What happened

Shares of U.S. Silica (SLCA 0.94%) have skyrocketed today, up by more than 20% as of 11 a.m. ET. The sand producer's impressive second-quarter results and optimistic outlook fueled the stock's move higher. 

So what

U.S. Silica's revenue jumped 22% year over year to $388.5 million, beating analysts' expectations by $43.5 million. Meanwhile, adjusted earnings came in at $0.32 per share, crushing the analysts' consensus estimate by $0.23 per share. 

U.S. Silica sold nearly 4.7 million tons of sand during the quarter, up 13% from Q1 and the year-ago period. The company benefited from strong demand from the oil and gas sector, helping drive a 73% surge in that segment's contribution margin. Meanwhile, demand for industrial and specialty products was also robust, powering a 21% improvement in that segment's contribution margin. 

The company noted that demand for sand used in fracking oil and gas wells remains strong. It said that customers are signing multiyear agreements to secure sand supplies because they expect energy prices to remain elevated for several years. 

Those positive market conditions enabled U.S. Silica to generate lots of free cash flow. That allowed the company to opportunistically repurchase $100 million of debt at a discount in Q2, helping deleverage its balance sheet. It expects to continue generating cash and using those funds to reduce debt in the coming quarters.

Now what

High oil and gas prices are incentivizing oil and gas producers to ramp up their drilling activities. That's leading them to secure sand supplies to complete more wells in the future. These strong market conditions bode well for U.S. Silica, which is cashing in on that demand, allowing it to reduce debt. If demand remains elevated, it could give the company's stock the fuel to continue heading higher in the coming quarters.