our senior management team and other key personnel. These employees have extensive experience and expertise in evaluating and analyzing industrial mineral properties, maximizing production from such properties, marketing industrial mineral production and developing and executing financing and hedging strategies.

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 additional personnel as needed could have an 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 other personnel. Our operations also rely on skilled laborers using modern techniques and equipment to mine efficiently. We may be unable to train or attract the necessary number of skilled laborers to maintain our operating costs.

With respect to our trucking services, the 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 and could negatively affect our operations and expenses if we are unable to do so. Our success will be dependent on our ability to continue to attract, employ and retain highly skilled personnel at all levels of our operations.

A shortage of skilled labor together with rising labor costs in the excavation industry may further increase operating costs, which could adversely affect our business, results of operations and financial condition.

Efficient sand excavation using modern techniques and equipment requires skilled laborers, preferably with several years of experience and proficiency in multiple tasks, including processing of mined minerals. If there is a shortage of experienced labor in areas in which we operate, we may find it difficult to hire or train the necessary number of skilled laborers to perform our own operations which could have an adverse impact on our business, results of operations and financial condition.

As a result of the volatility of the oilfield services industry and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive. Increased competition for their services could result in a loss of available, skilled workers or at a price that is not as advantageous to our business, both of which could negatively affect our operating results. 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.

Inaccuracies in our estimates of sand reserves and resource deposits, or deficiencies in our title to those deposits, could result in our inability to mine the deposits or require us to pay higher than expected costs.

We base our sand reserve and resource estimates on engineering, economic and geological data assembled and analyzed by our mining engineers, which are reviewed periodically by outside firms. However, frac sand reserve estimates are by nature 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 frac sand reserves and non-reserve frac sand deposits and costs to mine recoverable reserves, many of which are beyond our control and any of which could cause actual results to differ materially from our expectations. These uncertainties include:

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

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assumptions regarding the effectiveness of our mining, quality control and training programs;

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

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

In addition, 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 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. Any inaccuracy in our estimates related to our mineral reserves and non-reserve mineral deposits, or our title to such deposits, could result in our inability to mine the deposits or require us to pay higher than expected costs.

Further, the SEC has adopted amendments to its disclosure rules (the “SEC Modernization Rules”) to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the Exchange Act, which are codified in Regulation S-K subpart 1300. Under the SEC Modernization Rules, the historical property disclosure requirements for mining registrants included in SEC Industry Guide 7 have been replaced. As a result of the adoption of the SEC Modernization Rules, the SEC now recognizes estimates of “measured mineral resources,” “indicated mineral

resources” and “inferred mineral resources.” However, compared to mineralization that has been characterized as reserves, mineralization described using these terms has a greater amount of uncertainty as to their existence and whether they can be mined legally or economically, and investors are therefore cautioned not to assume that any reported “measured mineral resources,” “indicated mineral resources” or “inferred mineral resources” are or will be economically or legally mineable.

All of our product sales are currently generated at two facilities. Any adverse developments at those facilities could have an adverse effect on our business, financial condition and results of operations.

All of our product sales are currently derived from our Kermit and Monahans facilities located in Winkler and Ward Counties in Texas. Any adverse development at these facilities due to catastrophic events or weather, adverse government regulatory impacts, transportation-related constraints or any other event that could cause us to curtail, suspend or terminate operations at either of these facilities, could result in us being unable to deliver our contracted volumes and related obligations. Although we maintain insurance coverage to cover a portion of these types of risks, there could be potential risks associated with our operations not covered by insurance. There also may be certain risks covered by insurance where the policy does not reimburse us for all of the costs related to such risks. Downtime or other delays or interruptions to our future operations that are not covered by insurance could have an adverse effect on our business, results of operations and financial condition. In addition, under our supply contracts, if we are unable to deliver contracted volumes, we may be required to pay liquidated damages that could have an adverse effect on our financial condition and results of operations.

Our operations consume large amounts of natural gas and electricity. An increase in the price or a significant interruption in the supply of these or any other energy sources could have an adverse effect on our business, financial condition and results of operations.

Natural gas and electricity costs represented approximately 3.4% and 0.7%, respectively, of our total product sales in the year ended December 31, 2022, and 5.9% and 1.9%, respectively, of our total product sales in the year ended December 31, 2021. Potential climate change regulations or carbon or emissions taxes could result in higher cost of production for energy, which may be passed on to us in whole or in part. A significant increase in the price of energy that is not recovered through an increase in the price of our product and services or covered through our hedging arrangements or an extended interruption in the supply of electricity or natural gas to our production facilities could have an adverse effect on our business, results of operations and financial condition.

A large portion of our sales is generated by our top 10 customers, and the loss of or a significant reduction in purchases by our largest customers could adversely affect our business, financial condition and results of operations.

Our 10 largest customers accounted for approximately 67.7% of total sales for the year ended December 31, 2022. During the years ended December 31, 2021 and 2020, our 10 largest customers accounted for 79.0% and 81.4% of total sales, respectively. Some of our customers have exited or could exit the business, or have been or could be acquired by other companies that purchase proppant solutions or logistics services we provide from other third-party providers. Our current customers also may seek to acquire proppant or logistics services from other providers that offer more competitive pricing or capture and develop their own sources of proppant solutions or logistics services. The loss of a customer or contract, or a reduction in the amount of proppant solutions or logistics services purchased by any customer, could have an adverse effect on our business, financial condition and results of operations. Further, as a result of market conditions, competition or other factors, these customers may not continue to purchase the same levels of our products in the future, if at all. Substantial reductions in purchase volumes across these customers could have an adverse effect on our business, financial condition and results of operations.

Upon the expiration of our current contracts, our customers may not continue to purchase the same levels of proppant solutions or logistics services due to a variety of reasons. In addition, we may choose to renegotiate our existing contracts on less favorable terms or at reduced volumes in order to preserve relationships with our customers. Any renegotiation of our contracts on less favorable terms, or inability to enter into new contracts on economically acceptable terms upon the expiration of our current contracts, could have an adverse effect on our business, financial condition and results of operations.

Our business and operations depend on our and our customers’ ability to obtain and maintain necessary permits.

We and our customers hold numerous governmental, environmental, mining and other permits and approvals authorizing operations at each of our facilities. Our future success depends on, among other things, our ability, and the ability of our customers, to obtain and maintain the necessary permits and licenses required to conduct operations. 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 impact that our activities may have on the environment. Compliance with these regulatory requirements is expensive and significantly lengthens the time needed to conduct operations. Additionally, obtaining or renewing required permits is sometimes delayed, conditioned or prevented due to community opposition, opposition from other parties, the location of existing or proposed third-party operations, or other factors beyond our control. The denial of a new or renewed permit essential to our operations, delays in obtaining such a permit or the imposition of conditions in order to acquire the permit could impair our ability to continue operations at the affected facilities, delay those operations, or involve significant unplanned costs, any of which could adversely affect our business, performance and financial condition.

Our supply agreements may preclude us from taking advantage of increasing prices for proppant or mitigating the effect of increased operational costs during the term of those contracts.

The supply agreements we have may negatively impact our results of operations. Our sales contracts require our customers to pay a specified price for a specified volume of proppant. Although some of our supply agreements provide for price adjustments based on various factors, such adjustments are generally calculated on a quarterly basis and do not adjust dollar-for-dollar with adjustments in spot market prices. As a result, in periods with increasing prices our sales will not keep pace with market prices.

Additionally, if our operational costs increase during the terms of our supply agreements, we will not be able to pass some of those increased costs to our customers. If we are unable to otherwise mitigate these increased operational costs, our net income could decline.

A proppant production facility closure entails substantial costs, and if we close any of our facilities sooner than anticipated, our results of operations may be adversely affected.

We base our assumptions regarding the life of our proppant production facilities 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 of our proppant production facilities sooner than expected, sales will decline unless we are able to increase production at any of our other proppant production facilities, which may not be possible. The closure of a proppant production facility may also involve significant fixed closure costs, including accelerated employment legacy costs, severance-related obligations, and potentially reclamation and other environmental costs and the costs of terminating long-term obligations, including energy contracts and equipment leases. We accrue for the estimated costs to retire the assets over the expected timing of settlement. If we were to reduce the estimated time to settlement, the fixed proppant production facilities closure costs could be applied to a shorter period of production, which would increase production costs per ton produced and could adversely affect our results of operations and financial condition.

In addition, some environmental laws such as the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), impose strict, retroactive and joint and several liability for the remediation of releases of hazardous substances.

Certain of our contracts contain provisions requiring us to deliver minimum amounts of sand-based proppant. If we are unable to meet our minimum requirements under these contracts, we may be required to pay penalties or the contract counterparty may be able to terminate the agreement.

In certain instances, we commit to deliver products under penalty of nonperformance. We commit to deliver products to our customers prior to production, and we are obligated to deliver a minimum volume of sand-based proppant per year or per month under our supply agreements over their respective terms. Depending on the contract, our inability to deliver the requisite volume of sand-based proppant may permit our customers to terminate the agreement or require us to pay our customers a fee, the amount of which is generally calculated by multiplying the difference between the amount of volume contracted for and the amount delivered by a per-ton penalty specified in the contract. In such events, our results of operations may be adversely affected.

Currently, all of our operations are concentrated in the Permian Basin, making us vulnerable to risks associated with operating in a limited geographic area.

Currently, all of our operations are geographically concentrated in the Permian Basin. As a result, we may be disproportionately exposed to various factors, including, among others: (i) the impact of regional supply and demand factors, (ii) delays or interruptions of completion activity in such areas caused by governmental regulation, (iii) processing or transportation capacity constraints, (iv) market limitations, (v) availability of equipment and personnel or (vi) water shortages or other drought related conditions. This concentration in a limited geographic area also increases our exposure to changes in local laws and regulations, certain lease stipulations designed to protect wildlife and unexpected events that may occur in the regions such as natural disasters, seismic events, industrial accidents or labor difficulties. Any of the risks described above could have an adverse effect on our business, financial condition, results of operations and cash flow.

If significant new reserves of proppant are discovered and developed and have similar characteristics to the proppant we produce, we may be unable to renew or replace our existing contracts on favorable terms, if at all. Specifically, if proppant is oversupplied, our customers may not be willing to enter into long-term take-or-pay contracts, may demand lower prices or both, which would have an adverse effect on our business, results of operations and financial condition. Similarly, the ongoing COVID-19 pandemic has caused a historic slowdown in oil and natural gas activity, which has led to an increase in available proppant supply relative to the reduced demand. The foregoing events have led to increased competition among our competitors, which could lead to pressure to further reduce prices to compete effectively.

Our results of operations are significantly affected by the market price of sand-based proppant, which have been historically subject to substantial price fluctuations.

Our results of operations and financial conditions are, and will continue to be, particularly sensitive to the long- and short-term changes in the market price of sand-based proppant. Among other factors, these prices also affect the value of our reserves and inventories, and could negatively impact the market price of our Class A common stock.

Market prices are affected by numerous factors beyond our control, including, among others, demand for high quality sand-based proppant, the availability and relative cost of alternate sources of sand, drilling and completion activity in the Permian Basin, prevailing commodity prices and overall economic activity.

Additionally, when demand for sand-based proppant increases, there may not be a corresponding or immediate increase in the prices for our products or our customers may choose to opt for lower-quality, lower priced products, which could have an adverse effect on our results of operations and financial condition. For example, the average price of frac sand F.O.B. minegate in the Permian Basin in 2019 was approximately $17.86 per ton, compared to a low of approximately $13.25 per ton in 2020 during the COVID-19 pandemic. As activity recovered during 2021, the average price of frac sand F.O.B. minegate increased to approximately $18.59 per ton, recovering only a portion of the previous price decrease. 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 an adverse effect on our business and financial condition, even in a stronger oil and natural gas price environment.

Our E&P customers’ operations are subject to operating risks that are often beyond our control and could have an adverse effect on our business, financial condition and results of operations.

In addition to the sand-based proppant that we supply, the operations of our E&P customers rely on several other products and services in order to perform hydraulic fracturing activities, such as skilled laborers and equipment required for pumping proppant, water and fluids into oil and natural gas wells. Any failure by our E&P customers to obtain these other products and services could have an adverse effect on our business, financial condition and results of operations.

Our business and operations could suffer in the event of cybersecurity breaches, information technology system failures, network disruptions or other cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss.

We rely on our information technology systems and other digital information to process transactions, summarize our operating results, deliver our systems, perform many of our services and manage our business and operations. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and personally identifiable information of our employees. Our information technology systems and networks, and those of our customers, vendors, suppliers and other business partners, are subject to damage or interruption from power outages; computer and telecommunications failures; computer viruses; cyberattack 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 need 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.

We have been the target of cyberattacks, and while to date none of these incidents has had a material impact on us, we expect to continue to be targeted in the future. Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, the outsourcing of some of our business operations, the ongoing shortage of qualified cybersecurity professionals and the interconnectivity and interdependence of third parties to our systems.

As cyber incidents continue to evolve, we will likely be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. In addition, any technology required for any mandate by authorities

requiring the transition to remote work increases our vulnerability to cybersecurity threats, including threats to gain unauthorized access to sensitive information or to render data or systems. Any material disruption in our information technology systems or systems that affect our business operations, delays or difficulties in implementing or integrating new systems or enhancing current systems, or any vulnerabilities rendering data or systems unusable following any mandated remote work situations, could have an adverse effect on our business and results of operations.

The systems we employ to detect and prevent cyberattacks may be insufficient to protect us from an incident or to allow us to minimize the magnitude and effects of such incident for a significant period of time. The occurrence of a cyberattack, breach, unauthorized access, misuse, computer virus or other cybersecurity event could jeopardize our systems, interrupt our operations or result in the unauthorized disclosure, gathering, monitoring, misuse, corruption, loss or destruction of confidential and other information that belongs to us, our customers, our counterparties or third-party service providers that is processed and stored in, and transmitted through, our computer systems and networks. Any such event could result in significant losses, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations.

Our business and results of operations have been adversely affected by, and may again in the future be adversely affected by, the ongoing COVID-19 pandemic.

Public health crises, pandemics and epidemics, such as the ongoing COVID-19 pandemic, have adversely impacted, and may again adversely impact our operations, the operations of our customers and the global economy, including the worldwide demand for oil and natural gas and the level of demand for our product and services. Fear of such events has also altered the level of capital spending by oil and natural gas companies for exploration and production activities and has adversely affected global economies and financial markets, resulting in an economic downturn that has affected demand for our product and services. For instance, the outbreak of COVID-19 and its development into a pandemic has caused governmental authorities to impose mandatory closures, seek voluntary closures and impose restrictions on, or advisories with respect to, travel, business operations and public gatherings or interactions. Though we are currently deemed an essential business and, as a result, are exempt from many orders in their current form, the impact of the ongoing COVID-19 pandemic, and measures to prevent its spread, have adversely affected our businesses in a number of ways.

The COVID-19 pandemic (including the spread of variants of mutant strains) may significantly worsen during the upcoming months, which may cause governmental authorities to consider further restrictions on business and social activities. In the event governmental authorities increase restrictions, the re-opening of the economy may be further curtailed. We have experienced, and expect to continue to experience, some resulting disruptions to our business operations, as these restrictions have significantly impacted, and may continue to impact, many sectors of the economy. For example, the COVID-19 pandemic has caused one of the most challenging times in the recent history of the North-American E&P industry. The rig count in the Permian Basin decreased from a peak of 488 in 2019 to a trough of 117 in 2020, however our revenues and net cash provided by operating activities only contracted from $140.1 million and $22.7 million, respectively, for the year ended December 31, 2019, to $111.8 million and $12.5 million, respectively, for the year ended December 31, 2020, before recovering to $172.4 million and $21.4 million, respectively, for the year ended December 31, 2021. Our revenues and net cash provided by operating activities increased by $310.3 million and $184.6 million, respectively, from the year ended December 31, 2021, to $482.7 million and $206.0 million, respectively, for the year ended December 31, 2022.

The global impact of the ongoing COVID-19 pandemic continues to evolve, and we will continue to monitor the situation closely. The ultimate impact of the pandemic (including the spread of variants of mutant strains) on our business, financial condition and results of operations is highly uncertain and

subject to change, and will depend on future developments, including the duration of the outbreak within the United States and the related impact on the oil and natural gas industry, the impact of governmental actions designed to prevent the spread of COVID-19 and the availability of effective treatments and vaccines, all of which cannot be predicted with certainty at this time. While vaccines have become available in most countries and many economies have reopened, the status of the global recovery remains uncertain and unpredictable, especially in light of new variant strains. Business activity may not recover as quickly as anticipated, and widespread recovery will be impacted by future developments, including future waves of outbreak or new variant strains of the virus which may require re-closures or other preventative measures. Conditions will be subject to the effectiveness of government policies, vaccine administration rates, and other factors that may not be foreseeable. Any of the foregoing could adversely affect our business, results of operations and financial condition.

There are complex software and technology systems that need to be developed in coordination with our technology partner in connection with our autonomous trucking initiative, and there can be no assurance such systems will be successfully developed or implemented for use in our planned applications or at all.

Our planned autonomous proppant-delivery vehicles will use a substantial amount of third-party software codes and complex hardware to operate. The development of these advanced technologies is inherently complex, and we will need to coordinate with our technology partner in connection with the design, production and deployment of our autonomous proppant-delivery vehicles. Defects and errors may be revealed over time and our control over the performance of such third-party services and systems may be limited. Accordingly, our potential inability to successfully develop and implement the necessary software and technology systems may harm our competitive position.

We are relying on our technology partner to develop, manufacture and install a number of emerging technologies for use in our autonomous proppant-delivery vehicles. These technologies may not be commercially viable when used in our planned applications or at all. There can be no assurances that our technology partner will be able to meet the technological requirements, production timing and end-use specifications required to successfully implement our planned autonomous trucking initiative. In addition, the initial deliveries of our autonomous vehicles may not occur by the date or at the cost currently estimated. If any material delays or cost increases were to occur, we may also be unable to meet certain proppant-delivery obligations to our customers or incur additional costs in making such deliveries by traditional trucking methods or other alternative means, which could have an adverse effect on our business, financial condition and results of operations.

Our autonomous driving technology and related hardware and software could have undetected defects, errors or bugs in hardware or software, which could create safety or cybersecurity issues and could expose us to liability and other claims that could adversely affect our business.

Autonomous driving technology is highly technical and very complex, and has in the past and may in the future experience defects, errors or bugs at various stages of implementation. In the event of such defect, error or bug, we may incur significant additional development costs, repair or replacement costs, or more importantly, liability for personal injury or property damage caused by such errors or defects. Any insurance that we carry may not be sufficient or it may not apply to all situations that may arise in connection with the planned applications of our autonomous delivery vehicles. In accidents involving semi-trucks, most of the resulting fatalities are victims outside of the vehicle. If we experience such an event or multiple events, our insurance premiums could significantly increase or insurance may not be available to us at all. In addition, lawmakers or governmental agencies could pass laws or adopt regulations that limit the use of autonomous-trucking technology or increase liability associated with its use. Any of these events could adversely affect our reputation, relationships with our customers, financial condition and results of operations.

In addition, we could face material legal claims as a result of these problems. Any such lawsuit may cause irreparable damage to our brand and reputation. In addition, defending a lawsuit, regardless of its merit, could be costly and may divert management’s attention and adversely affect the market’s perception of us and our products and services. In addition, our business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable to us on acceptable terms or at all. These product-related issues could result in claims against us and have an adverse effect on our business, financial condition and results of operations.

Any unauthorized control or manipulation of the information technology systems in our autonomous proppant-delivery vehicles could result in loss of customer confidence in us and the products and services we provide.

Our autonomous proppant-delivery vehicles will contain complex information technology systems and built-in data connectivity to log location data and accept and install periodic remote updates to improve or update their functionality or performance. Our technology partner expects to design, implement and test security measures intended to prevent unauthorized access to its and our information technology networks, the autonomous vehicle platforms it produces and related or connected systems. However, hackers may attempt to gain unauthorized access to modify, alter and use such networks, vehicles and systems to gain control of or to change our autonomous vehicles’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by our autonomous vehicles. Future vulnerabilities could be identified and manipulated and our or our technology partner’s efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of our autonomous proppant-delivery vehicles, or any loss of data, could result in legal claims or proceedings against us and remediation of such problems could result in significant, unplanned capital expenditures. In addition, regardless of their veracity, reports of unauthorized access to our autonomous proppant-delivery vehicles or our or our customers’ data, as well as other factors that may result in the perception that our autonomous proppant-deliver vehicles or data are capable of being “hacked,” could negatively affect our brand and harm our business, financial condition and results of operations.

Risks Related to Our Financial Condition

We may be unable to generate sufficient cash to service all of our indebtedness and financial commitments.

Our ability to make scheduled payments on or to refinance our indebtedness and financial commitments depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions including financial, business and other factors beyond our control. We may be unable to generate sufficient cash flow to permit us to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund debt and other obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure our indebtedness. Our ability to restructure or refinance indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to service our debt would likely result in a reduction of our future credit rating, if any, which could harm our ability to incur additional indebtedness. If we face substantial liquidity problems, we might be required to sell assets to meet debt and other obligations. Our debt restricts our ability to dispose of assets and dictates our use of the proceeds from such disposition. We may not be able to consummate dispositions, and the proceeds of any such disposition may be inadequate to meet our obligations.

We may be unable to access adequate funding as a result of a decrease in the borrowing base under the 2023 ABL Credit Facility due to an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover a defaulting lender’s portion. As a result, we may be unable to execute our development plan, make acquisitions or otherwise conduct operations, which would have an adverse effect on our financial condition and results of operations.

Our indebtedness could adversely affect our financial flexibility and our competitive position.

On October 20, 2021, we entered into the 2021 Term Loan Credit Facility. As of December 31, 2022, $149.0 million of the principal amount of the term loan was outstanding under the 2021 Term Loan Credit Facility. The proceeds of the 2021 Term Loan Credit Facility were used, among other uses, to repay all outstanding indebtedness under the 2018 Term Loan Credit Facility. The term loan outstanding under the 2021 Term Loan Credit Facility (the “Term Loan”) bears interest at a rate of 8.47% per annum.

Atlas Operating and its subsidiaries have, and we expect to maintain in the near term, a significant amount of indebtedness. Under our 2023 ABL Credit Facility, the lenders thereunder (the “ABL Lenders”) provide revolving credit financing to Atlas LLC in an aggregate principal amount of up to $75.0 million with availability thereunder subject to a borrowing base as described in the loan agreement governing the 2023 ABL Credit Facility (the “ABL Credit Agreement”). As of December 31, 2022, we had no loans outstanding under our previous asset-based loan credit facility (the “2018 ABL Credit Facility”) and we were using $1.1 million for outstanding letters of credit, leaving $48.9 million of borrowing availability under our 2018 ABL Credit Facility prior to its termination in February 2023.

Our debt agreements contain a number of significant covenants that may limit our ability to, among other things:

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incur additional indebtedness;

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sell or convey assets;

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make loans to or investments in others;

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enter into mergers;

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make certain payments;

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hedge future production or interest rates;

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incur liens;

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pay dividends; and

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engage in certain other transactions without the prior consent of the lenders.

Our indebtedness could also have important consequences to you and significant effects on our business, including:

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increasing our vulnerability to adverse changes in general economic, industry and competitive conditions;

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requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes, including dividend payments;

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restricting us from exploiting business opportunities;

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making it more difficult to satisfy our financial obligations, including payments on our indebtedness;

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disadvantaging us when compared to our competitors that have less debt; and

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increasing our borrowing costs or otherwise limiting our ability to borrow additional funds for the execution of our business strategy.

Changes to applicable tax laws and regulations, exposure to additional income tax liabilities, changes in our effective tax rates or an assessment of taxes resulting from an examination of our income or other tax returns could adversely affect our results of operations and financial condition, including our ability to repay our debt.

We are subject to various complex and evolving U.S. federal, state and local taxes. U.S. federal, state and local tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our results of operations and financial condition, including our ability to repay our debt. For example, several tax proposals have been set forth that would, if enacted into law, make significant changes to U.S. tax laws. Such proposals include, but are not limited to, (i) an increase in the U.S. income tax rates applicable to individuals and corporations, (ii) the elimination of tax subsidies for fossil fuels, (iii) the imposition of a minimum tax on book income for certain corporations and (iv) the imposition of an excise tax on certain corporate stock repurchases that would be borne by the corporation repurchasing such stock. Congress may consider, and could include, some or all of these proposals in connection with tax reform that may be undertaken. It is unclear whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws could adversely affect our results of operations and financial condition.

Changes in our effective tax rates or tax liabilities could also adversely affect our results of operations and financial condition. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

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changes in the valuation of our deferred tax assets and liabilities;

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expected timing and amount of the release of any tax valuation allowances;

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expansion into future activities in new jurisdictions;

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the availability of tax deductions, credits, exemptions, refunds and other benefits to reduce tax liabilities; and

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tax effects of share-based compensation.

In addition, an adverse outcome arising from an examination of our income or other tax returns could result in higher tax exposure, penalties, interest or other liabilities that could have an adverse effect on our results of operations and financial condition.

We will need substantial additional capital to operate our business, and the inability to obtain needed capital or financing, on satisfactory terms, or at all, whether due to restrictions in our 2023 ABL Credit Facility, 2021 Term Loan Credit Facility or otherwise, could have an adverse effect on our growth and profitability.

Our business plan requires a significant amount of capital expenditures to maintain and grow our production levels over the long term. Although we currently use a significant amount of our cash reserves and cash generated from our operations to fund the maintenance and development of our existing sand reserves, we may need to depend on external sources of capital to fund future capital expenditures if proppant prices were to decline for an extended period of time, if the costs of our operations were to increase substantially or if other events were to occur that reduce our sales or

increase our costs. Our ability to obtain bank financing or to access the capital markets for future equity or debt offerings may be limited by our financial condition at the time of any such financing or offering, adverse market conditions or other contingencies and uncertainties that are beyond our control. Our failure to obtain the funds necessary to maintain, develop and increase our asset base could adversely impact our growth and profitability.

In addition, our existing 2023 ABL Credit Facility and 2021 Term Loan Credit Facility contain, and any future financing agreements we may enter into could also contain, operating and financial restrictions and covenants that may limit our ability to finance future operations or capital needs or to engage in, expand or pursue our business activities.

Our ability to comply with these restrictions and covenants is uncertain and will be affected by the levels of cash flow from our operations and events and circumstances beyond our control, including the ongoing COVID-19 pandemic (including the spread of variants of mutant strains). If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of the restrictions or covenants in our 2023 ABL Credit Facility and 2021 Term Loan Credit Facility, a significant portion of our indebtedness may become immediately due and payable and our 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. In addition, our obligations under our 2021 Term Loan Credit Facility are secured by substantially all of our assets, and if we are unable to repay our indebtedness or satisfy our other obligations under these, the lenders could seek to foreclose on our assets.

Even if we are able to maintain existing financing or access the capital markets, incurring additional debt may significantly increase our interest expense and financial leverage, and our indebtedness could restrict our ability to fund future development and acquisition activities. In addition, the issuance of any additional equity interests may result in significant dilution to our common stockholders.

We are subject to counterparty credit risk. Nonpayment or nonperformance by our customers, suppliers or vendors could have an adverse effect on our business, liquidity, financial condition and results of operations.

We are subject to the risk of loss resulting from nonpayment or nonperformance by our customers, suppliers and vendors. 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 use the production could have an adverse effect on our business, results of operations and financial condition. A decline in oil and natural gas prices could negatively impact the financial condition of our customers and sustained lower prices could impact their ability to meet their financial obligations to us. Further, our contract counterparties may not perform or adhere to our existing or future contractual arrangements. To the extent one or more of our contract counterparties is in financial distress or commences bankruptcy proceedings, contracts with these counterparties may be subject to renegotiation or rejection under applicable provisions of the United States Bankruptcy Code. Any material nonpayment or nonperformance by our contract counterparties due to inability or unwillingness to perform or adhere to contractual arrangements could adversely affect our business and results of operations. If our customers delay or fail to pay us a significant amount of our outstanding receivables, it could have an adverse effect on our business, liquidity financial condition and results of operations.

If we fail to comply with the restrictions and covenants in our debt agreements, there could be an event of default under the terms of such agreements, which could result in an acceleration of payment.

A breach of any representation, warranty or covenant in any of our debt agreements would result in a default under the applicable agreement after any applicable grace periods. A default could result in acceleration of the indebtedness which would have an adverse effect on us. If an acceleration occurs, it would likely accelerate all of our indebtedness through cross-default provisions and we would likely be unable to make all of the required payments to refinance such indebtedness. Even if new financing were available at that time, it may not be on terms that are acceptable to us.

Any future indebtedness could adversely affect our financial condition.

We will, subject to the terms and conditions in the ABL Credit Agreement and availability under the borrowing base described therein, be able to borrow up to $75.0 million under our 2023 ABL Credit Facility and anticipate that up to approximately $149.0 million under the 2021 Term Loan Credit Facility will remain outstanding after giving effect to the use of the net proceeds of this offering.

In addition, subject to the limits contained in our 2023 ABL Credit Facility and 2021 Term Loan Credit Facility, we may incur substantial additional debt from time to time. Any borrowings we may incur in the future would have several important consequences for our future operations, including that:

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covenants contained in the documents governing such indebtedness may require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise;

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our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited;

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we may be competitively disadvantaged to our competitors that are less leveraged or have greater access to capital resources; and

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we may be more vulnerable to adverse economic and industry conditions.

If we incur indebtedness in the future, we may have significant principal payments due at specified future dates under the documents governing such indebtedness. Our ability to meet such principal obligations will be dependent upon future performance, which in turn will be subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control. Our business may not continue to generate sufficient cash flow from operations to repay any incurred indebtedness. If we are unable to generate sufficient cash flow from operations, we may be required to sell assets, to refinance all or a portion of such indebtedness or to obtain additional financing.

Risks Related to Environmental, Mining and Other Regulations

We are subject to laws and regulations relating to human exposure to crystalline silica. For example, the federal Occupational Safety and Health Act (“OSHA”) has implemented rules establishing a more stringent permissible exposure limit for exposure to respirable crystalline silica and provided other provisions to protect employees. These rules require compliance with engineering control obligations to

limit exposures to respirable crystalline silica in connection with hydraulic fracturing activities. In June 2022, the DOL’s Mine Safety and Health Administration (“MSHA”) launched a new enforcement initiative to better protect U.S. miners from health hazards resulting from repeated overexposure to respirable crystalline silica. MSHA reports that silica dust affects thousands of miners each year and, without adequate protection, miners face risks of serious illnesses, many of which can be fatal.

As part of the program, MSHA will conduct silica dust-related mine inspections and expand silica sampling at mines, while providing mine operators with compliance assistance and best practices to limit miners’ exposure to silica dust.

Specifically, the silica enforcement initiative will include:

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Spot inspections at mines with a history of repeated silica overexposures to closely monitor and evaluate health and safety conditions.

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Increased oversight and enforcement of known silica hazards at mines with previous citations for exposing miners to silica dust levels over the existing permissible exposure limit of 100 micrograms. For mines where the operator has not timely abated hazards, MSHA will issue a withdrawal order until the silica overexposure hazard has been abated.

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Expanded silica sampling at mines to ensure inspectors’ samples represent the mines, commodities, and occupations known to have the highest risk for overexposure.

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A focus on sampling during periods of the mining process that present the highest risk of silica exposure for miners.

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Reminding miners about their rights to report hazardous health conditions, including any attempt to tamper with the sampling process.

In addition, the DOL’s Educational Field and Small Mine Services staff will provide compliance assistance and outreach to mine operators, unions and other mining community organizations to promote and advance protections for miners. The MSHA initiative is intended to take immediate action to reduce the risks of silica dust exposure as the DOL’s development of a mining industry standard continues.

If we are unable to satisfy these obligations, or are not able to do so in a manner that is cost effective or attractive to our customers, our business operations may be adversely affected or availability or demand for our products could be significantly affected. Federal and state regulatory authorities, including OSHA and MSHA, and analogous state agencies may continue to propose changes in their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits and required controls and personal protective equipment, and we can provide no assurance that we will be able to comply with any future laws and regulations relating to exposure to crystalline silica that are adopted, or that costs of complying with such future laws and regulations would not have an 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 health risks, including the lung disease silicosis. There is evidence of an association between crystalline silica exposure or silicosis and lung cancer and 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 hydraulic fracturing industry. Concerns over silicosis and other potential adverse health effects, as well as concerns regarding potential liability from the use of hydraulic fracture sand, may have the effect of discouraging our customers’ use of hydraulic fracture sand. The actual or perceived health risks of handling hydraulic fracture sand could adversely affect hydraulic fracturing service providers, including us, through reduced use of hydraulic fracture sand, the threat of product liability or employee lawsuits naming us as a defendant, increased scrutiny by federal, state and local regulatory authorities of us and our customers or reduced financing sources available to the hydraulic fracturing industry.

Over the past few decades, a number of companies that utilize silica in their operations have been named as a defendant, usually among many defendants, in numerous product liability lawsuits brought by or on behalf of current or former employees or customers alleging damages caused by silica exposure. The silica-related litigation brought against us to date and associated litigation costs, settlements and verdicts have not resulted in a material liability to us, and we presently maintain insurance policies where available. However, we may continue to have silica exposure claims filed against us in the future, including claims that allege silica exposure for periods or in areas not covered by insurance, and the costs, outcome and impact to us of any pending or future claims is not certain. Any such pending or future claims or inadequacies of our insurance coverage could have a material adverse effect on our business, reputation, financial condition, and results of operations.

We supply proppant to hydraulic fracturing operators in the oil and natural gas industry. Hydraulic fracturing is an important practice that is used to stimulate production of oil and natural gas from low permeability hydrocarbon bearing subsurface rock formations. The hydraulic fracturing process involves the injection of water, proppant, and chemicals under pressure into the formation to fracture the surrounding rock, increase permeability and stimulate production.

Although we do not directly engage in hydraulic fracturing activities, our customers purchase our proppant for use in their hydraulic fracturing activities. Hydraulic fracturing is typically regulated by state oil and natural gas commissions and similar agencies. Some states have adopted, and other states are considering adopting, regulations that could impose new or more stringent permitting, disclosure or well construction requirements on hydraulic fracturing operations. Aside from state laws, local land use restrictions may restrict drilling in general or hydraulic fracturing in particular. Municipalities may adopt local ordinances attempting to prohibit hydraulic fracturing altogether or, at a minimum, allow such fracturing processes within their jurisdictions to proceed but regulating the time, place and manner of those processes. In addition, federal agencies have started to assert regulatory authority over the process and various studies have been conducted or are currently underway by the Environmental Protection Agency (“EPA”), and other federal agencies concerning the potential environmental impacts of hydraulic fracturing activities. At the same time, certain environmental groups have suggested that additional laws may be needed and, in some instances, have pursued voter ballot initiatives to more closely and uniformly limit or otherwise regulate the hydraulic fracturing process, and legislation has been proposed by some members of Congress to provide for such regulation.

The adoption of new laws or regulations at the federal, state or local levels imposing reporting obligations on, or otherwise limiting, delaying, restricting, or prohibiting 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 proppant. In addition, heightened political, regulatory, and public scrutiny of hydraulic fracturing practices 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 limits the ability of our customers to operate. Such costs and scrutiny could directly or indirectly, through reduced demand for our proppant, have an adverse effect on our business, financial condition and results of operations.

We and our customers are subject to extensive environmental and occupational health and safety regulations 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.

We are subject to a variety of federal, state and local environmental laws and regulations affecting the mining and mineral processing industry, including, among others, those relating to employee health and safety, environmental permitting and licensing, plant and wildlife protection, wetlands protection, air and water emissions, greenhouse gas emissions, water pollution, waste management, including the transportation and disposal of waste and other materials, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, hazardous materials and natural resources. These laws and regulations have imposed, and will continue to impose, numerous obligations on our operations and the operations of our customers, including the acquisition of permits or other approvals to conduct regulated activities, the imposition of restrictions on the types, quantities and concentrations of various substances that may be released into the environment or injected in non-productive formations below ground in connection with oil and natural gas drilling and production activities, the incurrence of capital expenditures to mitigate or prevent releases of materials from our equipment, facilities or from customer locations where we are providing services, the imposition of substantial liabilities for pollution resulting from our operations, and the application of specific health and safety criteria addressing worker protection. Some environmental laws impose substantial penalties for noncompliance, and others, such as CERCLA, impose strict, retroactive and joint and several liability for the remediation of releases of hazardous substances.

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 have an adverse effect on our business. 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 impair or delay our operations.

Moreover, environmental requirements, and the interpretation and enforcement of these requirements, change frequently and have tended to become more stringent over time. 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. The costs associated with complying with such requirements, could have an adverse effect on our business, financial condition and results of operations.

Any failure by us or by our customers 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:

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assessment of sanctions including administrative, civil or criminal penalties;

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denial, modification, or revocation of permits or other authorizations;

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occurrence of restrictions, delays or cancellations in permitting or development or performance of projects or operations;

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

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requirements to perform site investigatory, remedial, or other corrective actions or the incurrence of capital expenditures.

Any such regulations could require us to modify existing permits or obtain new permits, implement additional pollution control technology, curtail operations, increase significantly our operating costs or impose additional operating restrictions among our customers that reduce demand

for our services. Such permit proceedings are often subject to public notice and comment, and third parties, including nongovernmental environmental organizations, may challenge government actions related to permits required for our operations.

Further, our business activities present risks of incurring significant environmental costs and liabilities, including costs and liabilities resulting from our handling of oilfield and other wastes, because of air emissions and wastewater discharges related to our operations, and due to historical oilfield industry operations and waste disposal practices. Moreover, accidental releases or spills may occur in the course of our operations or at facilities where our wastes are taken for reclamation or disposal, and we cannot assure you that we will not incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for injuries to persons or damages to properties or natural resources. Some environmental laws and regulations may impose strict liability, which means that in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior operators or other third parties. Remedial costs and other damages arising as a result of environmental laws and costs associated with changes in environmental laws and regulations could be significant and have an adverse effect on our liquidity, consolidated results of operations and financial condition.

Laws and regulations protecting the environment generally have become more stringent in recent years and are expected to continue to do so, which could lead to material increases in costs for future environmental compliance and remediation. In particular, the ESA restricts activities that may result in a “take” of endangered or threatened species and provides for substantial penalties in cases where listed species are taken by being harmed. The DSL is one example of a species that, if listed as endangered or threatened under the ESA, could impact our operations and the operations of our customers. The DSL is found in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas, including areas where our customers operate and our proppant facilities are located. The USFWS is currently conducting a thorough review to determine whether listing the dunes sagebrush lizard as endangered or threatened under the ESA is warranted. If the DSL is listed as an endangered or threatened species, our operations and the operations of our customers in any area that is designated as the DSL’s habitat may be limited, delayed or, in some circumstances, prohibited, and we and our customers could be required to comply with expensive mitigation measures intended to protect the DSL and its habitat. In 2021, we were accepted into the USFWS-approved CCAA for the DSL. We have supported and contributed to the development of the CCAA since its inception. Our participation in the CCAA and our other voluntary conservation measures for the benefit of the DSL, including plans to set aside as much as 17,000 acres for DSL habitat, helps reduce the risk of disruptions to our business and operations in the event the DSL is listed. Furthermore, new laws and regulations, amendment of existing laws and regulations, reinterpretation of legal requirements or increased governmental enforcement with respect to environmental matters could restrict, delay or curtail exploratory or developmental drilling for oil and natural gas by our customers and could limit our well servicing opportunities.

We may not be able to comply with any new or amended laws and regulations that are adopted, and any new or amended laws and regulations could have an adverse effect on our operating results by requiring us to modify our operations or equipment or shut down our facility. Additionally, our customers may not be able to comply with any new or amended laws and regulations, which could cause our customers to curtail or cease operations. We cannot at this time reasonably estimate our costs of compliance or the timing of any costs associated with any new or amended laws and regulations, or any material adverse effect that any new or modified standards will have on our customers and, consequently, on our operations.

Our and our customers’ operations are subject to a number of risks arising out of the threat of climate change, including regulatory, political, litigation and financial risks, which could result in increased operating and capital costs for our customers and reduced demand for our products and services.

In recent years, the U.S. Congress has considered legislation to reduce emissions of greenhouse gas (“GHGs”), including methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas. 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 are expected to be proposed that may be relevant to GHG emissions issues. For example, in August 2022, U.S. Congress passed, and President Biden signed into law the Inflation Reduction Act of 2022 which appropriates significant federal funding for renewable energy initiatives and, for the first time ever, imposes a fee on GHG emissions from certain facilities. The emissions fee and funding provisions of the law could increase the operating costs of our customers and accelerate the transition away from fossil fuels, which could in turn adversely affect our business and results of operations. In addition, a number of states are addressing GHG emissions, primarily through the development of emission inventories or regional GHG cap and trade programs. Depending on the particular program, we could be required to control GHG emissions or to purchase and surrender allowances for GHG emissions resulting from our operations. Independent of Congress, the EPA has adopted regulations controlling GHG emissions under its existing authority under the federal Clean Air Act (“CAA.”) For example, following its findings that emissions of GHGs present an endangerment to human health and the environment because such emissions contributed to warming of the earth’s atmosphere and other climatic changes, the EPA has adopted regulations under existing provisions of the CAA that, among other things establish construction and operating permit reviews for GHG emissions from certain large stationary sources that are already potential major sources for conventional pollutants. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified production, processing, transmission and storage facilities in the United States on an annual basis. Relatedly, in November 2021, the EPA issued a proposed rule under the CAA that was intended to reduce methane and VOC emissions from the oil and natural gas industry, and in particular the crude oil and natural gas source category, which includes crude oil and natural gas production, as well as natural gas processing, transmission, and storage facilities. In November 2022, the EPA announced a supplemental proposed rulemaking intended to strengthen and expand its November 2021 proposed rule, and to impose more stringent requirements on the natural gas and oil industry. The 2022 proposed rule is currently subject to a public comment period that runs through February 13, 2023, and is expected to be finalized in 2023. We cannot predict whether and in what form EPA will finalize these amendments; however, any additional regulation of air emissions from the crude oil and natural gas sector could result in increased expenditures for pollution control equipment, which could impact our customers’ operations and negatively impact our business.

On an international level, over 190 countries, including the United States reached an agreement, known as the Paris Agreement, to reduce global GHG emissions in December 2015. The United States withdrew from this agreement under the Trump Administration, but reentered shortly after President Biden took office.

In April 2021, President Biden announced a goal of reducing the United States’ emissions by 50-52% below 2005 levels by 2030. In November 2021, the international community gathered again in Glasgow at the 26^th Conference to the Parties on the UN Framework Convention on Climate Change (“COP26”), during which multiple announcements were made, including a call for parties to eliminate certain fossil fuel subsidies and pursue further action on non-CO2 GHGs. Relatedly, while at COP26, the United States and European Union jointly announced the launch of the “Global Methane Pledge,” which aims to cut global methane pollution at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector. Since its formal launch at COP26, over 150 countries have joined the

pledge. We cannot predict what additional legislative or regulatory requirements may result from these developments. COP26 concluded with the finalization of the Glasgow Climate Pact, which stated long-term global goals (including those in the Paris Agreement) aimed at limiting the increase in the global average temperature and reducing GHG emissions. These goals were reaffirmed at the November 2022 UN Climate Change Conference of Parties (“COP27”). Several states and geographic regions in the United States have also adopted legislation and regulations to reduce emissions of GHGs, including cap and trade regimes and commitments to contribute to meeting the goals of the Paris Agreement. To the extent that the United States and other countries implement the Paris Agreement and other international pledges or local, state, regional, national or international governments impose other climate change regulations on the oil and natural gas industry, our business could be adversely affected because substantial limitations on GHG emissions could adversely affect demand for the oil and natural gas that is produced by our customers.

Governmental, scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States, including climate change-related pledges made by certain candidates elected to public office. President Biden has issued several executive orders focused on addressing climate change, including items that may impact our costs to produce, or demand for, oil and natural gas. Additionally, in November 2021, the Biden Administration released “The Long-Term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050,” which establishes a roadmap to net-zero emissions in the United States by 2050 through, among other things, improving energy efficiency; decarbonizing energy sources via electricity, hydrogen and sustainable biofuels; and reducing non-CO2 GHG emissions, such as methane and nitrous oxide. The Biden Administration is also considering revisions to the leasing and permitting programs for oil and natural gas development on federal lands. For more information, see the risk factor below titled “Any restrictions on oil and natural gas development on federal lands has the potential to adversely impact our operations and the operations of our customers.” Other actions that could be pursued may include the imposition of more restrictive requirements for the establishment of pipeline infrastructure or the permitting of LNG export facilities, as well as more strict GHG emission limitations for oil and natural gas facilities. Litigation risks are also increasing, as a number of entities have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change. Suits have also been brought against such companies under stockholder and consumer protection laws, alleging that companies have been aware of the adverse effects of climate change but failed to adequately disclose those impacts. To the extent these risks impact our customers, we may experience reduced demand for our proppant.

There are also increasing financial risks for fossil fuel producers as stockholders currently invested in fossil fuel energy companies may elect in the future to shift some or all of their investments into other sectors. Institutional lenders who provide financing to fossil fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies. For example, at COP26, the Glasgow Financial Alliance for Net Zero (“GFANZ”) announced that commitments from over 550 firms around the world had resulted in over $130 trillion in capital committed to net zero goals. The various sub-alliances of GFANZ generally require participants to set short-term, sector-specific targets to transition their financing, investing, and/or underwriting activities to net zero emissions by 2050. There is also a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. President Biden signed an executive order calling for the development of a “climate finance plan” and, separately, the Federal Reserve has joined the Network for Greening the Financial System (“NGFS”), a consortium of financial regulators focused on addressing climate-related risks in the financial sector. In November 2021, the Federal Reserve issued a statement in support of the efforts of the NGFS to identify key issues and potential solutions for the climate-related challenges most relevant to central banks and supervisory authorities. Limitation of investments in and financings

for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities, which could reduce demand for our proppant.

Additionally, in March 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related data risks and opportunities, including financial impacts, physical and transition risks, related governance and strategy and GHG emissions, for certain public companies. We are currently assessing this rule but at this time we cannot predict the ultimate impact of the rule on our business or those of our customers. The SEC originally planned to issue a final rule by October 2022, but most commentators now expect a final rule to be issued in early 2023. To the extent this rule is finalized as proposed, we or our customers could incur increased costs related to the assessment and disclosure of climate-related risks and certain emissions metrics. In addition, enhanced climate disclosure requirements could accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon intensive sectors.

Finally, physical climate change impacts, including increased frequency and severity of storms, severe and persistent drought conditions, winter storms, floods and other climatic events, may potentially have a large impact on our operations and financial results, and our customers’ exploration and production operations. The potential impacts of climate change and climate change regulations are highly uncertain at this time, and thus we cannot currently anticipate or predict any material adverse effect of climate change-related matters on our consolidated financial condition, results of operations, or how our cash flows may be effected as a result of climate change and climate change regulations.

Restrictions on our operations and those of our customers intended to protect certain species of wildlife could have an adverse impact on our ability to expand some of our existing operations or limit our customers’ ability to develop new oil and natural gas wells.

Various federal and state statutes prohibit certain actions that adversely affect endangered or threatened species and their habitat, migratory birds, wetlands, and natural resources. These statutes include the ESA, the Migratory Bird Treaty Act (“MBTA”), and the federal Clean Water Act (“CWA”). The USFWS may designate critical habitat areas that it believes are necessary for survival of threatened or endangered species. As a result of a 2011 settlement agreement, the USFWS was required to determine whether to identify more than 250 species as endangered or threatened under the ESA by no later than completion of the agency’s 2017 fiscal year. The USFWS missed the deadline but reportedly continues to review new species for protected status under the ESA pursuant to the settlement agreement. A critical habitat designation could result in further material restrictions on federal land use or on private land use and could delay or prohibit land access or development. Where takings of or harm to species or damages to wetlands, habitat, or natural resources occur or may occur, government entities or at times private parties may act to prevent or restrict oil and natural gas exploration activities or seek damages for any injury, whether resulting from drilling or construction or releases of oil, wastes, hazardous substances or other regulated materials, and in some cases, criminal penalties may result. Similar protections are offered to migratory birds under the MBTA.

The DSL is one example of a species that, if listed as endangered or threatened under the ESA, could impact our operations and the operations of our customers. The DSL is found in the active and semi-stable shinnery oak dunes of southeastern New Mexico and adjacent portions of Texas, including areas where our customers operate and our proppant facilities are located. The USFWS is currently conducting a thorough review to determine whether listing the dunes sagebrush lizard as endangered or threatened under the ESA is warranted. On November 17, 2021, one environmental organization delivered a Notice of Intent to Sue to the U.S. Department of the Interior (“DOI”) and the USFWS for failing to timely list the DSL as endangered. Then, in August 2022, the USFWS agreed, via a stipulated settlement agreement in a federal district court, to make an endangerment or threatened listing determination for the DSL by June 29, 2023. If the DSL is ultimately listed as an endangered or

threatened species, our operations and the operations of our customers in any area that is designated as the DSL’s habitat may be limited, delayed or, in some circumstances, prohibited, and we and our customers could be required to comply with expensive mitigation measures intended to protect the dunes sagebrush lizard and its habitat. However, in January 2021, USFWS approved a CCAA for the DSL habitat in non-federal lands in certain counties of western Texas. We were a contributor to and supporter of the CCAA since its inception and have since been accepted into the program. Our participation in the CCAA and our other voluntary conservation measures for the benefit of the DSL reduces the risk of disruptions to our business and operations in the event the DSL is listed.

Another species whose recent listing could impact the operations of our customers is the Lesser Prairie-Chicken. In November 2022, the USFWS formally listed two Distinct Population Segments (“DPSs”) of the lesser prairie-chicken under the ESA. The Southern DPS, the habitat of which includes portions of southeast New Mexico and western Texas, was listed as endangered, while the Northern DPS, the habitat of which spans from northern Texas, through eastern Oklahoma, and intro southeastern Colorado and southwester Nebraska, was listed as threatened. The listed territory of the Southern DPS could overlap with the operating areas of some our customers, who in turn may be adversely affected by any restrictions which arose as a result of the endangerment determination. The identification or designation of further previously unprotected species as threatened or endangered in areas where we or our customers operate could cause us to incur increased costs arising from species protection measures or could result in limitations on our customers that result in reduced demand for our services, adversely affects the results of our operations. There is also increasing interest from a variety of stakeholders, including investors and institutional lenders, in nature-related matters beyond protected species, such as general biodiversity, which may similarly require us to incur costs or take other measures which may materially impact our business or operations.

Any restrictions on oil and natural gas development on federal lands has the potential to adversely impact our operations and the operations of our customers.

Many of our customers possess leases in New Mexico which are granted by the federal government and administered by the Bureau of Land Management (“BLM”), a federal agency. Operations conducted by our customers on federal oil and natural gas leases must comply with numerous additional statutory and regulatory restrictions. These leases contain relatively standardized terms requiring compliance with detailed regulations. Under certain circumstances, the BLM may require operations on federal leases to be suspended or terminated. Any such suspension or termination of our customers’ leases could reduce demand for our service and adversely impact the results of our operations.

Additionally, the Biden Administration has taken several actions to curtail oil and natural gas activities on federal lands. For example, on January 27, 2021, President Biden issued an executive order that instructed the Secretary of the Interior to pause new oil and natural gas leases on public lands, but not existing operations under valid leases or on tribal lands which the federal government merely holds in trust, pending completion of a comprehensive review and reconsideration of federal oil and natural issued a preliminary injunction against the order gas permitting and leasing practices. A federal district court in June 2021, which the Fifth U.S. Circuit Court of Appeals vacated and remanded to the district court on August 17, 2022. The federal district court issued a permanent injunction against the order on August 18, 2022 limited to the thirteen plaintiff states, which included Texas. Meanwhile, the DOI released a report on the federal oil and natural gas leasing program in November 2021 which included several recommendations for how to reform the program. Some of the report’s recommendations, including an increased royalty rate and a significant reduction in total available acreage have been incorporated into recent lease sales. In November 2022, BLM also issued a proposed rule to reduce the waste of natural gas from venting, flaring, and leaks during oil and gas production activities on Federal and Native American leases, which is currently subject to a public

comment period that runs through January 30, 2023. While we cannot predict the ultimate impact of these changes or whether the DOI, or any additional operating restrictions, and BLM will implement further reforms, any revisions to the federal leasing or permitting process that make it more difficult for our customers to pursue operations on federal lands may adversely impact our operations. The outcome of litigation surrounding the Biden Administration’s Social Cost of Carbon (“SCC”) metric may also impact future regulatory decision-making and our customers’ ability to obtain federal leases. In February 2022, a district court blocked the Biden Administration’s use of its interim SCC value in agency decision-making. As a result the BLM’s first quarter oil and gas lease sale was delayed. In March 2022, the Fifth Circuit stayed the order while the government’s appeal remains in progress. The ultimate result of this litigation may impact the character of new regulations on certain of the federal oil and gas leases of our customers, which in turn could impact our results of operations.

Additionally, oil and natural gas operations on federal lands, and related infrastructure projects, may be impacted by recent changes to National Environmental Policy Act (“NEPA”) implementing regulations. In 2020, the Trump Administration made a variety of substantive and procedural changes to NEPA, including limiting the scope of review to the direct effects of a proposed project on the environment. A new ‘Final Rule,’ introduced by the Biden Administration in April 2022, which took effect in May 2022, reversed several changes introduced by the 2020 rule, including the scope limitations. The 2022 Final Rule requires NEPA reviews to incorporate consideration of indirect and cumulative impacts of the proposed project, including effects on climate change and GHGs, consistent with pre-2020 requirements. The new rule also allows agencies to create stricter NEPA rules as they see fit, but left in place the 2020 rule two-year time limit to complete environmental impact statements. The issuance of the new rule completes the first of a two-phased process by the Council on Environmental Quality’s (“CEQ”) to reconsider and revise the 2020 rule, so additional changes to the NEPA rules may be expected after the second phase of CEQ’s review is complete. While the ultimate impact of these changes or whether the DOI and the BLM will implement further reforms cannot be predicted, any revisions to the federal leasing or permitting process that makes it more difficult for our customers to operate economically on federal lands may materially and adversely impact our operations and results.

In addition to administrative and policy risks, operations on federal lands also face litigation risks. Ongoing litigation related to the federal oil and gas leasing program, the Biden Administration’s use of the SCC metric, and NEPA review may impact the federal oil and gas leases of our customers, which in turn could impact our results of operations. More recently, a June 2022 settlement approved by a federal district court in Washington, D.C., obligates BLM to redo its environment reports under NEPA for all oil and gas leases sold between 2015 and 2020, including leases in New Mexico. The settlement stems from a 2016 lawsuit alleging that BLM was not properly accounting for the cumulative climate impacts of its federal leasing program. Separately, there is a risk that authorizations required for existing operations may be delayed to the point that it causes a business disruption, and we cannot guarantee that further action will not be taken to curtail oil and natural gas development on federal land. For example, certain lawmakers have proposed to reduce or ban further leasing on federal lands or to adopt further restrictions for same. To the extent such legislation is passed, it may adversely impact our customers’ operations, which could negatively impact our financial performance or results of operations.

We and our customers are subject to regulations that impose stringent health and safety standards on numerous aspects of our operations.

Multiple aspects of our and our customers’ operations are subject to health and safety standards, including our mining operations, our trucking operations, and employee exposure to crystalline silica.

Our mining operations are subject to the Mine Safety and Health Act of 1977 (“Mine Act”), as amended by the Mine Improvement and New Emergency Response Act of 2006, which imposes stringent health and safety standards on numerous aspects of mineral extraction and processing

operations, including the training of personnel, operating procedures, operating equipment and other matters. Our operating locations are regularly inspected by the MSHA for compliance with the Mine Act.

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 addition, our operations must comply with the Fair Labor Standard Act, which governs such matters as wages and overtime, and which is administered by the DOL. We may be audited periodically by the DOT or the DOL to ensure that we are in compliance with these safety, hours-of-service, wage and other rules and regulations.

We are also subject to laws and regulations relating to human exposure to crystalline silica. Several federal and state regulatory authorities, including MSHA and OSHA, may continue to propose changes to their regulations regarding workplace exposure to crystalline silica, such as permissible exposure limits, required controls and personal protective equipment. Our failure to comply with existing or new health and safety standards, or changes in such standards or the interpretation or enforcement thereof, could require us or our customers to modify operations or equipment, shut down some or all operating locations, impose significant restrictions on our ability to conduct operations or otherwise have an adverse effect on our business, financial condition and 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 proppant 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 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 proppant. Such current or future regulations could have an adverse effect on our business, and we may not be able to obtain or renew permits in the future.

Risks Related to Our Class A Common Stock and Organizational Structure

We are a holding company and will have no material assets other than our equity interest in Atlas Operating. We will have no independent means of generating revenue. To the extent Atlas Operating has available cash and subject to the terms of any current or future debt instruments, the Atlas Operating LLC Agreement will (i) require Atlas Operating to make pro rata cash distributions to the Atlas Unitholders, including us, in an amount sufficient to allow us to pay our taxes and (ii) permit us, as managing member of Atlas Operating, to cause Atlas Operating to make additional pro rata distributions to the Atlas Unitholders, including to us and the Legacy Owners holding Atlas Units after this offering, in an amount generally intended to allow such holders (other than us) to satisfy their respective income tax liabilities with respect to their allocable share of the income of Atlas Operating, based on certain assumptions and conventions, to the extent such liabilities exceed amounts otherwise distributed by Atlas Operating. We generally expect Atlas Operating to fund such distributions out of available cash. When Atlas Operating makes distributions, the Atlas Unitholders will be entitled to receive proportionate distributions based on their interests in Atlas Operating at the time of such distribution. In addition, the Atlas Operating LLC Agreement will require Atlas Operating to make non-pro rata payments to us to reimburse us for our corporate and other overhead expenses, which payments will not be treated as distributions under the Atlas Operating LLC Agreement. To the extent that we need funds and Atlas Operating or its subsidiaries (including Atlas LLC) are restricted from making such distributions or payments under applicable law or regulation or under the terms of the ABL Credit Agreement or any future financing arrangements, or are otherwise unable to provide such funds, our liquidity and financial condition could be adversely affected.

Moreover, because we will have no independent means of generating revenue, our ability to make tax payments is dependent on the ability of Atlas Operating to make distributions to us in an amount sufficient to cover our tax obligations. This ability, in turn, may depend on the ability of Atlas Operating’s subsidiaries (including Atlas LLC) to make distributions to Atlas Operating. The ability of Atlas Operating, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in our debt instruments issued by Atlas Operating or its subsidiaries (including Atlas LLC) and other entities in which it directly or indirectly holds an equity interest.

Our stock prices and trading volumes could be volatile, and you may not be able to resell shares of your Class A common stock when desired, at or above the price you paid, or at all.

The stock market has experienced and continues to experience extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the underlying businesses. In 2020, market volatility was especially high due to the ongoing COVID-19 pandemic. In addition, broad market fluctuations may adversely affect the market price of our Class A common stock, regardless of our actual operating performance. In addition to the other risks described in this section, the market price of our Class A common stock may fluctuate significantly in response to a number of factors, many of which we cannot control, including:

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our operating and financial performance;

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quarterly variations in the rate of growth of our financial indicator;

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the public reaction to our press releases, our other public announcements, and our filings with the SEC;

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announcements by others in or affecting our industry or our customers;

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strategic actions by our competitors;

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our failure to meet revenue or earnings estimates by research analysts or other investors;

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changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

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inaccurate or unfavorable research or ratings published by industry analysts about our business, or a cessation of coverage of us by industry analysts;

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speculation in the press or investment community;

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the failure of research analysts to cover our Class A common stock;

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sales of our Class A common stock by us, the Legacy Owners (including following an exercise of the Redemption Right or Call Right) or our other stockholders, or the perception that such sales may occur;

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changes in accounting principles, policies, guidance, interpretations or standards;

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additions or departures of key management personnel;

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actions by our stockholders;

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general market conditions, including fluctuations in commodity prices, sand-based proppant or industrial and recreational sand-based products;

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our acquisition of, investment in or disposition of other businesses;

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domestic and international economic, legal and regulatory factors unrelated to our performance; and

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the realization of any of the risks described under this “Risk Factors” section.

Volatility in the market price or trading volume of our Class A common stock may make it difficult or impossible for you to sell your Class A common stock at or above the price at which you purchased the stock. As a result, you may suffer a loss on your investment. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in substantial costs, reduce our profits, divert our management’s attention and resources and harm our business.

Investors in this offering will experience immediate and substantial dilution.

Based on an assumed initial public offering price of $21.50 per share (the midpoint of the price range set forth on the cover of this prospectus), purchasers of our Class A common stock in this offering will experience an immediate and substantial dilution of $12.83 per share in the as adjusted net tangible book value per share of Class A common stock from the initial public offering price, and our as adjusted net tangible book value as of December 31, 2022 after giving effect to this offering and the transactions related thereto would be $8.67 per share. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares. Please see the section titled “Dilution.”

Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

We may sell additional shares of our Class A common stock in subsequent offerings. In addition, subject to certain limitations and exceptions, the Legacy Owners holding Atlas Units may redeem their

Atlas Units for shares of Class A common stock (on a one-for-one basis, subject to conversion rate adjustments for stock splits, stock dividends and reclassification and other similar transactions) and then sell those shares of Class A common stock. Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock. Certain Legacy Owners who will own, in aggregate, approximately 46.3% of our Class A and Class B common stock on a combined basis, will be party to a registration rights agreement, which will include provisions by which we agree, after the expiration of the lock-up period described below, to register under the U.S. federal securities laws the offer and resale of shares of our Class A common stock (including shares issued in connection with any redemption of Atlas Units pursuant to the Redemption Right or the Call Right) by such Legacy Owners or certain of their respective affiliates or permitted transferees under the registration rights agreement. See “Certain Relationships and Related Party Transaction—Registration Rights Agreement.”

We cannot predict the size of future issuances of our Class A common stock or securities convertible into Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock will have on the market price of our Class A common stock. Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A common stock.

Certain of our Principal Stockholders will have the ability to direct the voting of a majority of the voting power of our common stock, and their interests may conflict with those of our other stockholders.

Holders of Class A common stock and Class B common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our certificate of incorporation. Upon completion of this offering, certain of our Legacy Owners will enter into a stockholders’ agreement (the “Principal Stockholders”) with us. The Principal Stockholders will collectively own approximately 54.6% of our voting stock (or approximately 53.2% if the underwriters’ option to purchase additional shares is exercised in full). As a result, on a combined basis, our Principal Stockholders will be able to control matters requiring stockholder approval, including the election of directors, changes to our organizational documents and significant corporate transactions. This concentration of ownership makes it unlikely that any other holder or group of holders of our Class A common stock will be able to affect the way we are managed or the direction of our business. The interests of our Principal Stockholders with respect to matters potentially or actually involving or affecting us, such as future acquisitions, financings and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other stockholders. Given this concentrated ownership, our Principal Stockholders would have to approve any potential acquisition of us.

The stockholders’ agreement provides Mr. Brigham or his affiliates with the right to designate certain numbers of nominees to our board of directors and the right to approve certain actions by the Company, so long as such Principal Stockholders and their affiliates collectively beneficially own specified percentages of the outstanding shares of our Class A and Class B common stock on a combined basis. Additionally, the stockholders’ agreement provides that the Principal Stockholders agree to cause their respective shares of Class A and Class B common stock to be voted in favor of the election of each of the director nominees designated by Mr. Brigham or his affiliates. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.”

Accordingly, Mr. Brigham or his affiliates will have the ability to strongly influence the election of the members of our board of directors, and thereby our management and affairs. In addition, the

Principal Stockholders will be able to strongly influence the outcome of all matters requiring stockholder approval, including mergers and other material transactions. This ownership by the Principal Stockholders may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of our Company. Moreover, this ownership by the Principal Stockholders may also adversely affect the trading price of our Class A common stock to the extent investors perceive a disadvantage in owning stock of a company with concentrated ownership.

Certain of our Principal Stockholders and members of our board of directors are not limited in their ability to compete with us, and the corporate opportunity provisions in our amended and restated certificate of incorporation could enable certain of our Principal Stockholders and members of our board of directors to benefit from corporate opportunities that might otherwise be available to us.

Our governing documents will provide that our Principal Stockholders and any member of our board of directors who is not at the time an officer of the Company and their respective affiliates are not restricted from owning assets or engaging in businesses that compete directly or indirectly with us and that we renounce any interest or expectancy in any business opportunity that may be from time to time presented to our Principal Stockholders and any member of our board of directors who is not at the time an officer of the Company or their respective affiliates. In particular, subject to the limitations of applicable law, our amended and restated certificate of incorporation will, among other things:

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permit our Principal Stockholders and any member of our board of directors who is not at the time an officer of the Company and their respective affiliates to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and

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provide that if our Principal Stockholders or any member of our board of directors who is not at the time an officer of the Company or their respective affiliates becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to us.

Our Principal Stockholders or any member of our board of directors who is not at the time an officer of the Company or their respective affiliates may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct such opportunities to other businesses in which they have invested, in which case we may not become aware of or otherwise have the ability to pursue such opportunity. Further, such businesses may choose to compete with us for these opportunities, possibly causing these opportunities to not be available to us or causing them to be more expensive for us to pursue. In addition, our Principal Stockholders and any member of our board of directors who is not at the time an officer of the Company and their respective affiliates may dispose of mining or other properties or other assets in the future, without any obligation to offer us the opportunity to purchase any of those assets. As a result, our renouncing our interest and expectancy in any business opportunity that may be from time to time presented to our Principal Stockholders and any member of our board of directors who is not at the time an officer of the Company and their respective affiliates could adversely impact our business or prospects if attractive business opportunities are procured by such parties for their own benefit rather than for ours. Please read “Description of Capital Stock—Corporate Opportunity.”

Certain of our Principal Stockholders or their affiliates are established participants in the oil and natural gas industry and may have resources greater than ours, which may make it more difficult for us to compete with our Principal Stockholders or their affiliates with respect to commercial activities as well as for potential acquisitions. We cannot assure you that any conflicts that may arise between us and our stockholders, on the one hand, and our Principal Stockholders or their affiliates, on the other

hand, will be resolved in our favor. As a result, potential competition from our Principal Stockholders or their affiliates could adversely impact our results of operations.

We expect to be a “controlled company” within the meaning of the rules of the NYSE and, as a result, will qualify for exemptions from certain corporate governance requirements.

Upon completion of this offering, the Principal Stockholders will initially indirectly own 54.6 million shares of our Common Stock, representing approximately 54.6% of the voting power of our Common Stock (or if the underwriters’ option to purchase additional shares is exercised in full, approximately 53.2% of the voting power of our Common Stock). Pursuant to the terms of the stockholders’ agreement, the Principal Stockholders have agreed to vote their respective shares of Class A and Class B common stock in favor of the election of each of the director nominees designated by Mr. Brigham or his affiliates. See “Certain Relationships and Related Party Transactions—Stockholders’ Agreement.” As a result, we expect to be a controlled company within the meaning of the NYSE’s corporate governance standards. Under the rules of the NYSE, a company of which more than 50% of the voting power for the election of directors is held by an individual, company or group of persons acting together is a controlled company and may elect not to comply with certain NYSE corporate governance requirements, including the requirements that:

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a majority of the board of directors consist of independent directors as defined under the rules of the NYSE;

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the nominating and governance committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and

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the compensation committee be composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

These requirements will not apply to us as long as we remain a controlled company. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE. See “Management—Status as a Controlled Company.”

Anti-takeover provisions in our organizational documents might discourage or delay acquisition bids or merger proposals, which may adversely affect the market price of our Class A common stock and limit the price investors might be willing to pay in the future for our Class A common stock.

Our amended and restated certificate of incorporation and amended and restated bylaws will contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions:

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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 our Class A common stock;

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prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders at such time as the Principal Stockholders cease to own more than a majority of the outstanding shares of our Class A common stock and Class B common stock on a combined basis;

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provide for our board of directors to be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three-year terms, other than directors that may be elected by holders of our preferred stock, if any;

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provide that our board of directors is expressly authorized to make, alter or repeal our Bylaws; and

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establish advance notice requirements for nominations of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These anti-takeover provisions could discourage, delay or prevent a transaction involving a change in control of our Company all together, even if doing so would benefit our stockholders. 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. Further, the stockholders’ agreement, the staggered board of directors and the ability of the board of directors to designate the terms of and issue new series of preferred stock may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the Superior Court of the State of Delaware, or, if the Superior Court of the State of Delaware does not have jurisdiction, the United States District Court for the District of Delaware, in each case, subject to that court having personal jurisdiction over the indispensable parties named defendants therein) will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, employees or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (the “DGCL”), our amended and restated certificate of incorporation or our bylaws (as either may be amended or restated), or as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware, our amended and restated certificate of incorporation or our bylaws, or (v) any other action asserting a claim against us that is governed by the internal affairs doctrine.

Our amended and restated certificate of incorporation will also provide that, unless we consent in writing to an alternate forum, to the fullest extent permitted by applicable law, the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. If a court were to find the exclusive-forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business.

To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the

provisions of our amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, 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 adversely affect our business, financial condition or results of operations.

In certain circumstances, Atlas Operating may make tax distributions to the Atlas Unitholders, including us, and such tax distributions may be substantial. To the extent we receive tax distributions in excess of our actual tax liabilities and retain such excess cash, the Legacy Owners that hold Atlas Units would benefit from such accumulated cash balances if they exercise their Redemption Right.

To the extent Atlas Operating has available cash and subject to the terms of any current or future debt instruments, the Atlas Operating LLC Agreement will (i) require Atlas Operating to make pro rata cash distributions to the Atlas Unitholders, including us, in an amount sufficient to allow us to pay our taxes and (ii) permit us, as managing member of Atlas Operating, to cause Atlas Operating to make additional pro rata distributions to the Atlas Unitholders, including to the Legacy Owners that hold Atlas Units and us, in an amount generally intended to allow such holders (other than us) to satisfy their respective income tax liabilities with respect to their allocable share of the income of Atlas Operating, based on certain assumptions and conventions, to the extent such liabilities exceed amounts otherwise distributed by Atlas Operating. The amount of such tax distributions will be determined based on certain assumptions, including an assumed individual income tax rate, and will be calculated after taking into account other distributions (including other tax distributions) made by Atlas Operating. Because tax distributions will be made pro rata based on ownership and due to, among other items, differences between the tax rates applicable to us and the assumed individual income tax rate used in the calculation and requirements under the applicable tax rules that Atlas Operating’s net taxable income be allocated disproportionately to its unitholders in certain circumstances, tax distributions may significantly exceed the actual tax liability for many of the Atlas Unitholders, including us. If we retain the excess cash it receives, the Legacy Owners that hold Atlas Units would benefit from any value attributable to such accumulated cash balances upon their exercise of the Redemption Right. However, we expect to take steps to eliminate any material cash balances. In addition, the tax distributions Atlas Operating may make may be substantial and may exceed the tax liabilities that would be owed by a similarly situated corporate taxpayer. Funds used by Atlas Operating to make tax distributions will not be available for reinvestment in our business, except to the extent we use the excess cash it receives to reinvest in Atlas Operating for additional units.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our 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 intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. We cannot predict if investors will find our Class A common stock less attractive because we will rely on these exemptions.

If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

We will remain an emerging growth company for up to five years after our IPO, although we will lose that status sooner if we have more than $1.235 billion of revenues in a fiscal year, have more than $700 million in market value of our Class A common stock held by non-affiliates as of any June 30 or issue more than $1.0 billion of non-convertible debt over a rolling three-year period.

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Class A common stock to be less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

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.

There is currently no existing market for our Class A common stock, and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

Prior to this offering, there has not been a public market for our Class A common stock. We cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market on the stock exchange on which we list our Class A common stock or otherwise or how liquid that market might become. If an active trading market does not develop, anyone purchasing our Class A common stock may have difficulty selling it. The initial public offering price for the Class A common stock was determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, purchasers of our Class A common stock may be unable to sell it at prices equal to or greater than the price paid.

The following factors could affect our stock price:

•

quarterly variations in our financial and operating results;

•

the public reaction to our press releases, our other public announcements and our filings with the SEC;

•

strategic actions by our competitors;

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changes in revenues or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;

•

speculation in the press or investment community;

•

the failure of research analysts to cover our Class A common stock;

•

sales of our Class A common stock by us or other stockholders, or the perception that such sales may occur;

•

equity capital markets transactions by other proppant companies, including by way of initial public offerings;

•

changes in accounting principles, policies, guidance, interpretations or standards;

•

additions or departures of key management personnel;

•

actions by our stockholders;

•

general market conditions, including fluctuations in commodity prices;

•

changes in, or investors’ perception of, the oil and natural gas industry;

•

litigation involving us, our industry, or both;

•

domestic and international economic, legal and regulatory factors unrelated to our performance; and

•

the realization of any risks described under this “Risk Factors” section.

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business, operating results and financial condition.

If Atlas Operating were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we and Atlas Operating might be subject to potentially significant tax inefficiencies.

We intend to operate such that Atlas Operating does not become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. A “publicly traded partnership” is a partnership the interests of which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. Under certain circumstances, redemptions of Atlas Units pursuant to the Redemption Right or Call Right, or other transfers of Atlas Units, could cause Atlas Operating to be treated as a publicly traded partnership. Applicable U.S. Treasury regulations provide for certain safe harbors from treatment as a publicly traded partnership, and we intend to operate such that redemptions or other transfers of Atlas Units qualify for one or more such safe harbors. For example, we intend to limit the number of holders of Atlas Units, and the Atlas Operating LLC Agreement, which will be entered into in connection with the corporate reorganization, will provide for limitations on the ability of holders of Atlas Units to transfer their Atlas Units and will provide us, as managing member of Atlas Operating, with the right to impose restrictions (in addition to those already in place) on the ability of holders of Atlas Units to redeem their Atlas Units pursuant to the Redemption Right to the extent we believe it is necessary to ensure that Atlas Operating will continue to be treated as a partnership for U.S. federal income tax purposes.

If Atlas Operating were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, significant tax inefficiencies might result for us and for Atlas Operating, including as a result of the inability to file a consolidated U.S. federal income tax return with Atlas Operating.

Our organizational structure confers certain benefits upon the Legacy Owners that hold Atlas Units that will not benefit the holders of our Class A common stock to the same extent as it will benefit such Legacy Owners.

Our organizational structure confers certain benefits upon the Legacy Owners that hold Atlas Units that do not benefit the holders of our Class A common stock to the same extent as it will benefit such Legacy Owners. We are a holding company and have no material assets other than our ownership of Atlas Units. As a consequence, our ability to declare and pay dividends to the holders of our Class A common stock is subject to the ability of Atlas Operating to provide distributions to us. If Atlas Operating makes such distributions, the Legacy Owners that hold Atlas Units will be entitled to receive equivalent distributions from Atlas Operating on a pro rata basis. However, because we must pay taxes, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less on a per share basis than the amounts distributed by Atlas Operating to such Legacy Owners on a per unit basis. This and other aspects of our organizational structure may adversely impact the future trading market for our Class A common stock.

The U.S. federal income tax treatment of distributions on our Class A common stock to a holder will depend upon our tax attributes and the holder’s tax basis in our stock, which are not necessarily predictable and can change over time.

Distributions of cash or other property on our Class A common stock, if any, will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed our current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the holder’s tax basis in our Class A common stock and thereafter as capital gain from the sale or exchange of such common stock. Also, if any holder sells our Class A common stock, the holder will recognize a gain or loss equal to the difference between the amount realized and the holder’s tax basis in such Class A common stock.

To the extent that the amount of our distributions is treated as a non-taxable return of capital as described above, such distribution will reduce a holder’s tax basis in the Class A common stock. Consequently, such excess distributions will result in a corresponding increase in the amount of gain, or a corresponding decrease in the amount of loss, recognized by the holder upon the sale of the Class A common stock or subsequent distributions with respect to such stock. Additionally, with regard to U.S. corporate holders of our Class A common stock, to the extent that a distribution on our Class A common stock exceeds both our current and accumulated earnings and profits and such holder’s tax basis in such shares, such holders would be unable to utilize the corporate dividends-received deduction (to the extent it would otherwise be applicable to such holder) with respect to the gain resulting from such excess distribution.

Investors in our Class A common stock are encouraged to consult their tax advisors as to the tax consequences of receiving distributions on our Class A common stock that are not treated as dividends for U.S. federal income tax purposes.

Because we have elected to take advantage of the extended transition period pursuant to Section 107 of the JOBS Act, our financial statements may not be comparable to those of other public companies.

Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This permits an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of this extended transition period and, as a result, we will comply with new

or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies. Accordingly, our financial statements may not be comparable to companies that comply with public company effective dates, and our stockholders and potential investors may have difficulty in analyzing our operating results by comparing us to such companies.

General Risk Factors

The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, and the requirements of Sarbanes-Oxley, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

As a public company, we need to comply with laws, regulations and requirements, certain corporate governance provisions of Sarbanes-Oxley and related regulations of the SEC and the requirements of the NYSE. Complying with these statutes, regulations and requirements occupies a significant amount of time of our board of directors and management and significantly increases our costs and expenses. We will need to:

•

institute a more comprehensive compliance function to test and conclude on the sufficiency of our internal controls around financial reporting;

•

comply with rules promulgated by the NYSE;

•

prepare and distribute periodic public reports;

•

establish new internal policies, such as those relating to insider trading; and

•

involve and retain to a greater degree outside professionals in the above activities.

Furthermore, while we must comply with Section 404 of Sarbanes-Oxley, we are not required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until our first annual report subsequent to our ceasing to be an “emerging growth company” within the meaning of Section 2(a)(19) of the Securities Act. Accordingly, we may not be required to have our independent registered public accounting firm attest to the effectiveness of our internal controls until as late as our annual report for the fiscal year ending December 31, 2028. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed. Compliance with these requirements may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

We believe that the out-of-pocket costs, diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of Sarbanes-Oxley could be significant. If the time and costs associated with such compliance exceed our current expectations, our results of operations could be adversely affected.

If we fail to comply with the requirements of Section 404 or if we or our independent registered public accounting firm identify and report such material weaknesses, the accuracy and timeliness of the filing of our annual and quarterly reports may be adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the stock price of our Class A common stock. In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have an adverse effect on our business, results of operations and financial condition.

In addition, being a public company subject to these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers.

If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, the price and trading volume of our Class A common stock could decline.

The trading market for our Class A common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades our securities, the price of our securities would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of our securities could decrease, which could cause the price of our Class A common stock and other securities and their trading volume to decline.

If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Class A common stock.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot be certain that our efforts to develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act. Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our Class A common stock.

Natural disasters and unusual weather conditions could disrupt business and result in operational delays and otherwise have an adverse effect on our business.

The occurrence of one or more natural disasters, such as tornadoes, hurricanes, tsunamis, fires, droughts, floods and earthquakes or unusual weather conditions or temperatures in the regions in which our facilities are located could adversely result in delayed operations or repair costs. For example, in February 2021, Texas and New Mexico experienced record-setting cold temperatures from Winter Storm Uri. Proppant volumes were negatively impacted in February and March 2021 as the cold weather delayed completion schedules and pushed forecasted producer activity into the latter half of the year. Events such as this could have an adverse effect on our business and may become more frequent and/or intense as a result of climate change.

A terrorist attack or armed conflict could harm our business.

Global and domestic terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States 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, refineries or transportation facilities are direct targets or indirect casualties of an act of terror or

war. Such activities could reduce the overall demand for oil and natural gas, which, in turn, could also reduce the demand for our proppant. Global and domestic terrorist activities and the threat of potential terrorist activities and any resulting physical damage and 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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information in this prospectus includes “forward-looking statements.” All statements, other than statements of historical fact included in this prospectus, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus, the words “could,” “would,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the section titled “Risk Factors” included in this prospectus. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements contained in this prospectus are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:

•

higher than expected costs to operate our Kermit and Monahans facilities and develop the Dune Express;

•

the amount of proppant we are able to produce, which could be adversely affected by, among other things, operating difficulties and unusual or unfavorable geologic conditions;

•

the volume of proppant we are able to sell and our ability to enter into supply contracts for our proppant on acceptable terms;

•

the prices we are able to charge, and the margins we are able to realize, from our proppant sales;

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the demand for and price of proppant, particularly in the Permian Basin;

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the success of our e-mining transition efforts;

•

fluctuations in the demand for certain grades of proppant;

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the domestic and foreign supply of and demand for oil and natural gas;

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changes in the price and availability of natural gas, diesel fuel or electricity that we use as fuel sources for our proppant production facilities and related equipment;

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the availability of capital and our liquidity;

•

the level of competition from other companies;

•

pending legal or environmental matters;

•

changes in laws and regulations (or the interpretation thereof) or increased public scrutiny related to the proppant production and oil and natural gas industries, silica dust exposure or the environment;

•

facility shutdowns in response to environmental regulatory actions;

•

technical difficulties or failures;

•

liability or operational disruptions due to pit-wall or pond failure, environmental hazards, fires, explosions, chemical mishandling or other industrial accidents;

•

health epidemics, such as the ongoing COVID-19 pandemic, natural disasters or inclement or hazardous weather conditions, including but not limited to cold weather, droughts, flooding, tornadoes and the physical impacts of climate change;

•

unanticipated ground, grade or water conditions;

•

inability to obtain government approvals or acquire or maintain necessary permits or mining, access or water rights;

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changes in the price and availability of transportation services;

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inability of our customers to take delivery;

•

difficulty collecting receivables;

•

the level of completion activity in the oil and natural gas industry;

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inability to obtain necessary production equipment or replacement parts;

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the amount of water available for processing;

•

any planned or future expansion projects or capital expenditures;

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our ability to finance equipment, working capital and capital expenditures;

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inability to successfully grow organically, including through future land acquisitions;

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inaccuracies in estimates of volumes and qualities of our frac sand reserves;

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failure to meet our minimum delivery requirements under our supply agreements;

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material nonpayment or nonperformance by any of our key customers;

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development of either effective alternative proppants or new processes that replace hydraulic fracturing;

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our ability to borrow funds and access capital markets;

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our ability to comply with covenants contained in our debt instruments;

•

the severity, operational challenges and duration of the ongoing COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions, which have caused economic slowdowns and interruptions to our and our customers’ operations;

•

the potential deterioration of our customers’ financial condition, including defaults resulting from actual or potential insolvencies;

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changes in global political or economic conditions, including sustained inflation and associated changes in monetary policy, both generally and in the markets we serve;

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physical, electronic and cybersecurity breaches;

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the effects of litigation;

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plans, objectives, expectations and intentions contained in this prospectus that are not historical; and

•

other factors discussed elsewhere in this prospectus including in the section titled “Risk Factors.”

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Risk Factors” in this prospectus. Should one or more of the risks or uncertainties described in this prospectus occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus.

USE OF PROCEEDS

We estimate that our net proceeds from this offering, based on an assumed initial public offering price of $21.50 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $355.3 million, or approximately $409.8 million if the underwriters’ option to purchase additional shares of Class A common stock is exercised in full.

Each $1.00 increase or decrease in the assumed initial public offering price of $21.50 per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) would increase or decrease the net proceeds to us from this offering by approximately $16.9 million (or approximately $19.5 million if the underwriters’ option to purchase additional shares of Class A common stock is exercised in full), assuming that the number of shares of Class A common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase or decrease of one million in the number of shares of Class A common stock offered by us would increase or decrease the net proceeds to us from this offering by approximately $20.2 million (or approximately $23.2 million if the underwriters’ option to purchase additional shares of Class A common stock is exercised in full), assuming no change in the assumed initial public offering price of $21.50 per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to help fund our current growth initiatives, create a public market for our Class A common stock, and facilitate our future access to the capital markets. We intend to contribute all of the net proceeds of this offering to Atlas Operating in exchange for Atlas Units, and Atlas Operating will further contribute the net proceeds received to Atlas LLC. Atlas LLC will, in turn, use:

•

approximately $350.0 million of the net proceeds of this offering to fund the construction of the Dune Express; and

•

approximately $5.3 million of the net proceeds of this offering to fund general corporate purposes.

We do not currently intend to use any of the net proceeds from this offering to make payments in connection with the Redemption Right or Call Right.

The expected use of net proceeds from this offering represents our intentions based upon our present plans and business conditions. We cannot predict with certainty all of the particular uses for the proceeds of this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have significant flexibility in applying the net proceeds of this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business.

DIVIDEND POLICY

We commenced paying cash distributions in December 2021 and, as of January 31, 2023, have paid $70.0 million in aggregate distributions to our unitholders since that time. We intend to continue to recommend to our board of directors that we regularly return capital to our stockholders in the future through a dividend framework that will be communicated to stockholders in the future. Following completion of this offering, our board of directors may elect to declare cash dividends on our Class A common stock, subject to our compliance with applicable law, and depending on, among other things, our financial condition, results of operations, projections, liquidity, earnings, legal requirements, and restrictions in the agreements governing our indebtedness (as further discussed herein). The payment of any future dividends will be at the discretion of our board of directors, which will be constituted upon completion of this offering and be comprised of a majority of independent directors, from time to time. Please see “Risk Factors—Risks Related to Our Financial Condition—Our indebtedness could adversely affect our financial flexibility and our competitive position.”

Our ability to pay any dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur.

Our ABL Credit Agreement generally permits Atlas LLC to pay distributions to us, if (i) no Event of Default (as defined in the ABL Credit Agreement) exists or would occur as a result of making a distribution, and (ii) Atlas LLC’s Availability (as defined in the ABL Credit Agreement) would be in excess of the greater of (a) $12.0 million or (b) 20% of the Borrowing Base (as defined in the ABL Credit Agreement) immediately after giving pro forma effect to such distribution. If Availability is less than these levels then our ability to pay distributions is either limited or is contingent on our ability to satisfy certain conditions such as a fixed charge coverage ratio.

Our 2021 Term Loan Credit Facility generally permits Atlas LLC to pay distributions to us if (i) no Event of Default has occurred and is continuing and (ii) immediately after giving pro forma effect thereto, (a) Atlas LLC’s Cash and Cash Equivalents (as defined in the 2021 Term Loan Credit Facility) is greater than or equal to $30.0 million, and (b) Atlas LLC’s Annualized Leverage Ratio (as defined in the 2021 Term Loan Credit Facility) is less than 2.00x. Concurrently with any such distribution, Atlas LLC is required to make a Related Paydown (as defined in the 2021 Term Loan Credit Facility) of the Term Loan based on the pro forma Leverage Ratio (as defined in the 2021 Term Loan Credit Facility). If the Leverage Ratio on a pro forma basis immediately after giving effect to such distribution would be greater than 1.25x, then Atlas LLC is required to make a Related Paydown of the Term Loan in an amount equal to one-third (1/3) of such distribution and if the Leverage Ratio on a pro forma basis immediately after giving effect to such distribution would be less than or equal to 1.25x, then Atlas LLC is required to make a Related Paydown of the Term Loan in an amount equal to one-fourth (1/4) of such distribution. If Cash and Cash Equivalents is less than $30.0 million or the Annualized Leverage Ratio is greater than or equal to 2.00x, then our ability to pay distributions may be limited. Notwithstanding these limitations, our Term Loan Facility also permits Atlas LLC to make Permitted Payments (as defined in the 2021 Term Loan Credit Facility) and to pay distributions to us following completion of this offering in an amount per year not to exceed 10.00% of the aggregate net proceeds received from this offering and contributed to Atlas LLC.

We will be a holding company upon the completion of this offering, and will have no material assets other than our ownership of Atlas Units. As a consequence, our ability to declare and pay dividends to the holders of our Class A common stock will be subject to the ability of Atlas Operating to provide distributions to us. The ability of our subsidiaries to make distributions to Atlas Operating depends upon the amount of cash they generate from their operations and the restrictions contained in

our credit facilities and such subsidiaries’ governing documents. If Atlas Operating makes such distributions, the Legacy Owners holding Atlas Units will be entitled to receive equivalent distributions from Atlas Operating on a pro rata basis. However, because Atlas Inc. must pay taxes, amounts ultimately distributed as dividends to holders of our Class A common stock are expected to be less on a per share basis than the amounts distributed by Atlas Operating to such Legacy Owners on a per unit basis. For additional information, please see “Risk Factors—Risks Related to this Offering and Our Class A Common Stock and Organizational Structure—We are a holding company. Our sole material asset after completion of this offering and our corporate reorganization will be its equity interest in Atlas Operating, and we will accordingly be dependent upon cash distributions from Atlas Operating to cover our taxes and corporate and overhead expenses, among other expenses.”

Assuming Atlas Operating makes distributions to Atlas Inc. and the Legacy Owners holding Atlas Units in any given year, the determination to pay dividends, if any, in respect of our Class A common stock out of the portion, if any, of such distributions remaining after our payment of taxes and our expenses (any such portion, an “excess distribution”) will be made by our board of directors. Because our board of directors may determine to pay or not pay dividends in respect of shares of our Class A common stock, our holders of Class A common stock may not necessarily receive dividend distributions relating to excess distributions, even if Atlas Operating makes such distributions to us.

CAPITALIZATION

The following table sets forth the consolidated cash, cash equivalents and capitalization as of December 31, 2022, as follows:

•

of Atlas LLC on an actual basis;

•

of Atlas Inc. on a pro forma basis to give effect to the transactions described under “Corporate Reorganization”; and

•

of Atlas Inc. adjusted to give pro forma effect to (i) the transactions described under “Corporate Reorganization,” (ii) the sale of shares of our Class A common stock in this offering at the assumed initial offering price of $21.50 per share (the midpoint of the price range set forth on the cover of this prospectus) and the application of the net proceeds therefrom as described under the section titled “Use of Proceeds” and (iii) the termination of the 2018 ABL Credit Facility and entrance into the 2023 ABL Credit Facility in February 2023.

The table below should be read in conjunction with, and is qualified in its entirety by reference to the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical condensed consolidated financial information of our Predecessor and our pro forma financial information for the periods and as of the dates indicated.


	As of December 31, 2022
	Atlas LLC(1)		Pro Forma Atlas Inc.			Pro Forma as adjusted Atlas Inc.(2)
	(In thousands, except number of shares)
Cash and cash equivalents	$	82,010	$	362,280		$	444,290

Total debt:
2018 ABL Credit Facility(3)	$	—	$	—		$	—
2021 Term Loan Credit Facility	$	148,995		—		$	148,995
2023 ABL Credit Facility(3)
Total debt	$	148,995	$	—		$	148,995
Redeemable noncontrolling interest:
Redeemable noncontrolling interest(4)	$	—	$	1,079,664		$	1,079,664
Members’ / stockholders’ equity:
Members’ / stockholders’ equity	$	511,357	$	(511,357	)	$	—
Class A common stock, $0.01 par value; no shares authorized, issued or outstanding (actual); 1,000,000,000 shares authorized, 49,783,082 shares issued and outstanding (as adjusted)	$	—	$	498		$	498
Class B common stock, $0.01 par value, no shares authorized, issued or outstanding (actual); 500,000,000 shares authorized, 50,216,918 shares issued and outstanding (as adjusted)	$	—	$	502		$	502
Additional paid-in capital	$	—	$	—		$	—
Retained earnings (accumulated deficit)	$	—	$	(214,027	)	$	(214,027	)
Total members’ and stockholders’ equity (deficit)	$	511,357	$	(724,384	)	$	(213,027	)

Total capitalization	$	660,352	$	355,280		$	1,015,632

(1)	Atlas LLC was formed in April 2017. The data in this table has been derived from the historical consolidated financial statements included in this prospectus which pertain to the assets, liabilities, revenues and expenses of our accounting predecessor.

(2)

A $1.00 increase (decrease) in the assumed initial public offering price of $21.50 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the as adjusted total members’ / stockholders’ equity and total capitalization by approximately $16.9 million and $16.9 million, respectively, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the estimated underwriting discounts and commissions payable by us. We may also increase (decrease) the number of shares we are offering. An increase (decrease) of one million shares offered by us at the assumed initial public offering price of $21.50 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the as adjusted total members’/stockholders’ equity and total capitalization by approximately $20.2 million and $20.2 million, respectively, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

As of December 31, 2022, the 2018 ABL Credit Facility included undrawn letters of credit in the amount of $1.1 million. On February 22, 2023, the 2018 ABL Credit Facility was repaid in full, and the Company entered into the 2023 ABL Credit Facility. As of February 23, 2023, no amounts are outstanding under the 2023 ABL Credit Facility.

(4)

On a pro forma adjusted basis, includes the Atlas Operating LLC interests not owned by Atlas Inc., which represent 50.2% of Atlas Operating LLC Units. Legacy Owners will hold the non-controlling economic interest in Atlas Operating LLC. Atlas Inc will hold 49.8% of the economic interest in Atlas Operating LLC.

DILUTION

Purchasers of the Class A common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the Class A common stock for accounting purposes. Our as adjusted net tangible book value as of December 31, 2022, after giving pro forma effect to the transactions described under the section titled “Corporate Reorganization” prior to the offering, was approximately $504.4 million, or $6.15 per share of Class A common stock (assuming that 100% of Atlas Units have been redeemed for Class A common stock). Pro forma net tangible book value per share is determined by dividing our pro forma tangible net worth (tangible assets less total liabilities) by the total number of outstanding shares of Class A common stock (assuming that 100% of Atlas Units have been redeemed for Class A common stock) that will be outstanding immediately prior to the closing of this offering, including giving effect to our corporate reorganization. After giving effect to the sale of the shares in this offering and further assuming the receipt of the estimated net proceeds from this offering (after deducting estimated underwriting discounts and commissions and estimated offering expenses), our pro forma as adjusted net tangible book value as of December 31, 2022 would have been approximately $866.6 million, or $8.67 per share. This represents an immediate increase in the net tangible book value of $2.52 per share to the Legacy Owners and an immediate dilution (i.e., the difference between the offering price and the as adjusted net tangible book value after this offering) to new investors of $12.83 per share. The following table illustrates the per share dilution to new investors (assuming that 100% of Atlas Units have been redeemed for Class A common stock):


Initial public offering price per share of Class A common stock			$	21.50
As adjusted net tangible book value per share of Class A common stock as of December 31, 2022 (after giving pro forma effect to our corporate reorganization as described above)	$	6.15

Increase per share of Class A common stock attributable to this offering and related transactions as described above		2.52

Pro forma as adjusted net tangible book value per share of Class A common stock (after giving further effect to this offering and related transactions as described above)				8.67

Dilution in pro forma as adjusted net tangible book value per share of Class A common stock to new investors			$	12.83

The dilution information discussed above is illustrative only and will change based on the actual public offering price and other terms of this offering to be determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $21.50 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share by approximately $16.9 million, or by approximately $0.17 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of one million in the number of shares offered by us would increase (decrease) the pro forma as adjusted net tangible book value per share by approximately $20.2 million, or approximately $0.11 per share, assuming the assumed public offering price remains the same, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, on an as adjusted basis as of December 31, 2022, the total number of shares of Class A common stock owned by the Legacy Owners (assuming that 100% of our Class B common stock and Atlas Units have been redeemed for Class A common stock) and to be owned by new investors, the total consideration paid, and the average price per share paid by the

Legacy Owners and to be paid by new investors in this offering at our initial offering price of $21.50 per share, calculated before deduction of estimated underwriting discounts and commissions and estimated offering expenses payable by us.


	Shares Acquired					Total Consideration					Average Price Per Share
	Number		Percent			Amount		Percent			Average Price Per Share
Legacy Owners		82,000,000		82	%	$	415,950,158		51.8	%	$	5.07
New investors in this offering		18,000,000		18	%		387,000,000		48.2	%		21.50

Total		100,000,000		100.0	%	$	802,950,158		100.0	%	$	8.03

The above table and discussion are based on the number of shares of our Class A common stock and Class B common stock to be outstanding as of the closing of this offering. The table does not reflect 10,000,000 shares of Class A common stock reserved for issuance under our LTIP, which we intend to adopt in connection with the completion of this offering.

If the underwriters’ option to purchase additional shares is exercised in full, the number of shares held by new investors will be increased to 20,700,000, or approximately 20.2% of the total number of shares of our Class A common stock.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the section titled “Summary—Summary Historical and Pro Forma Financial and Operating Data” and the financial statements and related notes appearing elsewhere in this prospectus. This discussion contains “forward-looking statements” reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, market prices for oil and natural gas, capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed below and elsewhere in this prospectus, particularly in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements except as otherwise required by applicable law.

Overview

The Dune Express will be the first long-haul overland conveyor system to deliver proppant. We have secured the contiguous right-of-way for our initial system, which is expected to follow a 42-mile-long route from our facilities into the heart of the prolific Northern Delaware Basin. The Dune Express will significantly shorten the distance that proppant needs to travel by truck, which is expected to provide meaningful productivity gains while decreasing emissions. We expect the Dune Express to make public roadways safer by removing trucks from public roadways, thus reducing traffic, accidents and fatalities on public roadways in the region.

productivity gains since their deployment in January 2023, and will continue to do as we build our fleet. Our long-term goal is to bring autonomous wellsite delivery to the Permian Basin, which we expect to drive further productivity gains as the technology is developed over the next several years.

Market Conditions, Operational Trends and Outlook

Increasing global economic activity, from historic lows brought about by the COVID-19 pandemic, has supported a higher oil and natural gas price environment. As the global demand for hydrocarbons has returned to pre-pandemic levels, historically low levels of capital investment into the oil and natural gas industry over the preceding two years, has led to significant supply imbalances as the supply of oil and natural gas has not kept pace with growing global demand. Russia’s invasion of Ukraine has further exacerbated the tightness in the markets for oil and natural gas.

Oil and natural gas prices experienced some volatility during the third quarter of 2022 as global oil demand continued to decelerate, weighed down by a worsening economic outlook and fears of recession; however, robust oil use for power generation in the Middle East and Europe provided a partial offset to the softening in global oil demand. Russia’s invasion of Ukraine and its effects on commodity markets, supply chains, inflation and financial conditions have added uncertainty to future global economic activity and global oil demand. The price for West Texas Intermediate (“WTI”) crude oil declined by more than $31.07 per barrel during the period, largely fueled by a broader equities markets sell off, before ending the period at $81.54 per barrel.

The slowdown in global oil demand has been significantly offset by critically low global oil inventories, which have been exacerbated by global Russian oil embargos and regulatory changes affecting the oil industry in certain non-OPEC countries. In addition, Saudi Arabia announced production cuts by upwards of two million barrels per day, starting in November 2022, while domestically, U.S. hydrocarbon producers remain prudent with their capital budgets and have not increased production to levels seen prior to the pandemic. As the market continues to price in these dynamics, we expect the price of WTI to remain at elevated levels.

This supply and demand imbalance has led to a higher oil and natural gas price environment which in turn has prompted Permian Basin operators to prudently increase activity levels with the Permian Basin ending the period with 328 active horizontal rigs.

As a result of the increase in drilling and completions activity in the Permian Basin, we have seen a significant tightening in the Permian Basin proppant market, where proppant demand is presently at an all-time high. While the available Permian Basin proppant supply stack has returned to pre-pandemic levels, there remains a significant undersupply which has led to strong increases in the spot price market for proppant. While Atlas has significantly benefited from the tightness in the market, as evidenced through our ability to secure several long-term fixed contracts, there remains a growing deficit in sand supply to forecasted demand levels.

In addition to increased industry activity levels, we expect to benefit from increased horizontal drilling as well as other long-term macro industry trends that improve drilling economics such as (i) greater rig efficiencies that result in more wells drilled per rig and (ii) enhanced well completion designs, including higher proppant usage per well.

Russia’s invasion of Ukraine and the limitations of renewables to provide a consistent supply of energy has increased both the cost of energy and the risk of energy supply disruptions. As such, we believe there exists a significant and unique opportunity to put strategic capital to work to address these concerns. To that end, Atlas has been investing in (i) significant capital projects that will address the growing demand for proppant as shale producers look to meet the growing global oil demand and (ii) new disruptive technologies (i.e., the Dune Express and autonomous wellsite delivery) that will both provide meaningful environmental benefits but also increase oilfield efficiencies, further driving growth that we believe will generate a positive community and environmental impact.

We believe these supportive tailwinds within the industry will continue. Atlas remains focused on positively disrupting the oilfield services space through the implementation of innovative technologies and will continue to capitalize on the growing market opportunity to benefit both our stockholders over the long term.

How We Generate Revenue

We generate revenue by mining, processing and distributing proppant that our customers use in connection with their operations. We sell proppant to our customers under supply agreements or as spot sales at prevailing market rates, which is dependent upon the cost of producing proppant, the proppant volumes sold and the desired margin and prevailing market conditions.

In some instances, revenues also include charges for sand logistics services provided to our customers. Our logistics service revenue fluctuates based on several factors, including the volume of proppant transported and the distance between our facilities and our customers. Revenue is generally recognized as products are delivered in accordance with the contract.

Some of our contracts contain shortfall provisions that calculate agreed upon fees that are billed when the customer does not satisfy the minimum purchases over a period of time defined in each contract.

As of December 31, 2022, our Kermit and Monahans production facilities have a total combined annual production capacity of 10.0 million tons.

Costs of Conducting our Business

We incur operating costs primarily from direct and indirect labor, freight charges, utility costs, fuel and maintenance costs and royalties. We incur labor costs associated with employees at our Kermit

and Monahans facilities, which represent the most significant cost of converting proppant to finished product. We may incur variable freight charges from trucking companies related to our delivery of sand to customer wellsites. Our Kermit and Monahans facilities undergo maintenance to minimize unscheduled downtime and ensure the ongoing quality of our proppant and ability to meet customer demands. We may incur variable utility costs in connection with the operation of our processing facilities, primarily natural gas and electricity, which are both susceptible to market fluctuations. We lease equipment in many areas of our operations including our proppant production hauling equipment. We incur variable royalty expense and/or delay rentals related to our agreements with the owners of our reserves. In addition, other costs including overhead allocation, depreciation and depletion are capitalized as a component of inventory and are reflected in cost of goods sold when inventory is sold.

How We Evaluate Our Operations

Our management uses a variety of financial and operating metrics to evaluate and analyze the performance of our business, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt are non-GAAP supplemental financial measures used by our management and by external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess our operating performance on a consistent basis across periods by removing the effects of development activities, provide views on capital resources available to organically fund growth projects and, in the case of Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures, assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financing methods, capital structure, levels of reinvestment or historical cost basis.

We define Adjusted EBITDA Margin as Adjusted EBITDA divided by total sales.

We define Adjusted Free Cash Flow Margin as Adjusted Free Cash Flow divided by total sales.

We define Adjusted EBITDA less Capital Expenditures Margin as Adjusted EBITDA less Capital Expenditures divided by total sales.

We define Adjusted Free Cash Flow Conversion as Adjusted Free Cash Flow divided by Adjusted EBITDA.

We define Contribution Margin as gross profit plus depreciation, depletion and accretion expense.

We define Maintenance Capital Expenditures as capital expenditures excluding growth capital expenditures.

We define Net Debt as total debt, net of discount and deferred financing costs, plus discount and deferred financing costs, plus right-of-use lease liabilities, less cash and cash equivalents.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt do not represent and should not be considered alternatives to, or more meaningful than, net income, income from operations, cash flows provided by operating activities or any other measure of financial performance presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as measures of our financial performance. Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures have important limitations as analytical tools because they exclude some but not all items that affect net income, the most directly comparable GAAP financial measure. Our computation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures, Adjusted EBITDA less Capital Expenditures Margin, Adjusted Free Cash Flow Conversion, Contribution Margin and Net Debt may differ from computations of similarly titled measures of other companies.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow, Adjusted EBITDA less Capital Expenditures, Adjusted Free Cash Flow Margin, Adjusted EBITDA less Capital Expenditures Margin, and Adjusted Free Cash Flow Conversion are non-GAAP supplemental financial measures used by our management and external users of our financial statements such as investors, research analysts and others, in the case of Adjusted EBITDA, to assess the financial performance of our assets and their ability to sustain dividends over the long term without regard to financial methods, capital structure or historical cost basis, and, in the case of Adjusted Free Cash Flow and Adjusted EBITDA less Capital Expenditures, to assess our operating performance on a consistent basis across periods by removing the effects of development activities.

Factors Affecting the Comparability of Our Results of Operations

COVID-19

In March 2020, the World Health Organization categorized the outbreak of COVID-19 as a pandemic. The COVID-19 pandemic has led to significant economic disruption globally, including in the areas of the United States in which we operate. Governmental authorities took actions to limit the spread of COVID-19 through travel restrictions and stay-at-home orders, which caused many businesses to adjust, reduce or suspend activities. Concerns about global economic growth, as well as uncertainty regarding the timing, pace and extent of an economic recovery in the United States and abroad, have had a significant adverse impact on commodity prices and financial markets. COVID-19 cases in the United States have decreased from their highest levels and vaccines are being distributed, but additional uncertainty remains regarding the timing, pace and extent of an economic recovery in the United States.

Beginning in March 2020, we took action to protect the health and safety of our workers, while continuing to operate, and to maintain the safety and integrity of, our assets. Where possible, our employees have worked remotely to support our business. Where continuous remote work was not possible, we implemented strategies to reduce the likelihood of spreading the disease. In compliance with Center for Disease Control guidance, these strategies include requiring sick employees to stay home, implementing policies and practices for social distancing and wearing cloth face coverings, educating employees about steps they can take to protect themselves at work and at home, performing enhanced cleaning and disinfecting, limiting non-essential travel, and minimizing meetings and gatherings.

COVID-19 contributed to a significant downturn in oil and natural gas commodity prices, and we experienced a corresponding drop in activity levels from our customers in the Permian Basin in 2020. We took action to reduce operating and general and administrative expenses while maintaining safe and reliable performance of our systems. We anticipate that these cost improvements are sustainable and will continue to benefit us in the future. We also expect a significant recovery in operator activity levels as the impact of COVID-19 diminishes and commodity prices continue to recover. However, we are unable to predict the future impact of COVID-19, and it is possible that such impact could be negative. For more information on the risks relating to COVID-19, please read the risks under the section titled “Risk Factors”, including “Risk Factors—Risks Related to Our Business and Operations—Our business and results of operations have been adversely affected by, and may again in the future be adversely affected by, the ongoing COVID-19 pandemic.”

Long-Term Incentive Plan

In order to incentivize management members following the completion of this offering, we anticipate that our board of directors will adopt a LTIP for employees and directors prior to the completion of this offering. Our principal executive officer and our next two most highly compensated executive officers (our “Named Executive Officers”) will be among those eligible to participate in this plan, which will become effective upon the consummation of this offering. We anticipate that the LTIP will provide for the grant of options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, other stock-based awards, cash awards, substitute awards and performance awards intended to align the interests of employees, directors and service providers with those of our stockholders. As such, our historical financial data may not present an accurate indication of what our actual results would have been if we had implemented the LTIP program prior to the periods presented within.

Income Taxes

Atlas Inc. is a corporation and will be subject to U.S. federal, state and local income taxes. Although the Predecessor is subject to franchise tax in the State of Texas (at less than 1% of modified pre-tax earnings), it is and historically has been treated as a pass-through entity for U.S. federal and other state and local income tax purposes, and as such is and was generally not subject to U.S. federal income taxes or other state or local income taxes. Rather, the tax liability with respect to the taxable income of the Predecessor is and was passed through to its owners. Accordingly, the financial data attributable to Predecessor contains no provision for U.S. federal income taxes or income taxes in any state or locality (other than franchise tax in the State of Texas). We estimate that we will be subject to U.S. federal, state and local taxes at a blended statutory rate of approximately 21.75% (plus any applicable state income tax) of pre-tax earnings, based upon the federal statutory rate of 21%, plus Texas franchise tax rate of 0.75%.

Atlas Inc. accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and

their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled pursuant to the provisions of Accounting Standards Codification (“ASC”) 740, Income Taxes. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts more likely than not to be realized.

We expect to record a full valuation allowance on our net deferred tax assets based on our assessment that it is more likely than not that the deferred tax asset will not be realized. A change in these assumptions could cause a decrease to the valuation allowance, which could materially impact our results of operations.

Results of Operations


	Predecessor
	For the Year Ended December 31,
	2022			2021			2020
	(in thousands)
Product sales	$	408,446		$	142,519		$	80,527
Service sales		74,278			29,885			31,245

Total sales		482,724			172,404			111,772
Cost of sales (excluding depreciation, depletion and accretion expense)		198,918			84,656			73,118
Depreciation, depletion and accretion expense		27,498			23,681			20,887

Gross profit		256,308			64,067			17,767
Selling, general and administrative expense		24,317			17,071			17,743
Impairment of long-lived assets		—			—			1,250

Operating income (loss)		231,991			46,996			(1,226	)
Interest expense, net		(15,760	)		(42,198	)		(32,819	)
Other income (loss)		2,631			291			(25	)
Income tax expense		(1,856	)		(831	)		(372	)

Net income (loss)	$	217,006		$	4,258		$	(34,442	)

Year Ended December 31, 2022 Compared To Year Ended December 31, 2021

Product Sales. Product sales increased by $265.9 million to $408.4 million for the year ended December 31, 2022, as compared to $142.5 million for the year ended December 31, 2021. An increase in proppant prices between the periods contributed to a $233.1 million positive impact, while an increase in sales volume contributed a $32.8 million positive impact.

Service Sales. Services sales, which includes freight for last-mile logistics services, increased by $44.4 million to $74.3 million for the year ended December 31, 2022, as compared to $29.9 million for the year ended December 31, 2021. The increase in logistics revenue was due to higher sales volumes shipped to last-mile logistics customers.

Cost of sales (excluding depreciation, depletion and accretion expense). Cost of sales (excluding depreciation, depletion and accretion expense) increased by $114.2 million to $198.9 million for the year ended December 31, 2022, as compared to $84.7 million for the year ended December 31, 2021. Cost of sales (excluding depreciation, depletion and accretion) related to product sales increased by $73.0 million due to higher sales volumes, which increased costs for utilities, maintenance, royalties and transition costs related to purchase of dredge equipment, requiring temporary usage of traditional mining rental equipment.

Cost of sales (excluding depreciation, depletion and accretion expense) related to services increased by $41.2 million due to higher sales volumes shipped to last-mile logistics customers during the period.

Depreciation, depletion and accretion expense. Depreciation, depletion and accretion expense increased by $3.8 million to $27.5 million for the year ended December 31, 2022, as compared to $23.7 million for the year ended December 31, 2021. The increase in depreciation, depletion and accretion expense is due to increased units of production depletion due to higher sand production and additional depreciable assets placed into service when compared to the prior period.

Selling, general and administrative expense. Selling, general and administrative expense increased by $7.2 million to $24.3 million for the year ended December 31, 2022, as compared to $17.1 million for the year ended December 31, 2021. The increase is primarily due to an increase of $5.1 million of employee costs, including an increase of $0.6 million of unit-based compensation expense, and $2.1 million of travel, sales and other corporate expenses associated with increased opportunities to conduct commercial business development efforts in person during the year ended December 31, 2022, compared to the year ended December 31, 2021.

Our selling, general and administrative expenses include the non-cash expense for unit-based compensation for equity awards granted to our employees. For the year ended December 31, 2022, unit-based compensation expense was $0.7 million, as compared to $0.1 million of unit-based compensation expense for the year ended December 31, 2021.

Interest expense, net. Interest expense, net decreased by $26.4 million to $15.8 million for the year ended December 31, 2022, as compared to $42.2 million for the year ended December 31, 2021. The decrease is primarily due to the recognition of a loss on extinguishment of debt of $16.4 million resulting from the recognition of unamortized debt discount and deferred financing costs of $11.9 million and a make-whole premium of $4.5 million paid upon redemption of the 2018 Term Loan Credit Facility during the year ended December 31, 2021. This decrease was partially offset by the recognition of gain on extinguishment of debt of $4.5 million due to the forgiveness of the SBA Paycheck Protection Program Loan and the related accrued interest expense during the year ended December 31, 2021. The remaining decrease is due to the outstanding 2021 Term Loan Credit Facility, which accrued $14.0 million of interest expense and $0.7 million of amortization of debt discount and deferred financing costs during the year ended December 31, 2022, as compared to the 2018 Term Loan Credit Facility and 2021 Term Loan Facility, which accrued $22.0 million of interest expense and $7.7 million of amortization of debt discount and deferred financing costs during the year ended December 31, 2021.

Income tax expense. Income tax expense increased by $1.1 million to $1.9 million for the year ended December 31, 2022, as compared to $0.8 million for the year ended December 31, 2021. The increase is primarily due to increased revenues, which increased our liability related to Texas franchise taxes.

Year Ended December 31, 2021 Compared To Year Ended December 31, 2020

Product Sales. Product sales increased by $62.0 million to $142.5 million for the year ended December 31, 2021, as compared to $80.5 million for the year ended December 31, 2020. An increase in proppant prices between the periods contributed to a $37.0 million positive impact, while an increase in sales volume contributed a $25.0 million positive impact.

Service Sales. Services sales, which includes freight for last-mile logistics services decreased by $1.3 million to $29.9 million for the year ended December 31, 2021, as compared to $31.2 million for the year ended December 31, 2020. The decrease in logistics revenue was due to lower sales volumes shipped to last-mile logistics customers.

Cost of sales (excluding depreciation, depletion and accretion expense). Cost of sales (excluding depreciation, depletion and accretion expense) increased by $11.6 million to $84.7 million for the year ended December 31, 2021, as compared to $73.1 million for the year ended December 31, 2020. Cost of sales (excluding depreciation, depletion and accretion) related to product sales increased by $10.7 million due to increased sales volumes, which increased costs for utilities, maintenance and royalties. These increases were partially offset by decreased mining and rental equipment costs, due to dredge mining for the full year, and cost efficiencies gained during the period. Cost of sales (excluding depreciation, depletion and accretion expense) related to services increased by $0.9 million due to higher operating costs, despite lower sales volumes shipped to last-mile logistics customers during the period.

Depreciation, depletion and accretion expense. Depreciation, depletion and accretion expense increased by $2.8 million to $23.7 million for the year ended December 31, 2021, as compared to $20.9 million for the year ended December 31, 2020. The increase in depreciation, depletion and accretion expense is due to increased component depreciation for certain product belts used in the proppant production process, as well as increased units of production depletion due to higher sand production when compared to the prior period.

Selling, general and administrative expense. Selling, general and administrative expense decreased by $0.6 million to $17.1 million for the year ended December 31, 2021, as compared to $17.7 million for the year ended December 31, 2020. The decrease is primarily due to a decrease of $2.4 million in unit-based compensation expense during the year ended December 31, 2021, compared to the year ended December 31, 2020. This decrease was partially offset by an increase of $1.8 million of employee and marketing costs associated with increased economic activity, from historic lows brought about by the COVID-19 pandemic during the year ended December 31, 2021, compared to the year ended December 31, 2020.

Our selling, general and administrative expenses include the non-cash expense for unit-based compensation for equity awards granted to our employees. For the year ended December 31, 2021, unit-based compensation expense was $0.1 million, as compared to unit-based compensation expense of $2.5 million for the year ended December 31, 2020.

Impairment of Long-Lived Assets. We recognized no impairment of long-lived assets expense for the year ended December 31, 2021. We recognized $1.3 million of impairment of long-lived assets expense for the year ended December 31, 2020, due to a write off of a vendor deposit during the period.

Interest expense, net. Interest expense, net increased by $9.4 million to $42.2 million for the year ended December 31, 2021, as compared to $32.8 million for the year ended December 31, 2020. The increase is primarily due to the recognition of a loss on extinguishment of debt of $16.4 million resulting from the recognition of unamortized debt discount and deferred financing costs of $11.9 million and a make-whole premium of $4.5 million paid upon redemption of the 2018 Term Loan Credit Facility. This increase was partially offset by the recognition of gain on extinguishment of debt of $4.5 million due to the forgiveness of the SBA Paycheck Protection Program Loan and the related accrued interest expense during the period, and decreased interest expense of $1.7 million and decreased debt discount amortization of $0.8 million related to the 2021 Term Loan Credit Facility.

Income tax expense. Income tax expense increased by $0.4 million to $0.8 million for the year ended December 31, 2021, as compared to $0.4 million for the year ended December 31, 2020. The increase is primarily due to increased revenues, which increased our liability related to Texas franchise taxes.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity to date have been capital contributions from our owners, cash flows from operations, and borrowings under our 2018 Term Loan Credit Facility, which was refinanced by our 2021 Term Loan Credit Facility, and our 2023 ABL Credit Facility. Our primary uses of capital have been capital expenditures for the construction of our Kermit and Monahans facilities and to support organic growth. In addition, we have routine facility upgrades and additional ancillary capital expenditures associated with, among other things, contractual obligations and working capital obligations. Funding for these cash needs may be provided by any combination of internally generated cash flow, borrowings under our 2023 ABL Credit Facility, additional capital investment from our owners, or other external financing sources. We strive to maintain financial flexibility and proactively monitor potential capital sources, including equity and debt financing, to meet our investment and target liquidity requirements and to permit us to manage the cyclicality associated with our business.

As of December 31, 2022, we had working capital, defined as current assets less current liabilities, of $90.1 million and $48.9 million of availability under the 2018 ABL Credit Facility. Our cash and cash equivalents totaled $82.0 million.

We intend to contribute all of the net proceeds of this offering to Atlas Operating in exchange for Atlas Units, and Atlas Operating will further contribute the net proceeds received to Atlas LLC. The principal purposes of this offering are to help fund our current growth initiatives, create a public market for our Class A common stock, and facilitate our future access to the capital markets. Atlas LLC will use:

•

approximately $350.0 million of the net proceeds of this offering to fund the construction of the Dune Express; and

•

approximately $5.3 million of the net proceeds of this offering to fund general corporate purposes.

We do not currently intend to use any of the net proceeds from this offering to make payments in connection with the Redemption Right or Call Right. Please see the section titled “Use of Proceeds” for more information.

Cash Flow

The following table summarizes our cash flow for the periods indicated:


	Predecessor
	For the Year Ended December 31,
	2022		2021			2020
	(in thousands)
Consolidated Statement of Cash Flow Data:
Net cash provided by operating activities	$	206,012	$	21,356		$	12,486
Net cash used in investing activities		(89,592)		(19,371	)		(9,532	)
Net cash provided by (used in) financing activities		(74,811)		2,344			11,826

Net increase in cash	$	41,609	$	4,329		$	14,780

100

Year Ended December 31, 2022 Compared To The Year Ended December 31, 2021

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $206.0 million and $21.4 million for the years ended December 31, 2022 and 2021, respectively. The increase is primarily attributable to increased net income.

Net Cash Used in Investing Activities

Net cash used in investing activities was $89.6 million and $19.4 million for the years ended December 31, 2022 and 2021, respectively. The increase was due to an increase in capital spending at the Kermit and Monahans facilities, Dune Express and logistics assets during the year ended December 31, 2022 when compared to the year ended December 31, 2021.

Net Cash Provided by and Used in Financing Activities

Net cash used in financing activities was $74.8 million year ended December 31, 2022. Net cash provided by financing activities was $2.3 million for the year ended December 31, 2021. The change is due to a decrease of $178.2 million of proceeds from term loan borrowings related to the funding of the 2021 Term Loan Credit Facility, a decrease of $148.8 million of payments on payments on term loan borrowings and debt prepayment and extinguishment costs related to the repayment of the 2018 Term Loan Credit Facility, an increase of $35.0 million for member distributions, and a decrease in proceeds from equity issuances of $12.6 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.

Year Ended December 31, 2021 Compared To The Year Ended December 31, 2020

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $21.4 million and $12.5 million for the year ended December 31, 2021 and 2020, respectively. The increase is primarily attributable to increased revenues of $60.6 million. The increase was partially offset by an $11.5 million increase in cost of sales (excluding depreciation, depletion and accretion expense), a $22.2 million increase in repayment of paid-in-kind interest upon the repayment of the 2018 Term Loan Credit Facility and an $8.8 million decrease in interest paid-in-kind through the issuance of additional term loans, as we elected not to pay certain term loan interest in-kind as of June 30, 2021.

Net Cash Used in Investing Activities

Net cash used in investing activities was $19.4 million and $9.5 million for the year ended December 31, 2021 and 2020, respectively. The increase was due to the purchase of Wyatt’s Lodge and an increase in capital spending at the Kermit and Monahans facilities during the year ended December 31, 2021 when compared to the year ended December 31, 2020.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $2.3 million and $11.8 million for the year ended December 31, 2021 and 2020, respectively. The decrease is primarily due to an increase of $165.6 million for the repayment of the 2018 Term Loan Credit Facility partially offset by an increase of $163.2 million from proceeds of term loan borrowings during the year ended December 31, 2021 compared to the year ended December 31, 2020.

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Capital Requirements

Outside of our growth and technology initiatives, our business is not presently capital intensive in nature and only requires the maintenance of our two existing proppant production facilities. Our current level of capital expenditures is expected to remain within our internally generated cash flow as we maintain significant flexibility around the timing of capital expenditures.

We intend to fund capital requirements through our primary sources of liquidity, which include cash on hand and cash flows from operations and, if needed, our borrowing capacity under the Credit Facility.

If and to the extent our board of directors were to declare a cash distribution to our Class A common stockholders, we currently expect the dividend to be paid from free cash flow. We do not currently expect to borrow funds or to adjust planned capital expenditures to finance dividends on our Class A common stock, if any such dividends were to be declared by our board of directors. The timing, amount and financing of dividends, if any, will be subject to the discretion of our board of directors from time to time following this offering. Please see the section titled “Dividend Policy.”

Debt Agreements

2018 ABL Credit Facility

On December 14, 2018, the Company and the ABL Lenders entered into the ABL Credit Agreement pursuant to which the ABL Lenders provided revolving credit financing to the Company in an aggregate principal amount of up to $50.0 million with availability thereunder subject to a borrowing base as described in the loan agreement governing the 2018 ABL Credit Facility (the “2018 ABL Credit Agreement’’). The 2018 ABL Credit Facility included a letter of credit sub-facility, which permitted issuances of letters of credit up to an aggregate amount of $10.0 million. As of December 31, 2022, the Company had an aggregate principal amount of $1.1 million in letters of credit outstanding under the 2018 ABL Credit Facility.

The 2018 ABL Credit Facility was repaid in full in February 2023 in connection with the Company’s entrance into the 2023 ABL Credit Facility.

2023 ABL Credit Facility

Borrowings under the 2023 ABL Credit Facility bear interest, at the Company’s option, at either a base rate or Term SOFR, as applicable, plus an applicable margin based on average excess availability as set forth in the ABL Credit Agreement. Term SOFR loans bear interest at Term SOFR for the applicable interest period plus an applicable margin, which ranges from 1.50% to 2.00% per annum based on average excess availability as set forth in the ABL Credit Agreement. Base rate loans bear interest at the applicable base rate, plus an applicable margin, which ranges from 0.50% to 1.00% per annum based on average excess availability as set forth in the ABL Credit Agreement. In addition to paying interest on outstanding principal under the 2023 ABL Credit Facility, the Company is required to pay a commitment fee which ranges from 0.375% per annum to 0.500% per annum with respect to the

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unutilized commitments under the 2023 ABL Credit Facility, based on the average utilization of the 2023 ABL Credit Facility. The Company is also required to pay customary letter of credit fees, to the extent that one or more letter of credit is outstanding.

The 2023 ABL Credit Facility is unconditionally guaranteed, jointly and severally, by the Company and certain of its subsidiaries and secured by substantially all of the assets of the Company and certain of its subsidiaries.

2021 Term Loan Credit Facility

On October 20, 2021, we entered into a credit agreement with Stonebriar Commercial Finance LLC (the “Term Lender”) pursuant to which the Term Lender extended a $180.0 million single advance term loan credit facility (the “2021 Term Loan Credit Facility”). The term loan outstanding under the 2021 Term Loan Credit Facility is payable in seventy-two consecutive monthly installments in varying amounts as more particularly set forth in the promissory note that was executed and delivered in connection with the 2021 Term Loan Credit Facility and has a final maturity date of October 1, 2027. The amortization of the 2021 Term Loan Credit Facility carries an implied interest rate of 8.47% per annum.

At any time prior to the October 1, 2027 maturity date, we may redeem the 2021 Term Loan Credit Facility, in whole or in part, at a price equal to 100% of the principal amount plus a prepayment fee. The prepayment fee ranges from 3% on or before October 19, 2022, to 2% after October 19, 2022, and on or before October 19, 2023, and 1% thereafter. Upon maturity of the 2021 Term Loan Credit Facility, the entire unpaid principal amount, together with interest, fees and other amounts payable in connection with the facility, will be immediately due and payable without further notice or demand. Mandatory debt service (inclusive of principal repayment and interest) is $30 million per year for the first two years of the 2021 Term Loan Credit Facility, increasing to $45 million for the final four years.

The 2021 Term Loan Credit Facility includes certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions. The 2021 Term Loan Credit Facility is not subject to financial covenants, but does require us to maintain a minimum average liquidity balance of not less than $20.0 million at any time there are loans of $5.0 million or more in the aggregate outstanding under our 2023 ABL Credit Facility.

Proceeds from the 2021 Term Loan Credit Facility were used to repay of outstanding indebtedness under our previous 2018 Term Loan Credit Facility with BlackGold Capital Management to make permitted distributions, and for general corporate purposes.

Quantitative and Qualitative Disclosure about Market Risk

Commodity Price Risks

The market for our services is indirectly exposed to fluctuations in the price of crude oil and natural gas, to the extent such fluctuations impact drilling and completion activity levels and thus impact the activity levels of our customers in the exploration and production and oilfield services industries. We do not currently intend to hedge our indirect exposure to commodity price risk.

Our natural gas purchases expose us to commodity price risk. Our facility operations require natural gas consumption for equipment used in the manufacturing of proppant. Pricing for natural gas has been volatile and unpredictable for several years, and this volatility is expected to continue in the future. The cost we pay for our natural gas depends on many factors outside of our control, such as the strength of the global economy and global supply and demand for the commodities we produce. To

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reduce the impact of fluctuations in natural gas prices on our operational costs, we periodically enter into commodity derivative contracts with respect to certain of our forecasted natural gas usage through various transactions that reduce the impact of price volatility. We plan to continue our practice of entering into such transactions to reduce the impact of commodity price volatility on our cash flow from operations. These hedging activities are intended to manage our exposure to natural gas price fluctuations.

Interest Rate Risks

We are subject to interest rate risk on a portion of our long-term debt under the 2023 ABL Credit Facility. The amounts owed under our 2023 ABL Credit Facility use SOFR as a benchmark for establishing the rate at which interest accrues. We do not currently have any borrowings under our 2023 ABL Credit Facility and do not currently have or intend to enter into any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness under our 2023 ABL Credit Facility.

Market Risks

The demand, pricing and terms for proppant and last-mile services provided by us are largely dependent upon the level of drilling activity in the oil and natural gas industry in the Permian Basin. These activity levels are influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and natural gas; the level of prices, and expectations about future prices of oil and natural gas; the cost of exploring for, developing, producing and delivering oil and natural gas; the expected rates of declining current production; the discovery rates of new oil and natural gas reserves; available rail and other transportation capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; environmental regulations; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and natural gas companies to raise equity capital and debt financing; and merger and divestiture activity among oil and natural gas companies.

The level of U.S. oil and natural gas drilling is volatile. Expected trends in oil and natural gas production activities may not materialize and demand for our services may not reflect the level of activity in the industry. Any prolonged and substantial reduction in oil and natural gas prices would likely affect oil and natural gas production levels and therefore affect demand for our services. A material decline in oil and natural gas prices or Permian Basin activity levels could have an adverse effect on our business, financial condition, results of operations and cash flows.

Credit Risks

We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. We examine the creditworthiness of third-party customers to whom we extend credit and manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, we may request letters of credit, prepayments or guarantees, although collateral is generally not required. For the year ended December 31, 2022, we had 39 customers, of which ten were investment grade. For the year ended December 31, 2021, we had 39 customers, of which seven were investment grade.

Inflation Risks

Inflationary factors such as increases in the cost of our products and overhead costs may adversely affect our results of operations. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may

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have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses as a percentage of net revenue if the selling prices of our products do not increase with these increased costs.

Critical Accounting Policies and Estimates

The preparation of financial statements requires the use of judgments and estimates. Our critical accounting policies are described below to provide a better understanding of how we develop our assumptions and judgments about future events and related estimates and how they can impact our financial statements. A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations.

We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe the following are the critical accounting policies used in the preparation of our combined financial statements, as well as the significant estimates and judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our combined financial statements and related notes included in this report.

Our significant accounting policies are described in Note 2 to our audited consolidated financial statements as of and for the years ended December 31, 2022, 2021 and 2020 included elsewhere in this prospectus. We prepare our consolidated financial statements in conformity with GAAP, which requires us to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and accompanying footnotes. Actual results could differ from those estimates. For additional information concerning certain estimates and assumptions, see the respective footnotes to our audited consolidated financial statements as of and for the years ended December 31, 2022, 2021 and 2020 included elsewhere in this prospectus. We believe that the following discussion addresses our most critical accounting estimates, which require management’s most subjective and complex judgments.

Property, Plant and Equipment, Including Depreciation and Depletion

In order to calculate depreciation for our fixed assets, other than plant facilities and mine development costs, we use the best estimated useful lives at the time the asset is placed into service.

Mining property and development costs, including plant facilities directly associated with mining properties, are amortized using the units of production method on estimated measures of tons of in-place reserves. The impact to reserve estimates is recognized on a prospective basis. Drilling and related costs are capitalized for deposits where proven and probable reserves exist. These activities are directed at obtaining additional information on the deposit or converting non-reserve minerals to proven and probable reserves, with the benefit being realized over a period greater than one year. At a minimum, we will assess the useful lives and residual values of all long-lived assets on an annual basis to determine if adjustments are required. The actual reserve life may differ from the assumptions we have made about the estimated reserve life.

We review property, plant and equipment for impairment annually or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If such a review should indicate that the carrying amount of long-lived assets is not recoverable, the Company will reduce the carrying amount of such assets to fair value.

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Recently Issued Accounting Pronouncements

Under the JOBS Act, we expect that we will meet the definition of an “emerging growth company,” which would allow us to have an extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. We intend to take advantage of all of the reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under Section 107 of the JOBS Act until we are no longer an emerging growth company. Our election to use the phase-in periods permitted by this election may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the longer phase-in periods under Section 107 of the JOBS Act and who will comply with new or revised financial accounting standards. If we were to subsequently elect instead to comply with these public company effective dates, such election would be irrevocable pursuant to Section 107 of the JOBS Act.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. In December 2022, FASB issued ASC 2022-06, Reference Rate Reform (Topic 848), Deferral of the Subset Date of Topic 848, which deferred the sunset date to Topic 848 to December 31, 2024. The Company is evaluating the impact of this standard on its condensed consolidated financial statements and does not believe it will have a material impact on the condensed consolidated financial statements.

In June 2016, the Financial Accounting Standards Board issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), which amends the guidance on the impairment of financial instruments. The standard adds an impairment model, referred to as current expected credit loss, which is based on expected losses rather than incurred losses. The standard applies to most debt instruments, trade receivables, lease receivables, reinsurance receivables, financial guarantees and loan commitments. Under the guidance, companies are required to disclose credit quality indicators disaggregated by year of origination for a five-year period. In May 2019, ASU 2016-13 was subsequently amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief. The new guidance is effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact of the ASU on the consolidated financial statements and does not believe it will have a material impact on the consolidated financial statements.

On January 1, 2022, the Company adopted ASU 2016-02, Leases (Topic 842), as amended by other ASUs issued since February 2016, using the modified retrospective transition method applied at the effective date of the standard. By electing this option transition method, information prior to January 1, 2022 has not been restated and continues to be reported under the accounting standards in effect for the period (ASC Topic 840).

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, including the option to carry forward the historical lease classifications and assessment of initial direct costs, account for lease and non-lease components as a single lease, and to not include leases with an initial term of less than 12 months in the lease assets and liabilities.

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The adoption of ASC Topic 842 resulted in the recognition of finance lease right-of-use assets, operating lease right-of-use assets, and lease liabilities for finance and operating leases. As of January 1, 2022, the adoption of the new standard resulted in the recognition of finance lease right-of-use assets of $0.7 million, including $0.7 million reclassified from property, plant and equipment, net, and finance lease liabilities of $0.6 million. Additionally, the Company recorded operating lease right-of-use assets of $5.4 million and operating lease liabilities of $7.1 million, including $2.3 million and $4.8 million recorded to other short-term liabilities and other long-term liabilities, respectively as of January 1, 2022. There was no significant impact to the condensed consolidated statements of income, equity or cash flows. Refer to Note 5, Leases, for additional disclosures required under ASC Topic 842.

Internal Controls and Procedures

We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. We will not be required to make our first assessment of the effectiveness of our internal control over financial reporting under Section 404 until our second annual report on Form 10-K after we become a public company.

Further, our independent registered public accounting firm is not yet required to formally attest to the effectiveness of our internal controls over financial reporting and will not be required to do so for as long as we are an “emerging growth company” pursuant to the provisions of the JOBS Act. Please see “Summary—Emerging Growth Company Status” for more information.

Off Balance Sheet Arrangements

We currently have no material off-balance sheet arrangements.

Environmental and Other Governmental Regulations

We are subject to a variety of federal, state and local regulatory environmental requirements affecting the proppant production and mineral processing industry, including among others, those relating to employee health and safety, environmental permitting and licensing, air and water emissions, GHG emissions, water pollution, waste management, remediation of soil and groundwater contamination, land use, restoration of properties, hazardous materials and natural resources. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.

We discuss certain environmental matters relating to our various production and other facilities, certain regulatory requirements relating to human exposure to crystalline silica and our proppant production activity under the subsection titled “Business—Environmental and Occupational Health and Safety Regulations.”

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INDUSTRY

Proppant and Proppant Logistics Industry

The quantity of proppant used in a typical well in North America often exceeds 10,000 tons. Prior to the development of in-basin sand facilities, proppants were predominately shipped long distances in bulk from processing facilities in the midwestern United States by rail and barge to various resource basins. It was then further transferred to a truck for “last mile” wellsite delivery. This long supply chain made transportation costs a significant portion of the customer’s overall proppant cost. The discovery, and subsequent development, of in-basin proppant deposits afforded customers a significant cost saving alternative. The supply chain was shortened to remove the costly rail or barge portion of the transportation cost, and in the Permian Basin customers have effectively reached full adoption of in-basin proppants, although meaningful consumption of out of basin proppant can occur from time to time during periods when demand exceeds local production capabilities as is occurring in today’s market. As the Permian Basin does not regularly experience extended seasonal disruptions, the proppant industry has been transformed into a “just-in-time” delivery model reliant on large quantities of trucks to fulfill orders. This places a premium on in-basin proppant production facilities to maximize uptime and on trucking companies to supply a sufficient quantity of trucks to effectively and efficiently fulfill deliveries to end-users.

As customers continue to drive efficiencies and productivity in their drilling and completions programs, in turn driving the demand for more proppant, we expect increased demand of the products and services that we provide.

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Permian Basin Proppant Consumption Density Map: 2018 - 2022

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Source: Enverus and Atlas Energy Solutions

The Permian Basin

The Permian Basin is the leading onshore U.S. resource basin with respect to drilling activity and oil production. The Permian Basin is an oil-and-gas-producing area located in West Texas and the adjoining area of southeastern New Mexico and covers an area of approximately 75,000 square miles and is composed of more than 7,000 fields, according to the Railroad Commission of Texas.

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The Permian Basin

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Source: Permian Strategic Partnership

The Permian Basin can be further delineated into sub-basins, with the Midland, Delaware, and Central Basin Platform being the major sub-basins. The significant resource base is best represented by the multiple benches, or target hydrocarbon-producing geological formations, with oil and natural gas production depths ranging from a few hundred feet to up to five miles below the surface. The recent increased use of enhanced-recovery practices in the Permian Basin has resulted in a substantial, and positive, impact on domestic oil production.

As a result of the substantial size and significant amount of estimated resource in-place in the Permian Basin, Texas not only receives an enormous economic benefit but also helps to provide energy security for the United States. In the first half of 2022 the Permian Basin accounted for nearly 43% of all domestic oil production and nearly 17% of total domestic natural gas production, according to the Federal Reserve Bank of Dallas. However, significant production growth potential remains. In 2018, the U.S. Geological Survey estimated that the Delaware Basin alone has the potential to produce 46.3 billion barrels of oil and 281 trillion cubic feet of natural gas.

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The Permian Basin is the Most Active On-Shore Basin in the U.S.

Active Rig Count by Basin as of December 31, 2022

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Average Production by Basin (MMBbls/d) in December 2022

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Source: EIA

Overview of the Proppant Production Process

Raw silica sand is a naturally occurring material that is mined and processed for various commercial uses. While the specific extraction method utilized depends primarily on the geologic setting, most raw silica sand is mined using conventional open-pit bench extraction methods. The composition, depth and chemical purity of the sand also dictates the processing method and equipment utilized.

In West Texas, much of the reserves are accessible from buried deposits, which require the removal of some overburden. The giant open dunes, where our facilities are located, can be mined readily without the need to remove any overburden. After extraction, the raw silica sand is washed with water to remove fine impurities such as clay and organic particles, with additional procedures used when contaminants are not easily removable. The final steps in the production process involves the drying and sorting of the raw silica sand according to mesh size.

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The unique size, location and depth of our large open-dune reserves provides us with a distinct advantage relative to our competitors, including the fact that in the Winkler Sand Trend we uniquely benefit from a naturally occurring water table near the surface of our deposits, providing an ample natural supply of costless water for dredge and wash plant operations, minimizing the impacts on regional aquifers. Furthermore, this has allowed us to implement e-mining, or mining via electric dredge, which significantly reduces the environmental impacts associated with mining, positively differentiating us relative to our competition.

One of Atlas Energy Solutions’ Two Proppant Production Facilities (Located in Kermit, Texas)

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Overview of the Trucking and Logistics Market

Transportation and logistics costs incurred in the delivery of proppant from the mine to the wellsite represents the majority of cost per ton of proppant paid by the end user. Furthermore, costs attributable to proppant sourcing and delivery represents a significant portion of the total expenses incurred by the E&P operator in completing a well.

While trucking is the default mode of wellsite delivery for proppant, the industry is currently characterized by low levels of technological differentiation between service providers, minimal barriers to entry, and high levels of price competition. As a result, the market is highly fragmented, and operating margins for incumbent service providers are typically 10%. A significant amount of wellsite delivery transportation is ultimately delivered by private owner-operators, whether providing services through their own offering, participating through a 3rd-party marketplace platform, or in partnership with an end-consumer. Most of the mileage traveled on the trip to deliver proppant to the wellsite occurs over interstate highways, state roads, and county roads, while the remaining portion of the trip occur over lease roads that are generally built and maintained by wellsite operators. For wellsite delivery, the roundtrip driving distance between the mine and wellsite is typically more than 35 miles and often exceeds 100 miles. The payload can range from 22 to 27 tons per truck depending on the selected trailer design. There are currently three main trailer designs utilized for proppant delivery, Box, Pneumatic, and Belly Dump, with average payloads of 22, 24, and 26 tons, respectively.

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Once the payload has reached the wellsite it will be offloaded to an on-site storage system, or a designated storage area, before being utilized in the fracturing process.

Consistent with our technology focus, we are expanding our footprint in the proppant delivery logistics business and pursuing autonomous wellsite delivery. The Company will begin operations with 10 trucks, which we anticipate will be deployed by early 2023. The implementation of autonomous wellsite delivery solutions is intended to improve the reliability and consistency of proppant delivery, mitigate risks to operations and lessen the probability or impact of traffic congestion and accidents, weather events and other disruptions that frequently affect the delivery of oilfield products within the United States currently. We also believe our autonomous wellsite delivery initiative will amplify the positive impacts on the environments and communities in which we operate.

Proppant and Proppant Logistics Market Dynamics in the Permian Basin

Key Demand Drivers

The demand for proppant in the Permian Basin is predominately influenced by the level of drilling and completions activity by oil and natural gas exploration and production companies operating in the region. Drilling and completion (“D&C”) activity is driven by well profitability and returns, which are driven by a number of factors, including current domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas, and the perceived stability and sustainability of those prices. As a result of the transition by exploration and production (“E&P”) companies from vertical to horizontal drilling that occurred during the previous decade, a vast inventory of previously uneconomic resources became profitable to drill and complete. Consequently, demand for pressure pumping and the proppant used during the well completion process has increased substantially over the last ten years.

Growth in Global Energy Demand

Supported by the backdrop of improved global economic growth, global energy demand rebounded in 2021 and is forecasted to continue to increase. According to the IEA, global oil demand is expected to grow by 7% and natural gas demand by 3% from 2021 through 2025.

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Global Historical and Projected

Natural Gas Demand (bcf/d)

Global Historical and Projected

Oil Demand (MMBbIs/d)

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Source: IEA

Global gasoline demand is higher than it was pre-pandemic, and continued economic recovery is expected to drive oil demand beyond the pre-pandemic peak toward the end of 2022 or beginning of 2023. Additionally, building off a strong 2021, continued momentum is expected in the global natural gas markets in 2022 and beyond, certain policy movements in Europe have shown that natural gas is gaining popularity as a transition and destination fuel for a reduced emissions world. Furthermore, recent geopolitical considerations are expected to result in continued reconfiguration of oil and natural gas flows between key producing and consuming nations. Supply of these commodities from the U.S. offers increased energy security to allied nations versus reliance on producers involved in geopolitical conflict.

Significant Identified U.S. Oil and Natural Gas Supply Base

The U.S. represents a significant share of identified oil and natural gas supplies, with proven reserves at the end of 2020 of more than 68 billion barrels of oil and 445 trillion cubic feet of natural gas, according to the BP Statistical Review of World Energy. Furthermore, per the EIA, the Permian Basin accounts for more than 62% of oil and 16% natural gas reserves in the U.S.


U.S. Oil Reserves by Region		U.S. Natural Gas Reserves by Region

Source: EIA

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Attractive Extraction Economics in the Permian Basin

The Permian Basin is North America’s most active basin due to its size, geology and attractive economics. The Permian Basin consists of mature, legacy, onshore oil and liquids rich natural gas reservoirs that span from West Texas through New Mexico inclusive of large in-basin sand reserves utilized in unconventional hydraulic fracturing production techniques. The Permian Basin is divided by the Central Basin platform, creating the Midland and Delaware sub-basins, which have contributed to the growth in the Permian Basin. Furthermore, the Permian Basin is made up of more than a dozen oil-containing shale formations, with several of these formations layered atop one another, resulting in a stacking of economically viable hydrocarbon reservoirs, ultimately supporting significantly higher recoverable reserves per acre versus other regions that do not possess this geology. According to Rystad Energy, the Permian Basin accounts for reserves with among the lowest breakeven costs across unconventional oil fields in the U.S., supporting attractive profitability for operators that incentivizes increased drilling and completion activity.

Unconventional Oil Cost Curve Based on 2022 Results ($/Bbl)

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Source: Rystad Energy

Demand for proppant is predominantly influenced by the level of drilling and completions spending by E&P companies, which, in turn, depends largely on the current and anticipated profitability of developing oil and natural gas reserves. The largest unconventional operators are present in the Permian Basin and have achieved better well economics by lowering drilling and completion costs without sacrificing production performance, including by reducing costs related to proppant and last

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mile logistics. To this end, the oil and natural gas industry is shifting towards more cost-effective and efficient proppants and technologies, such as sourcing in-basin proppant. Additionally, modern drilling and well completion technology and techniques, such as those related to horizontal drilling and hydraulic fracturing, coupled with in-basin proppant have made the extraction of oil and gas increasingly cost-effective in formations that historically would have been uneconomic to develop and have substantially increased the pace of demand growth for proppant. According to Rystad Energy, the cost per foot incurred by E&P companies to drill and complete a well in the Permian Basin has declined by more than 50% since 2013.

Permian Basin Drilling and Completion Cost by Year ($/Ft)

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Source: Rystad Energy

In conjunction with the cost efficiencies and increased reliability driven by in-basin proppant, new, unconventional well completion continues to rise; in combination with rising well completion intensity, as evidenced by trends including longer lateral lengths, increasing proppant per well and rising adoption of zipper and simul-frac completion techniques, this is expected to result in compounding demand for proppant. Logistical constraints associated with the location of some in-basin proppant mines combined with inefficiencies in trucking provide an opportunity for strategically located, efficient and reliable producers to disproportionately benefit in the future.

Increased Spending on Drilling and Completion in the Permian Basin

We expect the positive momentum in Permian Basin drilling and completion activities to continue as oil and gas exploration and production companies increased their 2022 capital investment in the aggregate, further increasing the total rig and frac fleet count. Notwithstanding the slowdown from COVID-19 shutdowns, the portion of total U.S. drilling and completions capital expenditures spent in the Permian Basin has increased over time, and represented 50% of the total in 2021, according to Rystad Energy.

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Total Spending on Drilling and Completions ($ Billions)

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Source: Rystad Energy

Increased Prevalence of Horizontal Drilling

Horizontal drilling has become the default method in the industry for the economic extraction of shale resources. According to Rystad Energy, active horizontal drilling rigs as a percentage of total active drilling rigs in the Permian Basin has increased rapidly for ten consecutive years to approximately 95% at the end of 2022. We expect U.S. oil and natural gas exploration and production companies to continue to focus on the development of unconventional resources utilizing horizontal drilling techniques. The successful economic development and ultimate production of horizontal wells typically relies on advanced stimulation techniques in which proppants are a critical component.

Avg. Permian Horizontal Drilling Rig Count as a Percent of Total Avg. Permian Drilling Rig Count

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Source: Rystad Energy

Growing Adoption of Pad Drilling and Increasing Pad Sizes

Oil and gas exploration and production companies have increasingly adopted multi-well pads and zipper or simultaneous completions of unconventional oil and natural gas wells. Multi-well pads allow for the drilling of multiple wellbores from a single drilling pad, reducing drilling times. According to Rystad Energy, the average wells completed per pad in the Permian Basin has risen by 57% since 2013.

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Average Wells Completed Per Pad in the Permian Basin

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Source: Rystad Energy

Rising Lateral Lengths per Well

As Permian Basin oil and gas exploration and production companies have increased horizontal development activities, the industry has made significant efficiency gains, driving down cycle times and finding and development costs per barrel of oil equivalent. Among the more significant factors in this trend is the shift towards longer lateral lengths. These longer lateral lengths increase the surface area, or exposure, to the hydrocarbon-bearing zone, thus increasing the productivity of a well. Lateral lengths have increased by approximately 43% from an average of 6,477 feet in 2016 to an average of 9,266 feet in 2022, according to Rystad Energy. This trend is expected to continue as operators pursue continuous operational improvements. As operators have extended well lengths, the demand for proppant has also increased – we expect this trend to continue.

Lateral Length per Well (Ft)

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Source: Rystad Energy

Increasing Rate of Stimulation

E&P and pressure pumping companies continuing to develop methods to enhance the rate of stimulation of unconventional wells in an effort to accelerate well completion, combined with rising operating efficiencies on the part of the hydraulic fracturing service providers, has resulted in an increase in the lateral length stimulated per day of approximately 60% over the past five years, according to data from Rystad Energy. An increase in lateral feet completed per day in turn drives an increase in proppant consumption on a daily basis.

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Median U.S. Shale Lateral Feet Stimulated (Ft per Day)

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Source: Rystad Energy

Additionally, these same companies have increasingly adopted zipper and simul-frac completions to allow for reduced capital expenditures per well and cycle times. While these advancements have resulted in cost savings per well through the reduced duration of rentals of rigs and pressure pumping spreads, this trend is favorable for proppant providers as it results in accelerated proppant consumption, translating in increased proppant consumed per day. In 2022, zipper and simul-frac completion operations consumed approximately five times the proppant used in legacy single well completion techniques on a daily basis, according to Rystad Energy.

U.S. Land Proppant Pumped Per Day Per Completion Job (Million Lbs per Day)

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Source: Rystad Energy

Increasing Proppant Loading per Lateral Foot

Similar to drilling efficiencies, oil and gas exploration and production companies have also focused on improving completion efficiencies. Over time, operators have increased the amount of proppant pumped per lateral foot in an effort to increase conductivity in the subsurface formation, increasing the ultimate recovery of hydrocarbons from the hydrocarbon-bearing zones. This trend is expected to continue as operators continuously aim to improve overall well returns, further driving the demand for proppant.

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Source: Rystad Energy

Among the oil and natural gas producing regions, the Permian Basin features significantly higher proppant loading or sand intensity relative to other basins, according to data from Lium.

Sand Intensity Relative to U.S. Average Shale Well (0% Baseline)

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Source: Lium Research

Growth in Permian Basin Proppant Demand

According to the 4Q 2022 Lium Sheets - Frac Sand report, the Permian Basin comprises the majority of estimated proppant demand in the U.S. due to attractive extraction economics resulting in increased drilling and completion activity in combination with greater well completion intensity.

Proppant Demand by U.S. Basin (MMTPY)

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Source: Lium Research

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Furthermore, supported by increasing operating efficiency and unconventional well completion intensity, the annual proppant demand per operating hydraulic fracturing fleet is expected to increase by 286% in 2022 versus 2013 levels. As a result, total proppant demand is expected to grow meaningfully, and the Permian Basin is expected to continue to gain market share through 2023.

Permian Proppant Demand per Frac Fleet (Thousand Tons per Active Fleet)

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Source: Rystad Energy

Increasing Demand for Pressure Pumping and Associated Well Completion Products and Services

According to Rystad Energy the total U.S. active pressure pumping fleet count has recovered from the May 2020 trough of 77 active fleets to over 200 active fleets by the end of 2021, representing an increase of over 180%. As oil and natural gas producers have accelerated their development programs, the demand for pressure pumping fleets has significantly increased. The increase in the demand for pressure pumping fleets is expected to increase well beyond 2021 levels, to more than 290 active fleets by the end of 2023. We expect the strong demand for pressure pumping fleets to continue, which will drive additional demand for the products and services we provide.

Average U.S. Historical and Projected Active Pressure Pumping Fleets (Number of Fleets)

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Source: Rystad Energy

As of Q4 2022, the Permian Basin accounted for 46% of all active U.S. pressure pumping fleet activity, indicating the Permian Basin continues to see outsized completions activity.

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U.S. Average Pressure Pumping Fleets by Basin

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Source: Rystad Energy

Proppant Logistics Market Drivers

End use of proppant in hydraulic fracturing operations is dependent on the transportation of proppant from the mine to the wellsite utilizing commercial trucking methods. Since the hauling capacity per truck has not increased substantially over time, proppant demand is significantly correlated with demand for last-mile transportation and logistics solutions. As a result, rising proppant demand is expected to translate into a commensurate increase in demand for proppant transportation and logistics services.

Increasing Logistics Costs for Last-Mile Delivery

As a result of long-term inflation and supply and demand imbalances following disruptions due to the global pandemic, freight costs associated with overland trucking has increased substantially. The U.S. Bureau of Labor Statistics estimates that producer price index for long-distance truckload general freight trucking has increased by almost 50% since 2020.

General Freight Trucking Producer Price Index (Indexed to 100 at 2003)

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Source: U.S. Bureau of Labor Statistics

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Labor costs now represent 45% of total per mile costs of operating a semi-truck, a 12% increase since 2015. Labor costs are the largest component of the cost per mile of operating a semi-truck, with the second largest cost per mile being fuel costs. These labor costs exclude additional costs that have become prevalent in the industry, such as driver training, recruiting, and retention expenses, which increase the labor costs on a fully burdened basis.

Increasing Traffic in the Permian Basin

Existing interstate highway, state highway and other road infrastructure in the Permian Basin region was originally established to serve lower total regional population and traffic. Infrastructure upgrades in the Permian Basin have progressed at a slower pace when compared to the growth in drilling and completion activity, resulting in increased congestion that drives operational delays and total cost for oilfield products. According to Rystad Energy, there were greater than 3,000 proppant trucks on the road per day on average in the Permian Basin in 2021, which is more than double the levels in 2015. Rystad Energy estimates this number to exceed 4,000 per day in 2022 and 2023. We expect our Dune Express combined with our wellsite delivery assets will alleviate trucking congestion by removing trucks from public roads.

Permian Proppant Trucks on the Road per Day Since 2015

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Source: Rystad Energy

Increase in Safety-Related Trucking Incidents in the Permian Basin

The significant increase in truck traffic in the Permian Basin has resulted in a meaningful increase in trucking-related safety incidents and fatalities, impacting E&P operators, service companies and local communities. The average number of trucking fatalities in the Permian Basin in 2019-2021 increased by 77% relative to the 2003-2005 average according to data from the Texas Department of Transport. We expect our autonomous wellsite delivery initiative combined with our conveyor system to reduce the total miles driven and result in fewer accidents.

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Number of Trucking Fatalities in the Permian Basin

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Source: Texas Department of Transportation

The U.S. Department of Transportation (USDOT) in June 2020 announced its initiative to speed up testing and widespread deployment of autonomous vehicles in order to address increased vehicle related traffic incidents. USDOT’s findings on autonomous vehicles highlighted key benefits including increasing safety, economic and social benefits, efficiency, convenience and mobility. In accordance with USDOT’s stated objectives, we expect our wellsite delivery assets initiative will improve profit margins and safety.

Emissions Associated with Proppant Logistics Operations

Trucking is estimated to be a significant contributor to U.S. greenhouse gas emissions. According to the U.S. Environmental Protection Agency, transportation accounted for 27% of U.S. greenhouse gas emissions in 2020. In 2020, medium and heavy-duty trucks represented 26% of transportation sector greenhouse gas emissions. In conjunction with heavy payloads associated with proppant delivery, truck traffic associated with proppant operations represents a meaningful source of greenhouse gas emissions. We expect our electric conveyor system combined with our wellsite delivery assets will reduce truck miles associated with proppant delivery, thereby resulting in a meaningful reduction in greenhouse gas emissions.


U.S. GHG Emissions by Sector		U.S. Transportation Sector GHG Emissions by Source

Source: U.S. Environmental Protection Agency

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Proppant Supply Outlook

Legacy Proppant Supplies and Transition to In-Basin

Historically, the majority of the proppant used in the U.S. was supplied by mines in Wisconsin; their product, Northern White Sand (“NWS”), was preferred by operators for its reliable properties. However, once sufficient in-basin sand reserves were developed and operators were able to determine in-basin proppants as a reliable substitute for NWS, the legacy supply from Wisconsin was displaced by in-basin supply.

Permian Basin Proppant Source

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Source: Lium Research

The first in-basin proppant capacity in the Permian Basin was brought online in 2017. Today, the nameplate capacity in the Permian Basin is estimated to be approximately 74 mmtpy according to Rystad Energy. The advantage of moving to a local proppant supply was primarily due to the high transportation cost associated with NWS, as Permian Basin in-basin proppant was ultimately proven to be of sufficient API specification quality for operators. Moving the proppant by rail from Wisconsin to the Permian Basin accounted for the majority of the cost of supply - it is estimated that approximately 60-80% of the cost of out-of-basin frac proppant is associated with transportation.

The discovery of in-basin sand deposits across several U.S. oil and gas basins led to a rush of reserve acquisitions and greenfield mine construction projects, ultimately leading to a disruption of supply dynamics with long-term, in-basin mine economics being more attractive relative to the marginal economics of existing NWS capacity. This significant increase in new, in-basin capacity accordingly led to a temporary oversupply in the market, while local proppant adoption was taking place, resulting in a significant decrease in prices. This price decrease, accompanied with the pandemic-induced decline in general oil and gas E&P-led demand, resulted in some capacity reductions and in some instances mine closures, including full abandonment and remediation.

This moderation of supply, coupled with the improved commodity price environment and full adoption of in-basin proppant in the Permian Basin, has resulted in a currently tight Permian Basin proppant market and an improved proppant pricing environment. Additionally, there can be significant capital expenditures or re-start costs associated with bringing idled capacity back online, and because most facilities were built approximately 4-5 years ago, many open sites are beginning to require significant maintenance capital expenditures.

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Several factors are expected to continue to influence this market, including:

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the difficulty of finding raw silica sand reserves that meet API specifications that can be mined and processed economically;

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the difficulty of securing contiguous raw silica sand reserves large enough to justify capital investment required to develop a processing facility;

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the lack of available capital investment options;

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the added barrier of securing mining, production, water, air, refuse and other state and local operating permits from appropriate authorities;

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the long lead time required to design and construct sand processing facilities that can efficiently process large quantities of high-quality proppant;

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supply chain factors influencing availability of equipment required to set up or refurbish sand processing facilities; and

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the lower achievable capacity and lifespan of reserves for temporary, smaller, or mobile-mini mines.

Cumulative Tons of Proppant Consumed in the Permian Basin by Source since 2010

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Source: Lium Frac Sand Usage

Overview of the Types of Proppant

Proppant Types

Historically, three primary types of proppant have been commonly utilized in the hydraulic fracturing process: processed silica sand, resin-coated sand, and manufactured ceramic beads. Over the last 10 years, processed silica sand has become the dominant product category in the market as the use of ceramic and resin-coated proppants has become increasingly rare in onshore unconventional completions due to their high cost.

Proppants are produced and sold at differing sizes depending on customer preferences and market availability. Over the last several years, oil and natural gas companies have shifted towards finer-mesh products as they have increasingly pursued “slickwater” completion designs. Older well designs utilized gels and other substances that aided in the delivery of proppants into the fracture network around the well. As these agents have been removed from most wells in current completion designs, slickwater designs rely only on the velocity of the fluids delivered to the fracture network to carry the proppants into place, thus making finer mesh proppants like those found in-basin more desirable as they are more easily conveyed into the fracture network unaided.

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Processed Silica Sand

There are three major types of raw silica sand deposits that have historically generated the proppants most widely used in onshore oil and gas well completions in North America: (a) Northern White; (b) Brady Brown; and (c) in-basin. Northern White is a specific type of white sand mined primarily in Wisconsin, Minnesota, and Illinois, and is generally considered to be of higher quality than Brady Brown due to its crush strength, sphericity, and monocrystalline structure. Due to its quality, Northern White historically commanded premium prices relative to Brady Brown and experienced greater market demand relative to supply, although with the recent emergence of lower cost, and high quality in-basin proppant, demand in basins in which local and viable sand deposits have been discovered has materially shifted away from Northern White. This shift in proppant preference is no more prevalent than in the Permian Basin, where in-basin sand has shown to exhibit quality specifications nearly analogous to Northern White in the higher quality large open-dune deposits, similar to the reserves found at our Kermit and Monahans facilities.

The API has identified thresholds that various physical characteristics of proppants should pass, and our proppant consistently meets these thresholds. The stringent API specifications for proppants include, among others, coarseness, crush resistance, roundness and sphericity, acid solubility, turbidity (low levels of contaminants), and particle size distribution.

Proppant Mesh Size

Mesh size is used to describe the size of the proppant and is determined by sieving the proppant through screens with uniform openings corresponding to the desired size of the proppant. Each type of proppant comes in various sizes, and the various mesh sizes are used in different applications in the oil and natural gas industry. The mesh number system is a measure of the number of equally sized openings there are per square inch of screen through which the proppant is sieved. For example, a 40-mesh screen has 40 equally sized openings per linear inch. Therefore, as the mesh size increases, the granule size decreases. In order to meet API specifications, 90% of the proppant described as 40/70 mesh size proppant must consist of granules that will pass through a 40-mesh screen but not through a 70-mesh screen.

In-basin silica sand produced in West Texas predominately yields 40/70 and 100 mesh, with both the Delaware and Midland Basins consuming almost exclusively these two sizes of proppant.

Sand Pricing

In-Basin Spot Pricing

In-basin sand pricing has historically been volatile as the shift to in-basin production facilities was a disruptive event. Customers quickly aimed to realign their proppant procurement programs, although frictions to faster adoption such as legacy contracts, quality testing and new vendor evaluation created a lag in adoption and a temporary oversupply of in-basin proppant. Supply can sometimes require significant capital expenditures or re-starting costs and cannot always be brought online in time to meet rapid resurgence in demand. According to Rystad Energy, median minegate prices for proppant in the Permian Basin are forecasted to be between $35/ton to $40/ton through 2026. We expect to profitably produce high-quality proppant at such levels.

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Median In-Basin Permian Sand Minegate Price Forecast ($/Ton)

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Source: Rystad Energy

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BUSINESS

Our Company

Overview

We were founded in 2017 by Ben (“Bud”) Brigham, our Executive Chairman and Chief Executive Officer, and are led by an entrepreneurial team with a history of constructive disruption bringing significant and complementary experience to this enterprise, including the perspective of longtime E&P operators, which provides for an elevated understanding of the end users of our products and services. While we believe this experience and our associated knowledge base differentiates us from our competitors and facilitates our ability to identify and execute as an early mover on critical value drivers, enabling us to maximize the full potential of our business and outcomes for our stockholders and stakeholders alike, past performance is not a guarantee of our future success or similar results. You should not rely on the historical record of our management team, our directors or their affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.

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In 2011, Brigham Exploration, a pioneer in the use of 3-D seismic and horizontal drilling and completions techniques within the oil-rich Bakken Shale was acquired by Statoil ASA (“Statoil”) for $4.7 billion. Brigham Exploration completed an IPO in 1997.

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In 2017, Brigham Resources, an innovator in Delaware Basin drilling and completions techniques (as an early adopter of e-frac technology and tested proppant loadings in excess of 5,000 pounds per foot) was acquired by Diamondback Energy, Inc. (“Diamondback”) for $2.6 billion.

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In 2022, Brigham Minerals, a technically sophisticated oil and gas minerals company, combined with Sitio Royalties in an all-stock merger with a combined enterprise value of approximately $4.8 billion (representing a $2.2 billion value to Brigham Minerals, or a 108% total return since its IPO, with total return calculated as cumulative dividends plus stock price appreciation).

Our experience as E&P operators was instrumental to our understanding of the opportunity created by in-basin sand production and supply in the Permian Basin, which we view as North America’s premier shale resource and which we believe will remain its most active through economic cycles. Though the industry has always been focused on increasing efficiencies in resource development, mission critical proppant production and related logistics were historically chaotic and inefficient, particularly given the long and inefficient legacy midwestern supply chain.

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the same degree of soil development, organics and impurities as buried sand deposits, they tend to produce higher and more consistent mining yields relative to buried sand deposits, making the large open dunes economically superior deposits. The giant open dunes’ advantaged access to water stems from the nature of the perched aquifers that have been found to form within these deposits. It is the nature of this water table that has enabled Atlas to become the first and, to our knowledge, the only proppant producer in the Permian Basin to mine by electric dredge, and we expect to transition more of our mining to electric dredging over the next twelve to twenty-four months. We control over 14,500 acres on the giant open dunes, which represents more than 70% of the total giant open dune acreage available for mining. Large open-dune reserves accounted for 100% of our produced volumes for the years ended December 31, 2022 and 2021. As the reserves of these large open dunes have not been subjected to the same degree of soil development, organics and impurities as buried sand deposits, they tend to produce better yields relative to buried sand deposits. Large open-dune reserves have also been proven to produce a higher-quality product (as measured by tests of crush strength, turbidity, etc.) more efficiently and with a smaller environmental footprint as compared to buried sand reserves throughout the Permian Basin. Furthermore, as referenced in a 2019 study attributable to Dr. Robert E. Mace of Texas State University, the large open dunes provide for advantaged access to water.

“More recently, Machenberg (1982, 1984) mentions “interdunal ponds” at Monahans Sandhills State Park and includes photographs of them. Machenberg (1982) notes that unvegetated dunes immediately absorb rainfall (there is no surface drainage in the dune field) and can store large amounts of rainfall and that the surficial sand is a locally important aquifer. She also notes that perched water tables form where the caliche is sufficiently thick. The Atlas Sand Company’s north facility (Atlas North near Kermit) has a shallow dugout (“no more than 10-15 ft. deep”) that they used as a source of water for construction (Triepke 2018b; Figure 3.19).”

Atlas Electric Dredges

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As our geologic analysis and land acquisition program was ongoing, we developed a thesis that a substantial redesign of the typical proppant plant was necessary to fit the just-in-time logistics model

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that we believed would develop in the Permian Basin due to the growing scale of proppant demand and industry’s focus on efficiency gains, and began engineering our facilities to fit this model. Our final engineered design resulted in a more expensive construction project on the front-end as we invested in redundant equipment in order to maximize our potential utilization rates. Construction commenced in the second half of 2017 on our Kermit and Monahans facilities and we began selling proppant in July 2018. Once operational, the relationships we formed over many years in the industry helped us to quickly build a brand centered around quality and reliability.

Based on our current total annual production capacity of approximately 10.0 million tons, as of December 31, 2022, our properties have an aggregate expected reserve life of approximately 36 years based on the currently defined mineral reserves, with a potential extension of our reserve life to approximately 200 years based on our total mineral resources.

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Atlas Plants Designed with Redundancy to Maximize Reliability

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The shift to in-basin sand proved to be a disruptive event for the proppant industry, but not sufficient to provide all participants a meaningful advantage. While many companies have attempted to capture the efficiency gains promised by this relocation of the proppant production hub from the midwestern United States to an in-basin model, few have been able to optimize their efficiency with geologically superior acreage positions and properly designed facilities. It is this combination of geology, water availability and plant design that significantly differentiates our proppant production facilities and we believe makes us more reliable than our competition.

Significant Innovation Projects

The Dune Express Electric Conveyor System

The Dune Express, which will originate at our Kermit facility and stretch into the middle of the Northern Delaware Basin, will be the first long-haul proppant conveyor system in the world. While this is the first application of conveyor infrastructure to long-haul proppant, conveyors are widely used in the proppant industry for short movements of product, and are a preferred method of transporting bulk materials in many other industries due to the low transportation cost and increased safety of the accompanying decrease in truck traffic.

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The system is comprised of multiple conveyors that transfer proppant from belt to belt at various stages of the transportation process. We plan to install two permanent loadouts near the middle of the conveyor system close to the Texas side of the Texas-New Mexico state line and at the end of the Dune Express right-of-way on BLM land near the Lea-Eddy County line in New Mexico. The system will also utilize one or more “mobile” loadouts, which can be mobilized and relocated from time to time, to maximize delivery efficiencies particularly for operators prosecuting a concentrated development plan in the area that is proximate to the conveyor system but not proximate to one of the two permanent loadouts connected to the system. The acquisition of the initial Dune Express right of way took three years to complete and was finalized in 2021. All material permits, including a federal permit to construct and operate the system (which was needed due to the right of way extending onto BLM lands) have been acquired. Detailed engineering and design has also been completed, as have environmental and traffic studies, evaluation of various alternative delivery methods, detailed survey work and customer education and market sizing. The location of the Dune Express right of way provides efficient access to some of the highest rate of return well locations and deepest inventory in the Permian Basin.

Illustrative Rendering of the Dune Express

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Wellsite Delivery Assets

Our existing logistics business utilizes third-party transportation contractors which we plan to supplement and bring in-house with our own trucks and trailers. As our trucks and trailers continue to be deployed, we expect to deliver significant productivity gains, as measured by tons per truck that can be delivered daily, compared to the throughput performance of traditional trucking assets. These immediate productivity gains will be made possible through a combination of process improvements and targeted investments in fit-for-purpose equipment. We have partnered with a provider of autonomy and robotic technology with experience in the field of GPS-denied off-road autonomous driving applications to procure a fleet of vehicles equipped with technology designed to test and ultimately support autonomous wellsite delivery. We expect to begin testing in the field during 2023 with the goal of developing this technology over the next several years.

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Atlas Logistics Solutions Can Expand Potential Throughput per Vehicle Dramatically

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Our technology partner’s highly-customizable, self-driving technology can be applied to a variety of platforms – from tugs, UAVs, and shuttles, to heavy-duty transit buses and full-size logistics trucks. We chose our technology partner due to their long history of deploying autonomous vehicle technology in military and other applications, with full 360-degree wheel movement capabilities.

While many autonomous vehicle companies focus on slight wheel movements for long-haul applications, our technology partner pioneered solutions for use in applications that required 90-degree+ turns to be performed. Furthermore, the technology package has the capacity to record the locations of the vehicles (whether or not Wi-Fi/cellular is available) to map out the road network in preparation for the transition to increasingly less labor-intensive deliveries. We expect to receive our initial vehicles by early 2023 and will begin training shortly thereafter.

In addition to the technology enhancements that are expected to reduce the operating costs of our logistics business through the decreased labor intensity associated with autonomous delivery, we also expect to realize early productivity gains due to the expanded payloads of our deliveries and high levels of asset utilization. We plan to achieve increased payloads due to a combination of equipment design and operational planning. Our business model can potentially achieve a fourfold increase in the daily throughput of a truck as compared to conventional delivery in 2023, and when combined with the mileage reduction delivered by the Dune Express can extend that throughput advantage to 15x or greater depending on the location of the wellsite.

Together, we believe these initiatives could have a significant impact in driving future revenue and increasing cash flow, reducing emissions, improving safety and relieving traffic and other burdens produced by the existing means of last-mile delivery. Furthermore, by reducing the intermittency of proppant delivery to the wellsite – and thereby increasing the reliability of delivery and potential throughput per truck per day – we believe our delivery solutions significantly mitigate a major bottleneck to the completions supply chain that may support increased pressure-pumping efficiencies.

The graphic below shows the estimated amount of proppant, in tons, that can be delivered to Delaware Basin drilling spacing units in a day by an individual truck. Based on the current supply chain configuration, each truck is limited to very few deliveries per day for a variety of reasons, including the distance from local mines to wellsites that are distributed across a large geographic area, a limited public roadway network and the hours per day that a driver can work. Upon commercialization of the Dune Express and our wellsite delivery assets, this throughput potential expands dramatically due to the reduced delivery distance higher payload capacity and increased asset utilization.

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Atlas Logistics Solutions Expand Potential Throughput per Vehicle Dramatically

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Source: Enverus.

In addition to the efficiency and reliability gains that we expect to realize through our logistics solutions, we anticipate that we will also be able to deliver significant safety benefits to the communities of the Permian Basin. The public road network in the Permian Basin today is ill-equipped for the massive amounts of oilfield traffic that is required for the industry to operate. By reducing the number of trucks required to fulfill proppant deliveries and removing these trucks from public roads, we anticipate that the rate of traffic accidents and associated injuries and fatalities will be reduced. Please see the subsection titled “—Value Proposition to Our Community and Stakeholders: A Demonstration of the Harmony of Capitalism with Sustainable Environmental & Social Progress” below for additional information regarding our anticipated community impact.

Value Proposition to Our Stockholders

Strong Margins and Cash Flow Generation – Our ability to generate cash flow is paramount to our value proposition, as it enables us to reinvest in growth, maintain a healthy balance sheet and regularly return capital to our stockholders. A brief summary of several of our key performance and financial metrics is provided below. Please see “Summary—Summary Historical and Pro Forma Financial and Operating Data—Non-GAAP Financial Measures” for more information.

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	Predecessor
	Year Ended December 31,
	2022			2021			2020
	(in thousands, except percentages)
Net Income	$	217,006		$	4,258		$	(34,442	)
Adjusted EBITDA(1)	$	263,983		$	71,954		$	24,667
Adjusted EBITDA Margin(1)		54.7	%		41.7	%		22.1	%
Net Cash Provided by Operating Activities	$	206,012		$	21,356		$	12,486
Adjusted Free Cash Flow(1)	$	228,510		$	64,239		$	19,686
Adjusted Free Cash Flow Margin(1)		47.3	%		37.3	%		17.6	%

(1)

Please read “Summary—Summary Historical and Pro Forma Financial and Operating Data—Non-GAAP Financial Measures” for the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin and a reconciliation of these measures to our most directly comparable financial measures calculated and presented in accordance with GAAP.

Focus on Return of Capital – We commenced paying cash distributions in December 2021 and have paid $70.0 million in distributions to our unitholders since that time. We intend to continue to recommend to our board of directors that we continue to regularly return capital to our stockholders through a dividend framework that will be communicated to stockholders in the future. Furthermore, our credit agreements contain provisions that allow us to pay dividends, subject to certain covenants, including pro forma liquidity and leverage ratios. Please see the section titled “Dividend Policy” for more information.

Management & Historical Successes – We were founded by Bud Brigham, our Executive Chairman and Chief Executive Officer, and are led by an experienced team of entrepreneurs from oil and natural gas, transportation, industrial automation and proppant industry backgrounds. We believe our management team’s deep industry experience, record of successful value creation and established history as entrepreneurs and positive disruptors in the energy industry are unique advantages that enable us to continually identify critical value-creation drivers that will allow us to maximize the full potential of our business and the outcomes for our stockholders and stakeholders alike. While our management team has had significant success, past performance is not a guarantee of our future success or similar results. You should not rely on the historical record of our management team, our directors or their affiliates as indicative of the future performance of an investment in us or the returns we will, or are likely to, generate going forward.

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Brigham Exploration - Prior to founding Atlas LLC, Bud Brigham founded Brigham Exploration, a positive disruptor and innovator in the E&P space. Brigham Exploration was an early pioneer in 3-D seismic exploration onshore, and completed its IPO in 1997. In subsequent years, Bud oversaw the identification, acquisition, delineation and development of approximately 375,000 net acres in the Williston Basin. Brigham Exploration established itself as a leading innovator in horizontal drilling and fracking, as well as oil, gas and water gathering and distribution. The company delivered industry leading operational and economic performance, leading up to Brigham Exploration’s sale to Statoil in December 2011 for an enterprise value of $4.7 billion.

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Brigham Minerals - In 2012, Bud Brigham and other members of his management team founded Brigham Minerals, a mineral acquisition company that leverages its knowledge base and experience to acquire mineral ownership in top-tier liquids rich domestic resource plays. Subsequent to its rapid growth as a private enterprise, Brigham Minerals’ management executed an upsized $300 million IPO in April 2019. Brigham Minerals aggregated a portfolio of approximately 81,800 net royalty acres across 36 counties within the Delaware and Midland Basins in West Texas and New Mexico, in the Anadarko Basin in Oklahoma, the Denver-Julesburg Basin in Colorado and Wyoming and the Williston Basin in North Dakota, prior to entering into an all-stock merger with Sitio Royalties in 2022 with a combined enterprise value of approximately $4.8 billion (representing a $2.2 billion value to Brigham Minerals, or a 108% total return since its IPO, with total return calculated as cumulative dividends plus stock price appreciation).

Value Proposition to Our Community and Stakeholders: A Demonstration of the Harmony of Capitalism with Sustainable Environmental & Social Progress

Across our past and current ventures, we have a well-established history of being good stewards of not only stockholder capital but also of the environments and communities in which we live and operate. Our core obligation is to our stockholders, and we recognize that maximizing value for our stockholders requires that we build goodwill and optimize the outcomes for our broader stakeholders, including our employees and the communities in which we operate. As a result, we deliver leadership across all aspects of Sustainable Environmental and Social Progress (“SESP”). Our aptitude on SESP benefits from our commitment to identifying and executing upon opportunities to transform our business which enhance our growth and profitability through the implementation of new technologies. Our planned Dune Express is one of several initiatives we have undertaken that exhibits our initiatives to transform our business, enhance growth and increase our profitability, while simultaneously providing substantial environmental and safety benefits. This is the harmony of capitalism – innovation can and often does drive both profitability and environmental and/or social progress through free market activity.

The Potential Long-Range Environmental & Safety Benefits from The Dune Express are Significant³

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Source: Management’s internal analysis, based on results of study completed by Texas A&M Transportation Institute

Sustainable Environmental Progress (“SEP”)

To our knowledge, we are the only proppant producer in the Permian Basin that engages in e-mining. Furthermore, we plan to continue transitioning our mining activities from diesel powered mining

³	Chart reflects anticipated reductions over a 30-year period.

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methods to electric dredging over the next twelve to twenty-four months, which generates materially lower emissions when compared to traditional sand mining. Our shift towards e-mining at both of our Kermit and Monahans facilities exemplifies the alignment of both our operational and SEP leadership, as dredge mining, based on our estimates, will materially improve safety and, reduces emissions by approximately 50% versus traditional sand mining methods due to the significant reduction in diesel, fuel usage required to mine sand traditionally, partially offset by increased electricity consumption from our electric dredges. Our dredge mining process also leads to less surface area disturbance per ton of sand produced as we mine to greater depth as compared to mining associated with buried sand deposits.

Our giant open-dune reserves, paired with the replenishing water sources from our acreage’s in-ground aquifers, are the key reasons why we are able to adopt a technology more often reserved for use in rivers and other naturally occurring bodies of water for use in the desert of West Texas. Our reserves benefit from a naturally occurring water table near the surface of our mines, which is unique in the Winkler Sand Trend and provides an ample natural supply of costless water for dredge and wash plant operations.

Atlas Electric Dredges

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Additionally, the results of a study commissioned by us with the Texas A&M Transportation Institute, an independent research agency (the “Transportation Study”), when integrated with our management’s internal analysis, support our estimate that our planned Dune Express could significantly reduce emissions that would otherwise be produced by trucking-related activities associated with the delivery of proppant from the mines of Permian Basin providers to end users. Our estimates project that the system will result in an approximate 70% reduction in carbon dioxide emissions and other emissions, including other pollutants that are harmful to humans. Please see the subsection titled “—Significant Innovation Projects—Dune Express” above for additional information regarding the Dune Express.

Our management team has been proactive with respect to the protection of the DSL and its habitat in an effort to reduce the risk that our business and operations will be materially interrupted in the event that the DSL is listed under the ESA. We have adopted numerous best practices to promote

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active conservation measures for the benefit of the DSL, including our identification of up to 17,000 acres of land for potential set asides, our pursuit of more environmentally friendly mining practices and our participation in the CCAA for the DSL. Please see the subsection titled “—Competitive Strengths—Proactive approach to the well-being of the environment and our employees” below. In January 2021, the CCAA was approved by the USFWS to provide a framework for entry into voluntary conservation agreements between the USFWS and stakeholder participants under which the parties work together to identify threats to the DSL, design and implement conservation measures to address these threats and monitor their effectiveness, among other things. Atlas has been a supporter of the CCAA since its inception and was the first proppant producer to apply for a permit under, and be accepted into, the CCAA. Due to our participation in the CCAA and other conservation measures that we have voluntarily adopted, we do not anticipate that a listing of the DSL as an endangered species would materially reduce sand production at our Kermit and Monahans facilities. We are currently only one of three companies participating in the CCAA. In the event that the DSL is listed as an endangered species under the ESA, it is possible that companies that are not participants in the CCAA at the time of a potential ESA listing would see a disruption to their operations.

Sustainable Social Progress (“SSP”)

Our Company’s culture is a product of our employees, and as such, we embrace the responsibility of promoting a diverse and inclusive meritocracy, with approximately 64% minority and/or female representation in our workforce as of December 31, 2022. We reward the hard work of our employees by compensating them well, with our median employee earning in excess of $100,000 per year as of 2022. Furthermore, we provide our employees with a high-quality benefits package including fully paid family medical, dental and vision insurance, a company 401(k) match program and substantial paid time off or rotational schedules. For our employees in West Texas, we provide convenient, safe and comfortable living facilities at Wyatt’s Lodge, our distinctive alternative to the traditional, notoriously unsafe and unsanitary housing accommodations provided for many oilfield employees. Wyatt’s Lodge provides employees with fully furnished housing, a full cafeteria with a chef and a diverse menu including healthy options, a workout facility, as well as a recreational room and a movie theater. The success of our efforts to create a high-quality workplace is evidenced by our low employee turnover and accolades that include the “Great Place to Work” certification from the Great Place to Work Institute, Inc. for the years ended

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December 31, 2019, 2020 and 2021, as well as the “Top Work Places” Award of Recognition from Austin American-Statesman for the years ended December 31, 2021 and 2022.

We believe that the men and women who have served in the United States armed forces have earned a special place in our society. As such, at our founding we created a dedicated effort to support our veterans in our hiring. We have found our focus on recruiting veterans to work for Atlas has brought us many hardworking and outstanding employees over the years and has positively influenced our corporate values. We have received external recognition for our veteran hiring practices, including the Hire Vets Medallion from the DOL in 2019, 2020 and 2021. As of December 31, 2022, 8.4% of our employees served in the U.S. military as compared to an average of 5.6% across all employers nationally.

Governance

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We will establish a diverse and independent board of directors with complementary skills and backgrounds.

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We will adopt a director compensation policy for our non-employee directors in which a significant portion of the total compensation package is equity based to further align the interests of our directors with our stockholders.

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Management will maintain significant initial ownership in the Company after completion of this offering.

Our organizational structure following the offering and corporate reorganization is commonly referred to as an Up-C structure. Pursuant to this structure, following this offering we will hold a number of Atlas Units equal to the number of shares of Class A common stock issued and outstanding, and the Atlas Unitholders (other than us) will hold a number of Atlas Units equal to the number of shares of Class B common stock issued and outstanding. The Up-C structure was selected in order to (i) allow certain Legacy Owners the option to continue to hold their direct and indirect economic ownership in Atlas LLC in “pass-through” form for U.S. federal income tax purposes through their ownership of Atlas Units, and (ii) potentially allow us to benefit from certain net cash tax savings that we might realize as a result of certain increases in tax basis that may occur as a result of Atlas Inc.’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of Atlas Units pursuant to the exercise of the Redemption Right or the Call Right. In contrast to many offerings by issuers choosing an Up-C structure, we have made the decision not to enter into a tax receivable agreement with the Legacy Owners with respect to any such cash tax savings we might realize, which we believe provides for increased alignment between us and our stockholders over the long term.

Assets and Operations

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acres of large open-dune reserves and resources, which represent more than 70% of the total giant open dune acreage in the Winkler Sand Trend available for sand mining. The Monahans Dune consists of approximately 8,750 acres of premium open-dune reserves. Additionally, we have substantial off-dune acreage at Monahans that is not included in our estimated reserves or resources but that could be mined following our removal of material, such as soil and unusable sand, that lies above the useable sand and must be removed to excavate the useable sand, which we refer to as “overburden.” The Kermit Dune consists of approximately 5,826 acres of premium open-dune reserves.

Map of Operations

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Source: Enverus, Baker Hughes.

Our “twin” mines, located on the bookends of the Winkler Sand Trend, provide optimal logistics to serve both the Southern and Northern portions of the Delaware and Midland Basins and, as of December 31, 2022, have a combined annual production capacity of 10.0 million tons, 70,000 tons of dry storage, 700,000 tons of wet storage and 14 loadout lanes. Innovative plant design and large-scale operations ensure low-cost operations and continuity on site. Redundancies were designed into our facilities to remove singular points of failure that can disrupt the production process, ensuring maximum reliability of proppant production and delivery.

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Atlas’s Facilities are Strategically Located

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Source: Enverus. Baker Hughes.

As of December 31, 2022, we had 357 million tons of proven and probable sand reserves at our Kermit and Monahans facilities according to estimates by John T. Boyd Company, our independent mining

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engineers and geologists. Based on our current total annual expected production capacity of approximately 10.0 million tons as of December 31, 2022, our reserve life is expected to be approximately 36 years. As of December 31, 2022, our reserves are composed of approximately 59% 40/70-mesh and 41% 70/140-mesh substrate sand. We believe our reserve composition is attractive to customers that want to consolidate sourcing and positions us as a go-to provider of high quality in-basin proppant.

Competitive Strengths

We believe the following competitive strengths will allow us to successfully execute our business strategies, achieve our primary business objectives and generate free cash flow, including:

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Superior geology combined with next-generation plant design promotes efficiency & reliability. Our Kermit and Monahans acreage holds a unique combination of key attributes that drive our differentiated business profile, including (i) unmatched scale of reserves and acreage within the two large open-dune deposits at the northern and southern ends of the Winkler Sand Trend, (ii) the associated high quality of proppant, (iii) the associated ease of access to our reserves and resources, (iv) the depth of our deposit, which provides a smaller areal footprint per ton produced, and (v) plentiful availability of water. We are not aware of any other area in the Permian Basin that is able to replicate this combination of key attributes. As of December 31, 2022, our combined facilities have 10.0 million tons of annual production capacity, two dredges, six dryers, 70,000 tons of onsite, finished-good storage, 14 dedicated truck loadout lanes with high-speed loadout silos, a comprehensive water recycling system at each plant, which allows us to reuse approximately 95% of the water used in the production process, and 700,000 tons of damp sand storage. Our facilities are capable of operating year-round and feature advanced safety designs, onsite water supply and recycling, power infrastructure and access to low-cost natural gas through connections to interstate natural gas lines.

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High margins and strong balance sheet drive compelling combination of growth & yield. Our margin profile has been tested through industry cycles, and we have demonstrated strong performance relative to our peers in both high and low proppant price environments. We maintain modest levels of debt and intend to continue to reduce our debt over time. Pro forma for this offering, as of December 31, 2022, we will have a Net Debt/LTM Adjusted EBITDA multiple of 0.3x. We are currently pursuing attractive growth projects and have been returning capital to stockholders. We plan to offer a balanced value proposition to stockholders that we believe will include growth and yield while maintaining financial flexibility and a strong balance sheet.

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Unique logistics offering. Our Dune Express and wellsite delivery assets hold the potential to revolutionize the delivery of proppant in the Permian Basin. By leveraging technology and infrastructure, we will increase asset utilization and payload per delivery resulting in increased efficiency and reliability for our customers. This will also reduce the miles driven on public roadways in the Permian Basin, which will improve the road safety in the basin.

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Strategically located facilities. Our facilities are located on the giant open dunes near Kermit and Monahans, Texas, that bookend the Winkler Sand Trend and enable us to reliably and efficiently meet the proppant demand of our customers in both the Delaware and Midland

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Basins. In addition, we strategically located our Kermit facility to be bisected by two state highways and positioned our Monahans facility adjacent to two highways to facilitate the efficient transportation of our proppant. Our Kermit facility’s location also provides a strategic origination point for the initial Dune Express, which will travel across the Texas-New Mexico state line area, one of the highest development intensity sections of the Permian Basin.

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Strong brand recognition for reliability drives contracting and solidifies valuable relationships with a diverse group of customers. The success of our business has been underpinned by our relationships with some of the most respected operators and service companies in the Permian Basin. Our customers range from high-profile, public oil and natural gas and service companies to private, independent enterprises. We also have a diverse customer base, which we believe minimizes counterparty risk. During the year ended December 31, 2022, we had 39 customers, with the top 10 customers accounting for approximately 68% of our revenue for that period. During the year ended December 31, 2021, we had 39 customers, with the top 10 customers accounting for approximately 79% of our revenue for that period. Our ability to secure and maintain these robust relationships lends support to our ability to weather economic headwinds. In 2020, we continued to operate throughout the height of the pandemic, grew sales volumes year over year from 2019 to 2020, and increased our market share, as we expanded our customer base by the addition of 14 new customers since January 1, 2020. While our contracting strategy changes over time and through industry cycles, we are currently highly contracted on our existing production capacity, which provides for significant visibility in our future revenue and cash flow. We plan to continue to pursue contracts when they stand to benefit our business over the long term.

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This experience includes two successful IPOs, three successful company sales or mergers, multiple asset monetization events and the successful building of other enterprises. Please see the subsection titled “—Value Proposition to Our Stockholders—Management & Historical Successes” above. Management benefits from extensive experience in the Permian Basin, where our founder was born and raised, and he and other management members have extensive relationships built over a long history of involvement with various businesses in the region across upstream operations, non-operated enterprises, sand mine development, mineral acquisitions and water sourcing. We believe our management team’s experience managing upstream operations in the Permian Basin lends a unique perspective that provides us with a network of key potential customers, suppliers, vendors and employees, contributes to our ability to provide a high-quality customer experience and serves as a strong foundation for our role as a collaborative partner in meeting the advanced completion needs of our customers. Further, our management team has extensive experience in identifying attractive operating areas and evaluating resource potential through a variety of means, including extensive geologic studies; we believe this experience will continue to allow us to expand our operations by selectively pursuing organic development opportunities and innovations in the Permian Basin.

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Proactive approach to the well-being of the environment and our employees. Our voluntary agreement under the CCAA ensures that the USFWS will not require us to comply with conservation measures or impose any restrictions on our use of resources beyond those which we have already agreed. Our large acreage position also provides us with the flexibility to set aside as much as 17,000 acres of high suitability DSL habitat for conservation protection, which would exempt us from certain enrollment fees otherwise required under the CCAA. The smaller acreage position of many of our Permian Basin competitors may make similar set-asides commercially challenging for them. We believe that our voluntary participation under the CCAA will help to safeguard our assets and operations against adverse effects that could result from non-participation or any future listing of the DSL as an endangered species. We believe potential customers, focused on improving the sustainability profile of their own operations, value our proactive stance towards environmental risk management. As we focus on the well-being of the environment we operate in, we also focus on the well-being of our employees through initiatives such as our compensation and benefits package and Wyatt’s Lodge. We believe that this differentiated investment in our employees creates a culture of pride and ownership that fosters the positive disruptions and innovations our business successes are built on.

Business Strategies

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order for their design to maximize uptime and reliability. Our access to a natural water table near the surface of our deposit has allowed us to significantly lower our production costs through dredge mining. Our transition to e-mining, when fully completed is expected to result in reduced production costs, as we have seen historically when we have been able to use electric dredging as our primary mining method. In the future, the modular designs of our facilities will accommodate future expansions at a significantly reduced expense as compared to the conventionally designed facilities of our Permian Basin competitors.

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Use our unmatched scale to amplify innovation and disruptive technology to improve the unconventional resource supply chain. Our Kermit and Monahans facilities represent a complete reinvention of the more traditional proppant production facility. Most proppant production facilities were historically located far from the point of consumption and therefore had long supply lines. Generally speaking, these facilities frequently experienced downtime on an unpredictable schedule. With the onset of in-basin sand, we recognized the need for our facilities to operate on a just-in-time delivery basis and took to redesigning the traditional facility to ensure that redundancy was built in at critical junctures to mitigate the effects of unplanned equipment downtime. Additional early measures included investments into the automation of our loadout lanes to drive down load times and the automation of many of our operations activities to improve efficiency and safety. More recently, we were the first, and currently the only, Permian Basin miner to partially electrify the mining of proppant through the use of electric dredges, and we plan to increase our electric dredge volumes over the next twelve to twenty-four months. Our Dune Express and wellsite delivery assets are the next positive major disruptions that we are bringing to the Permian Basin. As a positive disruptive industry technology, the Dune Express replaces much of the trucking haul with electric, conveyor-based transportation, which is likely to provide substantial SESP benefits, including a significant reduction in the emissions generated, relative to the traditional delivery of sand to customer wellsites due to the reduction in miles driven per ton of payload delivered. These strategic initiatives and other innovations are clear demonstrations of our commitment to evaluate and pursue strategies and technologies that positively disrupt our industry and continue to establish, maintain and optimize aspects of our business that provide distinct advantages over our competitors.

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contracts with major oil companies that includes the delivery of proppant by means of the Dune Express. While many factors influence the selection of proppant providers, we believe that our differentiated environmental profile, resulting from our major electrification projects, paired with our ability to reliably provide large volumes of quality proppant at attractive rates makes us a preferred partner for customers similarly prioritizing enhanced sustainability of operations and cost structure optimization.

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Drive stockholder value creation by prioritizing our other stakeholders through sustainable environmental and social progress. We have recognized, from our founding, that long-term profitability for our stockholders can be achieved only by delivering positive outcomes for our other stakeholders—treating our employees well, executing as good stewards in the communities and the environments we do business in, and operating with the highest governance and diligence standards. Though many of our stakeholders are not owners of our business, they do have a meaningful influence in the success of our business. Therefore, to optimize value creation for our stockholders, we strive to provide attractive outcomes for our stakeholders.

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Maintain a conservative financial profile in order to provide durable capital returns in a cyclical industry. The energy services business is historically cyclical, and we believe that a strong balance sheet and substantial liquidity are key, not only for the long-term health of the Company, but also for its ability to continuously return capital to its stockholders through-cycles. As of December 31, 2022, on a pro forma basis after giving effect to this offering and the 2023 ABL Credit Facility, we expect to have approximately $444.3 million of cash on hand, approximately $68.3 million available under the 2023 ABL Credit Facility, and approximately $149.0 million outstanding under our 2021 Term Loan Credit Facility. Further, we plan to continue making regular stockholder distributions as we transition into a public company, likely in the form of regular base dividends and potentially a combination of special dividends and share repurchases. Please see “Summary—Recent Developments—Cash Distribution” and the section titled “Dividend Policy.”

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Our Facilities

We currently operate our Kermit and Monahans facilities in Winkler and Ward Counties, Texas. The following map shows the location of both facilities:

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Kermit, Texas

As of December 31, 2022, our Kermit mine had production capacity of 5.0 million tons and is located on 5,826 gross acres of land (of which 5,341 net acres are controlled by us either through lease or fee ownership) in Winkler County, Texas, with onsite processing and truck loading facilities. We commenced construction of our Kermit mine in October of 2017, and commenced operations in June 2018. Geographically, our Kermit facility is located at approximately 31° 58’ 6.29”N latitude and 103° O’ 39.46” W longitude and is situated approximately 7 miles northeast of Kermit, Texas, and is accessible via Texas State Highway 18. The Midland International Air and Space Port is located approximated 45 miles southeast of the facility. The facility’s primary utilities include three phase power, 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 10 million tons annually. The facility was designed with redundancies to provide enhanced reliability and minimize the potential for bottlenecks throughout the processing and loadout operation.

The Kermit facility has 188.0 million tons of associated proven reserves as of December 31, 2022. The sand deposits generally range from 60 to over 100 feet thick and consist of 40/70-mesh and 100-mesh sand, with an anticipated production mix of approximately 30% 40/70-mesh and approximately 70% 100-mesh. The crush strength of the sand mined at the facility is between 7,000 to 8,000 pounds-per-square-inch (“PSI”) for 40/70-mesh and between 10,000 to 11,000 PSI for 100-mesh. Given the open-dune reserves and natural aquifer, sand is generally extracted from the mine through surface excavation through mining by electric dredge. The facility was constructed with a modular design that facilitates future expansion opportunities. The Kermit facility and has onsite transportation infrastructure capable of loading more than 35 trucks per hour on average.

We lease a portion of the reserves associated with our Kermit facility. In December 2017, we also entered into the Kermit Royalty Agreement providing Permian Dunes with an overriding royalty interest in revenues we receive from the sale of proppant mined from the reserves associated with our Kermit facility. Under the terms of the Kermit Royalty Agreement, the agreement would terminate in connection with the consummation of this offering. In contrast, the Monahans Lease, including the royalty payment obligations thereunder, will survive the consummation of this offering or any other Capital Event. See Please see “Certain Relationships and Related Party Transactions–Historical Transactions with Affiliates–Permian Dunes Holding Company, LLC” and “—Our Lease and Royalty Arrangements” for more information. We have received the material permits required to operate our Kermit facility from the Air Permits Division of the Texas Commission on Environmental Quality (the “TCEQ”), Winkler County, the MSHA and TxDOT. Please see “—Our Permits” for more information.

Monahans, Texas

As of December 31, 2022, our Monahans mine had production capacity of 5.0 million tons and is located on approximately 32,224 gross acres of land in Ward County, Texas, with onsite processing and truck loading facilities. We commenced construction of our Monahans mine in February of 2018 and commenced operations in October 2018. Geographically, our Monahans facility is located at approximately 31° 39’ 32.53” N latitude and 102° 52’ 55.46” W longitude and is situated approximately 3 miles northeast of Monahans, Texas, and is accessible via Texas State Highway 115 and Interstate 20. The Midland International Air and Space Port is located approximated 40 miles east of the facility. The facility’s primary utilities include three phase power from 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 10 million tons annually. The facility was designed with redundancies to provide enhanced reliability and minimize the potential for bottlenecks throughout the processing and loadout operation.

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The Monahans facility has 113.5 million tons of associated proven reserves as of December 31, 2022. The sand deposits generally range from 60 to over 100 feet thick and consist of 40/70-mesh and 100-mesh sand, with an anticipated production mix of approximately 50% 40/70-mesh and approximately 50% 100-mesh. The crush strength of the sand mined at the facility is 7,000 to 8,000 PSI for 40/70-mesh and between 10,000 to 11,000 PSI for 100-mesh. Given the open-dune reserves and natural aquifer, sand is generally extracted from the mine through surface excavation through mining by electric dredge. The facility was constructed with a modular des