....provides industry leading technology for Production Enhancement and Environmental Services Howard Weil 42 nd Annual Energy Conference New Orleans, Louisiana March 25, 2014 Exhibit 99.1 |
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Any written or oral statements made by the Company or on behalf of the Company in conjunction with this presentation may include forward-looking statements which reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from such statements. This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning, among other things, the Company's prospects, developments and business strategies for its operations, all of which are subject to certain risks, uncertainties and assumptions. These risks and uncertainties include, but are not limited to, changes in overall economic conditions, changes in the cost of raw materials and natural gas used in manufacturing our products, changes in demand and prices charged for our products, changes in the demand for, or price of, oil and natural gas, risks of increased competition, technological, manufacturing, distribution and product development risks, loss of key customers, changes in government regulations, foreign and domestic political and legislative risks, the risks of war and international and domestic terrorism, risks associated with foreign operations and foreign currency exchange rates and controls, weather-related risks and other risks and uncertainties described in our publicly available filings with the Securities and Exchange Commission. The words "believe,” "expect,” "anticipate,” "project" and similar expressions identify forward-looking statements. Participants are cautioned not to place undue reliance on these forward-looking statements, each of which speaks only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward Looking Statements |
Production Enhancement Environmental Services ....provides industry leading technology for: |
“We increase well Production and EUR through our Design, Build, and Optimize the Frac workflow” The value we create, is lower F&D costs and a higher Recovery Factor Well Cost $ Increased Production & EUR Lower F&D ($/BOE) = TM |
• Frac Conductivity & Durability • Production Assurance • Production Intelligence • Flow Enhancement • Well Site Supervision • Frac Diagnostics & Optimization • Field Development Optimization • Reservoir & Formation Analysis • Frac Design • Economic Optimization • Reservoir Performance • Post Job Analysis ….a leading production enhancement company |
• Is the industry’s most widely used hydraulic fracturing design software, clients include E&P Operators, Service Companies, Universities • Provides Frac Design, Economic Optimization, Reservoir Performance and Post Job Analysis. Ties all the information together during the frac process. |
Reservoir Reservoir Fracture Fracture Design Design Production Production Completion Completion Best practices Best practices Execution Execution • Experienced, industry experts working in Unconventional Reservoirs • Provide technical consulting from Well-site to Office to Full Field Analysis • Integrating leading Technology to increase well Production & EUR |
Proppant Delivered Technology Platforms “More Space to Flow” Higher EUR Production IRR Ceramics Production Assurance Flow Enhancement Production Intelligence Proppant Delivered Proppant Delivered Proppant Delivered Resin Coated Products |
Ultra-conductive ultra-high strength proppant technology Developed for deep wells and ultra-high stress formations |
More conductivity 100% more baseline conductivity |
Plant produced proppant grains Precision-Engineered More Space to Flow More strength More durability More uniformity More roundness More smoothness More flow space More uniform flow paths More long-term conductivity More production, increased EUR and superior IRR |
Highest Conductivity Proppant in the Industry Outstanding performance under pressure |
Lbs (Millions) Millen Line 1 est completion near end of Q2-2014 Millen Line 2 est completion near end of H1-2015 Environmental permits obtained for all 4 Millen lines Ceramic Proppant Sales vs Capacity |
“Proppant is one of the biggest factors in determining Production and EUR in fracture stimulated wells. It is important that E&P Operators know what Proppant is being used in their wells. Make sure you are getting the Conductivity and Quality you are paying for.” Proppant Conductivity and Quality in the industry |
15 Hierarchy of Proppant Conductivity Highest Conductivity Highest Production, EUR, ROI Ceramic - Engineered product Ultra-high strength Mono-size and spherical High strength Uniform size and shape Thermal resistant Medium strength Irregular size and shape Low strength Irregular size and shape Sand - Naturally occurring product Conductivity = Permeability of the frac x width of the frac = K x W Ultra-conductive Ceramic Tier 1 – High conductivity Ceramic Tier 2 – Medium conductivity Resin-coated Sand Tier 3 – Low conductivity Sand Chart prepared by and property of CARBO frac frac |
The Stakeholders - E&P Operators, Service Companies, Royalty Owners, State Agencies….. • • Industry Awareness of Low Quality Chinese Ceramics ………are becoming more aware of the losses to well Production and EUR that can occur when using low quality, low conductivity Chinese ceramic proppants, or other low quality proppants, and the subsequent loss of revenue ………are becoming more aware of the need to test Proppant and know what they are paying for. CARBO is committed to quality and testing – everyday. |
Proppant Quality Matters in Well Production As an E&P Operator investing $4M – $12M on a well, how much Production & EUR are you sacrificing by using low quality Chinese ceramic proppant? Chinese 20/40 IDC # 1C Chinese 20/40 IDC # 2C Chinese 20/40 IDC # 3C Field Samples #1, #2, #3 taken in North Dakota from 3 Chinese Suppliers Bottom Row Represents Whole Pellet Cross Sections Production & EUR Loss due to Poor Quality: • Irregular Size & Shape reducing flowrates • Rough Surface reducing flowrates • High Internal Porosity leads to Low Strength & Crushing as Closure Stress Increases • All lead to Reduced Frac Conductivity |
CARBO vs Low Quality Chinese Ceramic Chinese 20/40 IDC # 1C CARBOLITE 20/40 Chinese 20/40 IDC # 2C Chinese 20/40 IDC # 3C Bottom Row Represents Whole Pellet Cross Sections Field Samples #1, #2, #3 taken in North Dakota from 3 Chinese Suppliers Comparison of three field samples from North Dakota from low quality, low Conductivity Chinese ceramic proppant suppliers, compared to CARBOLITE : |
CARBO vs Low Quality Chinese Ceramic Chinese 20/40 IDC # 4C CARBOLITE 20/40 Chinese 20/40 IDC # 5C Chinese 20/40 IDC # 6C Three more field samples of low quality, low Conductivity Chinese ceramic proppant suppliers, compared to CARBOLITE : Bottom Row Represents Whole Pellet Cross Sections Field Samples #4, #5, #6 taken in North Dakota from 3 more Chinese Suppliers |
CARBO vs Brazilian & Russian Ceramic Brazilian 20/40 LDC # B1 CARBOLITE 20/40 Two Brazilian & one Russian field samples of low quality, low Conductivity lightweight ceramic proppant suppliers, compared to CARBOLITE : Bottom Row Represents Whole Pellet Cross Sections Field Samples #B1 taken in South Texas; #B2, #R1 taken in North Dakota Brazilian 20/40 LDC # B2 Russian 20/40 LDC # R1 |
21 +20% Bakken Operator CARBO vs Chinese +120,000 bbl 30 Day Cum Oil *EUR *Operator projected EUR 6 wells with CARBOECONOPROP low density ceramic (LDC) 4 wells with Chinese intermediate density ceramic (IDC) Frac Design (per well) ~ 24 stages ~ 3 million lbs Average ECONOPROP Average Chinese IDC Average ECONOPROP Average Chinese IDC |
Effects of Pressure and Temperature on Sand Northern White Sand 20/40 Sand Crushes into fine particles Conductivity = only 215 md-ft Conditions: • Loss of frac width • Particles plug flow channels • Leads to loss of Conductivity • 9,000 psi, 250 F • Flowing 2% KCL for 30 days • Cross sections of Proppant pack shown • At 9,000 psi, the Sand experienced severe crushing and the conductivity was only 215 md-ft x y |
Effects of Sand Crushing at Higher Pressure W frac Less W frac White Sand @6,000 psi stress White Sand @12,000 psi stress Crushing reduces frac width and the “Space to Flow” ….most wells are conductivity limited with Sand |
Ceramic vs Sand - Realistic* Conductivity (20/40 mesh) Bakken Stress Range Eagle Ford Stress Range *Reduced Baseline conductivity by 60% for the effects of non-darcy flow, multi-phase flow, gel damage, etc. Md-ft Md-ft Closure Stress (psi) Haynesville Stress Range 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 6,000 8,000 10,000 12,000 14,000 Ceramic - CARBOLITE Sand - White |
“Over 150 SPE papers have been written documenting the benefits of increased conductivity on well Production and EUR. Generally, the payout on the additional Proppant investment is less than 2 - 6 months, and increases Production and EUR in a range of 20% to 100%.” Case Histories |
Ceramic Success Grows Into Key Basins |
50,000’ view 1,000’ view Ground view Bakken Ceramic Proppant Growth Continues SPE Paper 163827– Liberty Resources |
SPE Paper 163827– Liberty Resources Feb 2013 @ SPE Hydraulic Fracturing Conference by Dr M. Pearson 37 Wells from Williams County 90 Day Production Bubble-Plot Liberty Resources wells (RED) 49,100 BBLs 29,100 BBLs 19,100 BBls LR LR Bakken ( Liberty Resources ) outperform offset wells |
Bakken ( Statoil / Brigham Exploration ) SPE Paper 134595 & 146376 – Brigham Exp/Statoil |
Ceramic Success Grows Into Key Basins |
50,000’ view 1,000’ view Ground view Eagle Ford (4,000 wells*) * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic completions offer a 20% - 60% improvement Normalized Production Indicator* |
Karnes County (600 wells*) 50,000’ view 1,000’ view Ground view * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data Normalized Production Indicator *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic completions offer a 20% - 40% improvement |
Karnes County Operator (300* wells) 50,000’ view 1,000’ view Ground view * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data *NPI = Best 3 Months Production/Perforated Lateral Length = BOE/Ft (BOE/Ft) Ceramic completions offer a 30% - 50% improvement |
Ceramic Success Grows Into Key Basins |
Permian Basin Bone Spring * Public data : Unknown proppant type not included in analysis: Ceramic proppant verified through internal CARBO data |
Ceramic Success Grows Into Key Basins |
How to Increase the Recovery Factor • In horizontal wells in resource plays, there are two critical factors that determine the level of economic success 1.) Creating large reservoir contact area, through multiple, transverse frac stages 2.) Building high conductivity, durable fracs with a “life-of-the-well” flow channel • The majority of fracs today are complex (non-planar), and conductivity limited……….they need more conductivity • Total F&D costs could be reduced by drilling a smaller number of effectively stimulated wells……….versus drilling more infill wells on smaller spacing Proved by well testing, limited effective drainage areas, refracs, lab testing of proppants, infill drilling High pressure losses within the frac caused by limited conductivity, constricts Production |
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We take customers from high risk containments Un-lined, permeable dirt berm Tanks sitting on pea gravel & corroding Un-lined tanks corroding inside & outside High risk for spills & higher LOE: |
To industry-leading environmental protection Lined containment, impermeable Tank bases prevent corrosion Lined tanks, prevents corrosion Minimize risk for spills & lower LOE: More than 6,000 installations, with 100% environmental success |
Client Base is Growing & Market will Change Market Segments Polymer Coatings HDPE Liners Dirt Berm Client Growth, 2009-2013 2010 2012 2011 2009 2013 11 25 68 119 178 We believe the industry and the regulatory bodies will continue to gain awareness of the high environmental spill risks associated with dirt berms and HDPE (plastic) containments • Dirt Berms will likely continue to be “regulated” out We continue to push growth through: • Environmental Stewardship message • Business Risk Reduction message • Geographic Expansion • New Products Falcon |
Finance |
CARBO Financials * Cash from operations is equal to net income plus depreciation and amortization and non-cash stock compensation 231 284 300 388 342 473 626 646 667 0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700 3,000 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 05 06 07 08 09 10 11 12 13 Revenue $M NAM Total Rigcount 57 70 71 84 80 110 171 156 138 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 05 06 07 08 09 10 11 12 13 Cash From Operations $M 45 52 50 60 53 79 130 106 85 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 05 06 07 08 09 10 11 12 13 Net Income $M |
CARBO Financials Cash Flow Per Share = Cash from operations (= net income plus depreciation and amortization and non-cash stock based compensation)/diluted shares 1.88 2.14 2.02 2.46 2.27 3.40 5.62 4.59 3.67 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 05 06 07 08 09 10 11 12 13 Earnings Per Share 231 284 300 388 342 473 626 646 667 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 05 06 07 08 09 10 11 12 13 Revenue $M 2.33 2.88 2.91 3.57 3.47 4.80 7.43 6.80 6.02 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 05 06 07 08 09 10 11 12 13 Cash Flow Per Share |
Dividends Increased - 13 Years $ Per Share Shares - Millions $0.20 $0.23 $0.24 $0.25 $0.29 $0.36 $0.44 $0.52 $0.62 $0.70 $0.76 $0.88 $1.02 $1.14 12 14 16 18 20 22 24 26 28 30 32 34 36 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Dividend Amount Paid Per Share Per Year Shares Outstanding |
Industry Factors First Quarter of 2014 Activity quarter-to-date impacted by harsh weather conditions in the Bakken and northern regions of NAM. Railroads’ operational issues and congestion have severely impacted the distribution of Proppant Fracturing well-site activity has been negatively impacted by the cold weather Anticipate ceramic proppant volumes will be somewhat below fourth quarter 2013 ceramic proppant volumes We remain positive on activity levels and our ceramic proppant demand for Q2 and the balance of the year Full Year 2014 |
Create value by lowering E&P Operators F&D costs and increasing the Recovery Factor Differentiate by continuing to develop industry leading technology Grow our client’s knowledge of CARBO as the leading Production Enhancement company focused on fracs, with technologies that make oil & gas wells produce better and increase recovery (EUR) Stress to E&P the investment benefits of making informed decisions on Design-Build-Optimize Fracs, that strikes a balance of EUR with AFE Grow Falcon Technologies through product development to address industry environmental needs, and geographical expansion. Continue to grow cashflow and build an enduring Company Summary |
....provides industry leading technology for Production Enhancement and Environmental Services Howard Weil 42 nd Annual Energy Conference New Orleans, Louisiana March 25, 2014 |
Cash Flow from Operations Reconciliation $ in 000s Results from Continuing Operations 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Income 45,463 $ 52,245 $ 49,641 $ 60,405 $ 52,810 $ 78,716 $ 130,136 $ 105,933 $ 84,886 $ Plus: depreciation and amortization 10,935 15,630 19,895 24,638 24,905 27,728 36,015 44,893 47,472 Plus: non-cash stock compensation - 2,311 1,709 2,052 2,571 3,812 4,719 5,335 5,837 Cash Flow from Continuing Operations 56,398 $ 70,186 $ 71,245 $ 87,095 $ 80,286 $ 110,256 $ 170,870 $ 156,161 $ 138,195 $ Weighted Average Shares Oustanding 24,177 24,400 24,451 24,418 23,112 22,977 23,012 22,969 22,957 Cash Flow Per Share 2.33 $ 2.88 $ 2.91 $ 3.57 $ 3.47 $ 4.80 $ 7.43 $ 6.80 $ 6.02 $ For The Years Ended Dec 31 Cash from operations is equal to net income plus depreciation and amortization and non-cash stock compensation |