Filed Pursuant to Rule 424(b)(3)

Registration No. 333-213989

PROSPECTUS SUPPLEMENT

(to Prospectus dated October 20, 2016)

Emerge Energy Services LP

Common Units

Representing Limited Partner Interests

This prospectus supplement supplements and amends the prospectus dated October 20, 2016, relating to the offer and sale of 3,350,154 common units representing limited partner interests in Emerge Energy Services LP by the selling unitholder.

On November 2, 2016, we filed with the U.S. Securities and Exchange Commission (the “SEC”) the attached Quarterly Report on Form 10-Q for the period ended September 30, 2016. We are filing this prospectus supplement to update and supplement the information included or incorporated by reference in the prospectus dated October 20, 2016 with the information contained in our Quarterly Report on Form 10-Q. The text of our Quarterly Report on Form 10-Q is attached to and a part of this prospectus supplement. Any document, exhibit or information contained in our Quarterly Report on Form 10-Q that has been deemed furnished and not filed in accordance with SEC rules shall not be included in this prospectus supplement.

This prospectus supplement should be read in conjunction with the prospectus dated October 20, 2016 and may not be delivered or utilized without the prospectus. To the extent there is a discrepancy between the information contained in this prospectus supplement and the information in the prospectus dated October 20, 2016, the information contained herein supersedes and replaces such conflicting information.

Investing in our common units involves risks. See “Risk Factors” beginning on page 2 of the prospectus dated October 20, 2016.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is November 7, 2016

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

¨         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from        to

Commission File No.  001-35912

EMERGE ENERGY SERVICES LP

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x Yes    o  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    o  No

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    o  Yes    x  No

As of October 26, 2016, 24,173,407 common units were outstanding.

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TABLE OF CONTENTS

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FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements.”  The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature.  These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us.  While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate.  All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions.  Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.  Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:

·                  failure to secure or maintain contracts with our largest customers, or non-performance of any of those customers under the applicable contract;

·                  competitive conditions in our industry;

·                  the amount of frac sand we are able to excavate and process, which could be adversely affected by, among other things, operating difficulties and unusual or unfavorable geologic conditions;

·                  the volume of frac sand we are able to sell;

·                  the price at which we are able to sell frac sand;

·                  changes in the long-term supply of and demand for oil and natural gas;

·                  volatility of fuel prices;

·                  unanticipated ground, grade or water conditions at our sand mines;

·                  actions taken by our customers, competitors and third-party operators;

·                  our ability to complete growth projects on time and on budget;

·                  increasing costs and minimum contractual obligations relating to our transportation services and infrastructure;

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

·                  environmental hazards;

·                  industrial accidents;

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

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

·                  facility shutdowns in response to environmental regulatory actions;

·                  inability to obtain necessary production equipment or replacement parts;

·                  reduction in the amount of water available for processing;

·                  technical difficulties or failures;

·                  labor disputes and disputes with our excavation contractor;

·                  late delivery of supplies;

·                  difficulty collecting receivables;

·                  inability of our customers to take delivery of our products;

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·                  changes in the price and availability of transportation;

·                  fires, explosions or other accidents;

·                  pit wall failures or rock falls;

·                  the effects of future litigation; and

·                  other factors discussed in this Quarterly Report on Form 10-Q and the detailed factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2015.

When considering forward-looking statements, you should keep in mind the known material risk factors and other cautionary statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2015 in “Risk Factors” and in this Form 10-Q in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.”  Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

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PART I                                                     FINANCIAL INFORMATION

ITEM 1.                FINANCIAL STATEMENTS

EMERGE ENERGY SERVICES LP

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

($ in thousands, except unit data)

See accompanying notes to unaudited condensed consolidated financial statements.

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EMERGE ENERGY SERVICES LP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except unit and per unit data)

(1) See Note 9.

See accompanying notes to unaudited condensed consolidated financial statements.

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EMERGE ENERGY SERVICES LP

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PREFERRED UNITS AND PARTNERS’ EQUITY

($ in thousands)

See accompanying notes to unaudited condensed consolidated financial statements.

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EMERGE ENERGY SERVICES LP

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

See accompanying notes to unaudited condensed consolidated financial statements.

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EMERGE ENERGY SERVICES LP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.                                      ORGANIZATION AND BASIS OF PRESENTATION

Organization

Emerge Energy Services LP (“Emerge”) is a Delaware limited partnership that completed its initial public offering (“IPO”) on May 14, 2013 to become a publicly traded partnership.  The combined entities of Superior Silica Sands LLC (“SSS”), a Texas limited liability company, Allied Energy Company LLC (“AEC”), an Alabama limited liability company, and Emerge Energy Services Operating LLC (“Emerge Operating”), a Delaware limited liability company, represent the predecessor for accounting purposes (the “Predecessor”) of Emerge.  Emerge acquired Direct Fuels LLC (“Direct Fuels”) in a business combination concurrent with the IPO on May 14, 2013.

References to the “Partnership,” “we,” “our” or “us” when used for dates or periods ended prior to the IPO, refer collectively to the Predecessor.  References to the “Partnership,” “we,” “our” or “us” when used for dates or periods ended on or after the IPO, refer collectively to Emerge and all of its subsidiaries, including Direct Fuels.

We are a growth-oriented energy services company engaged in the business of mining, producing, and distributing silica sand that is a key input for the hydraulic fracturing of oil and gas wells.  The Sand business conducts mining and processing operations from facilities located in Wisconsin and Texas.  In addition to mining and processing silica sand for the oil and gas industry, the Sand business sells its product for use in building products and foundry operations.

The Fuel business operated transmix processing facilities located in the Dallas-Fort Worth area and in Birmingham, Alabama.  The Fuel business also offered third-party bulk motor fuel storage and terminal services, biodiesel refining, sale and distribution of wholesale motor fuels, reclamation services (which consists primarily of cleaning bulk storage tanks used by other petroleum terminal and others) and blending of renewable fuels.

On August 31, 2016, we completed the sale of our Fuel business pursuant to an Amended and Restated Purchase and Sale Agreement, dated August 31, 2016 (the “Restated Purchase Agreement”), with Susser Petroleum Operating Company LLC and Sunoco LP (together, “Sunoco”). Sunoco paid Emerge a purchase price of approximately $167.7 million in cash (subject to certain working capital and other adjustments in accordance with the terms of the Restated Purchase Agreement), of which $14.25 million is placed into several escrow accounts to satisfy potential claims from Sunoco for indemnification under the Restated Purchase Agreement.  Any escrowed funds remaining after certain periods of time set forth in the Restated Purchase Agreement will be released to Emerge, provided that no unsatisfied indemnity claims exist at such time.

The results of operations of the Fuel business have been classified as discontinued operations for all periods presented.  We now operate our continuing business in a single sand segment.  We report silica sand operations as our continuing operations and fuel operations as our discontinued operations.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X.  Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our 2015 Annual Report on Form 10-K.  These financial statements include the accounts of all of our subsidiaries.  All significant intercompany transactions and balances have been eliminated in consolidation.  In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these interim statements have been included.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.  These reclassifications do not impact net income and do not reflect a material change in the information previously presented in our Condensed Consolidated Statements of Operations.

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NOTE 2 — DISCONTINUED OPERATIONS

At March 31, 2016, the assets and liabilities of our Fuel business were classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented in accordance with ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.”

Summarized assets and liabilities of the Fuel business, classified as held for sale as of December 31, 2015 are as follows:

The following corporate costs were allocated to discontinued operations for the three and nine months ended September 30, 2016 and all prior periods presented:

·                  Interest on the revolver was allocated to the discontinued operations based on the allocation of debt between sand and fuel business.

·                  Equity-based compensation costs recognized for the Fuel business employees were allocated to discontinued operations.

·                  The taxes paid on behalf of the Fuel business were compiled by review of prior tax filings and payments. These amounts were allocated to discontinued operations.

·                  General corporate overhead costs were not allocated to discontinued operations.

Summarized results of the discontinued operations for the three and nine months ended September 30, 2016 and 2015 are as follows :

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On August 31, 2016, we completed the sale of our Fuel business pursuant to the terms of the Restated Purchase Agreement.  The purchase price was $167.7 million, subject to adjustment based on actual working capital conveyed at closing.  The following escrow accounts were established at closing:

·                  $7 million of the sales price was withheld as a general escrow associated with certain indemnification obligations.  Any unutilized escrow balance, plus any accrued interest thereon, will be paid 54 months from the closing date;

·                  $4 million  of the sales price was withheld as a hydrotreater escrow to satisfy any cost overruns of the Birmingham hydrotreater completion. Any unutilized escrow balance, along with any accrued interest thereon, will be paid 60 days after the substantial completion of the Birmingham hydrotreater;

·                  $2.25 million of the sales price was withheld as the Renewable Fuel Standard (“RFS”) escrow account. The unutilized RFS escrow will be released, along with any accrued interest thereon, no later than four months from the closing date; and

·                  $1 million of the sales price was withheld as a pipeline escrow account.  Any unutilized escrow balance, along with any accrued interest thereon, will be released with the general escrow.

Escrow receivables are recorded at the net present values of estimated future recoveries and will be adjusted as contingencies are resolved.

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The following table represents the gain on sale from the Fuel business recognized in the third quarter of 2016 (in thousands).  These amounts may be adjusted as certain contingencies regarding estimated transaction costs and escrow receivables are resolved in subsequent periods.

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3.              OTHER FINANCIAL DATA

Assets held for sale

We consider assets to be held for sale when management commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset is expected to be completed within one year and it is unlikely that significant changes will be made to the plan.  Upon designation as held for sale, we record the carrying value of the assets at the lower of its carrying value or its estimated fair value, less costs to sell.  In accordance with generally accepted accounting principles, assets held for sale are not depreciated.

Discontinued Operations

The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented.  The expenses included in the results of discontinued operations are the direct operating expenses incurred by the discontinued segment that may be reasonably segregated from the costs of the ongoing operations of the Company.  The assets and liabilities have been accounted for as assets held for sale in our Condensed Consolidated Balance Sheets for all periods presented.  The operating results related to these lines of business have been included in discontinued operations in our Condensed Consolidated Statements of Operations for all periods presented.  See Note 2 - Discontinued Operations for further detail.

Private Placement

On August 8, 2016, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”) to issue and sell to the Purchaser in a private placement (the “Private Placement”) an aggregate principal amount of $20 million of our Series A Preferred Units (the “Preferred Units”) and a warrant (the “Warrant”) that may be exercised to purchase common units (the “Warrant Units”) representing limited partner interests in the Partnership.

The Preferred Units will initially be convertible into approximately 1.97 million common units at the option of the Purchaser or upon certain other events. The Preferred Units, subject to the satisfaction of customary equity conditions, will automatically convert into the common units in two tranches (each, an “Automatic Conversion Date”) as follows:  (a) 50% of the Preferred Units shall automatically convert into common units on November 3, 2016, and (b) the remaining 50% of the Preferred Units shall automatically convert into common units on February 15, 2017.  On each applicable Automatic Conversion Date, the Conversion Price of the Preferred Units shall be equal to the lower of (i) $10.15 and (ii) 90% of the Market Price (as defined in the Purchase Agreement) on the applicable Automatic Conversion Date.  These Preferred Units are classified as temporary equity in accordance with Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity, on our Condensed Consolidated Balance Sheets.

We also issued to the Purchaser the Warrant to purchase approximately 890,000 common units at an exercise price of $10.82 per common unit.  The Warrant, which expires on August 16, 2022, was exercisable immediately upon issuance and contains a cashless exercise provision and other customary provisions and protections, including anti-dilution protections.  These warrants are classified as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity, and are included in Other long-term liabilities on our Condensed Consolidated Balance Sheets.

On November 3, 2016, 10,000 Preferred Units will automatically convert into 958,222 common units at a conversion price of $10.15.

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Allowance for Doubtful Accounts

The allowance for doubtful accounts totaled $3.1 million and $1.4 million  at September 30, 2016 and December 31, 2015, respectively.

Inventories

Inventories for continuing operations consisted of the following:

During the first quarter of 2016, we wrote down $5.4 million of our sand inventory based on our lower or cost or market analysis. We attribute this write-down to declining market conditions and a significant decline in prices.

We classified $12.5 million of our inventories related to our Fuel business to assets held for sale as of December 31, 2015.  See Note 2 - Discontinued operations for further information.

Prepaid expenses and other current assets

Prepaid expenses and other current assets for continuing operations consisted of the following:

Property, Plant and Equipment

Property, plant and equipment for continuing operations consisted of the following:

(1) Includes assets under capital lease

We classified $54.1 million of our property, plant and equipment related to our Fuel business to assets held for sale as of December 31, 2015.  See Note 2 - Discontinued operations for further information.

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We recognized $13.1 million and $16.1 million of depreciation and depletion expense for the nine months ended September 30, 2016 and 2015, respectively.  Of these amounts, depreciation and depletion expense for continuing operations totaled $12.2 million and $13.4 million at September 30, 2016 and 2015, respectively.

Property, plant and equipment included as part of the assets held for sale were no longer depreciated from the time that they were classified as such.

Intangible Assets Other Than Goodwill

Our intangible assets for continuing operations consisted of the following:

We classified $24.1 million of our intangible assets other than goodwill related to our Fuel business to assets held for sale as of  December 31, 2015.  See Note 2 - Discontinued operations for further information.

We recognized $3.8 million and $5.2 million of amortization expense for the nine months ended September 30, 2016 and 2015, respectively.  Of these amounts, amortization expense for continuing operations totaled $2.3 million and $0 million for the nine months September 30, 2016 and 2015, respectively.

Other Assets, Net

Other assets, net for continuing operations consisted of the following:

(1)         The cost to transport leased railcars from the manufacturer to our site for initial placement in service is capitalized and amortized over the term of the lease (typically five to seven years).  This balance reflects the non-current portion of these capitalized costs.

(2)         During the first six months of 2016, we completed negotiations with various  railcar lessors pursuant to which we terminated a future order of railcars, deferred future railcar deliveries and reduced and deferred payments on existing leases.  The related rent expense is recorded on a straight-line basis over the lease term. The cumulative excess of rent payments  over rent expense is recorded as a deferred lease asset and recorded in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.

(3)         Non-current receivables are recorded at net present value of estimated recoveries and will be adjusted as contingencies are resolved.

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We classified $43 thousand of our other assets, net related to our Fuel business to assets held for sale as of December 31, 2015.  See Note 2 - Discontinued operations for further information.

Accrued Liabilities

Accrued liabilities for continuing operations consisted of the following:

We classified $5.1 million of our accrued liabilities related to our Fuel business to liabilities held for sale as of December 31, 2015.  See Note 2 - Discontinued operations for further information.

Other Long-term Liabilities

Other long-term liabilities for continuing operations consisted of the following:

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Long-term Promissory Note

During the second quarter of 2016, we negotiated significant concessions on the majority of our railcar leases pursuant to which we cancelled or deferred deliveries on rail cars and reduced cash payments on a substantial portion of the existing rail cars in our fleets.  In exchange of these concessions, we issued  at par an Unsecured Promissory Note in the aggregate principal amount of $8 million (the “PIK Note”) for delivery deferrals.  The PIK Note bears interest at a rate of 10% per annum payable in cash or, in certain situations, in-kind, when certain financial metrics have been met.  The PIK Note will mature on June 2, 2020.  We also issued warrants to purchase 370,000 common units representing limited partnership interests in the Partnership in exchange of these concessions during the second quarter of 2016.  This note is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

Contract and Project Terminations

In 2014 and 2015, we began development of sand processing facilities in Independence, Wisconsin and other small projects in Ohio and Missouri.  Due to a number of complications, such as an increase in projected operating costs and a decline in the market price and demand for frac sand in early 2015, we determined that these projects were no longer economically viable.  In 2015, we recorded a $9.3 million charge to earnings, of which $9.2 million related to the Independence, Wisconsin facilities.  This charge to earnings included items such as engineering, legal and other professional service fees, site preparation costs, and writedowns of assets to estimated net realizable value.

Management committed to a plan to discontinue these projects in April 2015.  In accordance with Financial Accounting Standards Board (“FASB”) ASC 420,  Exit or Disposal Cost Obligations, any contract termination charges and estimated values of continuing contractual obligations for which we will receive no future value will be recognized as a charge to earnings as of the contract termination date or cease-use date.  We estimated these contract termination charges to be approximately $1.4 million.  These liabilities will be reviewed periodically and may be adjusted when necessary, but we do not expect any such adjustments to be significant.

During the first half of 2016, we negotiated concessions on the majority of our railcar leases pursuant to which we cancelled or deferred deliveries on rail cars and reduced cash payments on a substantial portion of the existing rail cars in our fleets.  In exchange for these concessions, we incurred a contract termination charge of $4 million.  We issued at par an Unsecured Promissory Note in the aggregate principal amount of $4 million with interest payable in cash or, in certain situations, in-kind, when certain financial metrics have been met.  This note bears interest at a rate of five percent per annum and is due and payable within 30 days following the date on which financial statements are publicly available covering the first date on which these financial metrics have been met.

The following table illustrates the various contract termination liabilities and exit and disposal reserves included in Accrued liabilities and Other long-term liabilities in our Condensed Consolidated Balance Sheets:

Mining and Wet Sand Processing Agreement

In April 2014, a five-year contract with a sand processor (“Processor”) became effective to support our Sand business in Wisconsin.  Under this contract, the Processor financed and built a wet wash processing plant near our Wisconsin operations.  As part of the agreement, the Processor wet washes our sand, creates stockpiles of washed sand and maintains the plant and equipment.  During the term of the agreement the Processor will own the wet plant along with the equipment and other temporary structures used to support this activity.  At the end of the five-year term of the agreement or following a default under the contract by the Processor, we have the right to take ownership of the wet plant and other equipment without charge.  Subject to certain conditions, ownership of the plant and equipment will transfer to us at the expiration of the term.  We

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accounted for the wet plant as a capital lease obligation.  The original capitalized lease asset and corresponding capital lease obligation totaled $3.3 million.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and debt instruments.  The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are representative of their fair values due to their short maturities.  The carrying amounts of our revolving credit facility approximates fair value because the underlying instrument includes provisions that adjust our interest rates based on current market rates.

On June 2, 2016, we issued  warrants to lessors  to purchase 370,000 common units representing limited partnership interests in the partnership for concessions on various long-term leases.  These warrants may be exercised at any time and from time to time during next five years, at an exercise price per common unit equal to $4.77.  These fair value of these warrants was calculated  at $2.45 per unit based on a Black Scholes valuation model, utilizing Level 2 inputs based on the hierarchy established in ASC 820, Fair Value Measurement.

On August 15, 2016, we, as part of the private placement described above, also issued warrants to the Purchaser to purchase approximately 890,000 common units at an exercise price of $10.82 per common unit.  The Warrants shall be exercisable for a period of six years from the closing date and include customary provisions and protections, including anti-dilution protections.  The fair value of these warrants at issuance date was calculated at $5.56 per unit based on a Black Scholes valuation model, utilizing Level 2 inputs based on the hierarchy established in ASC 820, Fair Value Measurement.  This liability is  marked to market each quarter with fair value gains and losses recognized immediately in earnings and included in Other income (expense) on our Consolidated Statements of Operations.  We recorded a loss of $3.0 million during the three months ended September 30, 2016.

Retirement Plan

We sponsor a 401(k) plan for substantially all employees that provides for us to match 100% of participant contributions up to 5% of the participant’s pay.  Additionally, we can make discretionary contributions as deemed appropriate by management.  Our employer contributions to these plans for continuing operations totaled $177 thousand and $416 thousand for the nine months ended September 30, 2016 and 2015, respectively.  We classified $118 thousand and $213 thousand to Income from discontinued operations, net of taxes for the nine months ended September 30, 2016 and  2015, respectively.  As of July 1, 2016, we have suspended all employer contributions to this plan.

Seasonality

For our Sand business, winter weather affects the months during which we can wash and wet-process sand in Wisconsin.  Seasonality is not a significant factor in determining our ability to supply sand to our customers because we accumulate a stockpile of wet sand feedstock during non-winter months.  During the winter, we process the stockpiled sand to meet customer requirements.  However, we sell sand for use in oil and natural gas production basins where severe weather conditions may curtail drilling activities.  This is particularly true in drilling areas located in the northern U.S. and western Canada.  If severe winter weather precludes drilling activities, our frac sand sales volume may be adversely affected.  Generally, severe weather episodes affect production in the first quarter with effects possibly continuing into the second quarter.

Concentration of Credit Risk

We provide credit, in the normal course of business, to customers located throughout the United States and Canada.  We encounter a certain amount of credit risk as a result of a concentration of receivables among a few significant customers.  We perform ongoing credit evaluations of our customers and generally do not require collateral.  The trade receivables (as a percentage of total trade receivables) as of September 30, 2016 and December 31, 2015 from such significant customers are set forth below:

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An asterisk indicates balance is less than ten percent.

Significant customers

Customer A represented 11.1% of total revenues for the nine months ended September 30, 2016,  No other customers exceeded 10% of the total revenues for the nine months ended September 30, 2016 and September 30, 2015.

The table shows our significant customers for our continuing operations for the three months ended September 30, 2016 and 2015.

An asterisk indicates revenue is less than ten percent.

Geographical Data

Although we own no long-term assets outside the United States, our Sand business began selling product in Canada during 2013.  We recognized $11.2 million and $33.2 million of revenues in Canada for the nine months ended September 30, 2016 and 2015, respectively.  All other sales have occurred in the United States.

Interim Indicators of Impairment

Long-Lived Assets

We believe the decrease in our common units’ market value is attributable primarily to our Sand business’ decreasing profits and the frac sand industry’s downturn.  Therefore, we have assessed the recoverability of long-lived assets for our Sand business, and determined that the carrying values are recoverable from our forecasted cash flows as of September 30, 2016.

Recent Accounting Pronouncements

In May 2014, August 2015 and May 2016, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, ASU 2015-14, Revenue from Contracts with Customers, Deferral of the Effective Date, and ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, respectively, as a new Topic, Accounting Standards Codification Topic 606.  The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized.  The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires entities to disclose both quantitative and qualitative information that enable financial statements users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.  This guidance is effective for annual periods beginning after December 15, 2017 with early adoption permitted on January 1, 2017 and shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption.  We are evaluating the effect of adopting this new accounting guidance.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern.  This ASU requires an entity to evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity’s ability to continue as

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a going concern for one year from the date the financial statements are issued or are available to be issued.  The new guidance is effective for annual periods and interim periods within those annual periods ending after December 15, 2016.  We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on our financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases.  This ASU requires lessees to recognize lease assets and lease liabilities generated by contracts longer than a year on their balance sheet.  The ASU also requires companies to disclose in the footnotes to their financial statements information about the amount, timing, and uncertainty for the payments they make for the lease agreements.  ASU 2016-02 is effective for public companies for annual periods and interim periods within those annual periods beginning after December 31, 2018.  Early adoption is permitted for all entities.  We are evaluating the effect of adopting this new accounting guidance.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.  This ASU affects entities that issue share-based payment awards to their employees.  The ASU is designed to simplify several aspects of accounting for share-based payment award transactions which include the income tax consequences, classification of awards as either equity or liabilities, classification on the statement of cash flows and forfeiture rate calculations.  ASU 2016-09 is effective for public companies for annual periods and interim periods within those annual periods beginning after December 15, 2016.  We adopted this ASU as of January 1, 2016.  As a result, we changed our accounting policy to recognize forfeitures as they occur.  The adoption of ASU 2016-09 did not have a material effect on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows.  This ASU provides classification guidance for certain cash receipts and cash payments including payment of debt extinguishment costs, settlement of zero-coupon debt instruments, insurance claim payments and distributions from equity method investees.  ASU 2016-15 is effective on January 1, 2018, with early adoption permitted.  We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on our financial position, results of operations or cash flows.

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4.              LONG-TERM DEBT

Following is a summary of our long-term debt:

Revolving Credit Facility

On June 27, 2014, we entered into an amended and restated revolving credit and security agreement (as amended, the “Credit Agreement”) among Emerge Energy Services LP, as parent guarantor, each of its subsidiaries, as borrowers (the “Borrowers”), and PNC Bank, National Association, as administrative agent and collateral agent (the “agent”), and the lenders thereto.  The Credit Agreement matures on June 27, 2019 and, prior to giving effect to the amendments described below, consisted of a $350 million revolving credit facility, which included a sub-limit of up to $30 million for letters of credit.  Substantially all of the assets of the Borrowers are pledged as collateral under the Credit Agreement.

Prior to the execution of Amendment No. 5 discussed below, borrowings under the Credit Agreement accrued interest at a rate equal to either, at our option, (i) the London interbank offered rate (LIBOR) plus 4.25% or (ii) a base rate, which will be the base commercial lending rate of the agent, as publicly announced to be in effect from time to time, plus 3.25%.  We also incur a commitment fee of 0.375% on committed amounts that are neither used for borrowings nor under letters of credit.

The Credit Agreement contains various covenants and restrictive provisions and requires maintenance of certain financial covenants.  Prior to the execution of Amendment No. 5 discussed below, we were subject to the following covenants and restrictions:

·                  the $350 million total aggregate commitment under the Credit Agreement would be reduced in an amount equal to the net proceeds of any notes offerings we may make in the future;

·                  we were required to maintain at least $25 million of excess availability (as defined in the Credit Agreement) under the Credit Agreement; and

·                  we were required to generate consolidated EBITDA in certain minimum amounts beginning with the quarter ending December 31, 2015 and rolling forward thereafter.

In addition, prior to the execution of Amendment No. 5 discussed below, the Credit Agreement placed restrictions on our ability to commence certain other actions, including:

·                  our subsidiaries’ ability to make distributions to us (to permit us to make distributions to unitholders) if, after giving pro forma effect to such distribution, our total leverage ratio would be greater than or equal to 4.00 to 1.00, or the excess availability under the Credit Agreement would be less than the greater of $43.75 million or 12.5% of the total aggregate commitments;

·                  our ability to enter into certain substantial acquisition or merger agreements with third-party businesses or make certain other investments; and

·                  our ability to make capital expenditures for growth and maintenance through March 31, 2019 above certain amounts per quarter.

On March 1, 2016, we entered into Amendment No. 3 to the Credit Agreement to permit us to incur certain second lien obligations.

As of March 31, 2016, we had undrawn availability under the Credit Agreement totaling $23.6 million and, as a result, we were not in compliance with the financial covenant to maintain at least $25 million of excess availability.  On April 20, 2016, we notified the agent of this event of default under the Credit Agreement and began discussions with the agent to obtain a waiver

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regarding the event of default and to otherwise arrive at a long-term solution to the Partnership’s liquidity requirements, including the reduction of outstanding borrowings under the Credit Agreement through the sale of our Fuel business.

On May 20, 2016, we entered into Amendment No. 4 to the Credit Agreement to permit us to issue an unsecured promissory note and warrants to one of our lessors in return for concessions on various long-term leases. On May 20, 2016, we also entered into Amendment No. 5 to the Credit Agreement. Amendment No. 5, among other things, provided a limited waiver of the event of default under the Credit Agreement for failure to maintain financial covenants as of March 31, 2016 and provided a period of covenant relief with respect to the requirements to maintain $25 million of excess availability under the Credit Agreement or to generate the minimum amounts of consolidated EBITDA for the quarter ended March 31, 2016. The limited waiver and covenant relief provided in Amendment No. 5 continued until the earlier of July 8, 2016 or the execution of a definitive agreement for the sale of our Fuel business (as subsequently amended, the “Covenant Reversion Date”).

Prior to the Covenant Reversion Date, we were subject to the following covenants and restrictions:

·                  we were restricted from making dividends or distributions to our unitholders, and our subsidiaries were restricted from making dividends or distributions to us; and

·                  we were restricted from making capital expenditures in our Sand business in excess of $570,000 in the aggregate or from making capital expenditures in our Fuel business for purposes other than completing installation of hydrotreaters at the facilities.

In addition, Amendment No. 5 increased the interest rates applicable to borrowings under the Credit Agreement to either, at our option, (i) LIBOR plus 5.00% or (ii) the base rate plus 4.00% and also provided for the following revisions:

·                  the total aggregate commitment under the Credit Agreement was reduced from $350 million to $325 million and the sublimit on letters of credit was reduced from $30 million to $20 million;

·                  the dominion period (as defined in the Credit Agreement), whereby our and our subsidiaries’ cash receipts are swept on a daily basis and used to reduce outstanding borrowings, was extended until the revolving credit facility matures; and

·                  the threshold amounts for an event of default upon the occurrence of judicial actions, judgments or cross defaults were decreased from $10 million to $5 million.

On May 27, 2016, June 10, 2016, June 15, 2016 and June 17, 2016, we entered into Amendments No. 6, 7, 8 and 9, respectively, to the Credit Agreement to delay the onset of the Covenant Reversion Date while we negotiated a purchase and sale agreement for the Fuel business.  We reached a definitive agreement for the sale of the Fuel business on June 23, 2016.  On June 30, 2016, we entered into Amendment No. 10 to the Credit Agreement for the purpose of further extending the Covenant Reversion Date until the earlier of September 2, 2016 or the closing of the sale of the Fuel business.

On August 31, 2016, we closed the sale of the Fuel business, used the net proceeds therefrom to repay outstanding borrowings under the Credit Agreement and entered into Amendment No. 11 to the Credit Agreement.  Amendment No. 11, among other things, restated the Credit Agreement and provided a full waiver for all defaults or events of default arising out of our failure to comply with the financial covenant to generate minimum amounts of adjusted EBITDA during the quarters ended March 31, 2016, June 30, 2016 and September 30, 2016 and the covenant to maintain the minimum amount of excess availability for any date prior to September 1, 2016.

Pursuant to Amendment No. 11, the Credit Agreement now provides for a maximum $200 million revolving credit facility with a $20 million sublimit on letters of credit and incurs interest at a rate equal to either, at our option, LIBOR plus 5.00% or the base rate plus 4.00%. We also incur a commitment fee of 0.375% on committed amounts that are neither used for borrowings nor under letters of credit. After Amendment no. 11, the Credit Agreement now requires the Partnership to maintain the following financial covenants:

·                  a covenant to maintain $20 million of excess availability (as defined in the Credit Agreement), subject to decrease to $15 million upon the satisfaction of certain conditions;

·                  a covenant to limit capital expenditures (as defined in the Credit Agreement) to certain maximum amounts for each quarter through March 31, 2019;

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·                  beginning with the quarter ending June 30, 2017, a covenant to generate consolidated EBITDA (as defined in the Credit Agreement) in certain minimum amounts;

·                  beginning with the quarter ending March 31, 2018, a covenant to maintain an interest coverage ratio (as defined in the Credit Agreement) of not less than 2.00 to 1.00, which is scheduled to increase to 3.00 to 1.00 for the fiscal quarter ending March 31, 2019; and

·                  a covenant to raise at least $31.2 million of net proceeds from the issuance and sale of common equity by November 30, 2016.

In addition, the Credit Agreement as amended by Amendment No. 11 also prohibits us from making cash distributions to our unitholders and requires all cash receipts by us and our subsidiaries to be swept on a daily basis and used to reduce outstanding borrowings under the Credit Agreement.

Following our entry into Amendment No. 11, we believe that we will be able to maintain compliance with the covenants and restrictions under the Credit Agreement, as amended, for at least the next 12 months. As a result of the reductions in the aggregate commitment, we wrote off $3.7 million of deferred financing costs during the nine months ended September 30, 2016.

At September 30, 2016, we had undrawn availability under the Credit Facility totaling $36.9 million and our outstanding borrowings under the Credit Agreement bore interest at a weighted-average rate of 5.87%.

5.                                      COMMITMENTS AND CONTINGENCIES

Contractual Obligations

The following table represents the remaining minimum contractual obligations as of September 30, 2016.