Shares of proppant provider U.S. Silica (NYSE:SLCA) gapped higher yesterday on some fantastic quarterly earnings. As I've mentioned in previous articles, U.S. Silica benefits from the growth of fracking, in a unique way: It provides the large quantities of high-quality sand needed to successfully get oil and gas out of the ground during the fracking process. 

This quarter was really a knockout performance. Consider the following:

  • Year-on-year revenue growth of 47%, with the company's oil and gas segment increasing revenue by an amazing 77%.
  • Volume growth of 45% year-on-year from the oil and gas division.
  • EBITDA grew by only 6.3%, but will come in on the "upper end" of guidance for the year, with management feeling "optimistic" about that number. 

Those numbers look pretty great, but for a better idea, consider some anecdotal data:

  • One customer asked U.S. Silica to quadruple the volume outlined in its original contract. 
  • Another customer is receiving quadruple the volume of its original contract and is paying market prices for the additional amount. 
  • Just a year ago, management saw the average horizontal well consume about 2,000 tons of sand over its producing life. Management now commonly sees wells use over 5,000 tons over the same period.
  • Customers increasingly prefer U.S. Silica over its peers because the company has a proven track record of dependably delivering sand, even during the unusually cold winter just experienced in North America.
  • On top of all this, well downspacing, a new trend in horizontal drilling, is adding more drilling locations over the same acreage.

Volume and price
In addition to the better than expected volume growth, management also sees price increases on the horizon because the proppant market is getting tighter. Management expects to see mid single-digit price increases throughout the year across all shale basins, not just a few. Between all the proppant providers, there will be less additional supply coming online in the next two years than there was in the previous two years. All of these trends are bullish for proppant providers such as U.S. Silica.

What about the top line?
In the most recent conference call, one analyst questioned why volumes were up so much, and yet top-line guidance was only tightened to the upside and not increased. Management replied that while there would be some supply cost increase, most of the discrepancy comes from a desire to remain conservative in giving guidance. In other words, management wanted to see how the remainder of the year would play out. I wouldn't be surprised if, at some point over the course of this year, management raised its top-line guidance for 2014.

Foolish conclusion
U.S. Silica is up quite a bit. In fact, it has just about doubled since the first time I wrote about it in October 2013. Believe it or not, U.S. Silica is still reasonably priced at 17.1 times this year's earnings. The company also recently initiated a dividend, which I believe will grow over time. 

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Casey Hoerth has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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